Wholesale gas prices have hit a 5-year low. But what does this mean for customers?
We are currently experiencing the warmest December in six decades. Although it won’t be a white one in Ireland this year, many of us have still been cranking up the home heating, turning on our gas fires and cooking festive feasts on our gas cookers this winter.
And with this higher gas usage comes higher bills. Despite this annual worry for many households, there is some hope that prices will come down over the coming months. That’s because wholesale gas prices have just hit a 5-year low.
Wholesale Gas Prices Down 26% on 2014
Last December, the average wholesale gas price was 2.31 cent per kWh, but now stands at just 1.71 cent per unit, which represents a fall of 26% in the past year alone.
When the average wholesale gas price over the last three years is considered, the price drop adds up to 35%.
Three main reasons behind the 5-year-low prices are exceptionally mild weather, healthy supplies, and plenty of stored gas - because of the mild weather.
Senior analyst at Vayu Energy, Joanne Daly, explained; “Gas prices are now at lows not seen since September 2010. This is due to a combination of low demand and strong supply…mild weather conditions have been a major factor”.
What Does This Mean for Customers?
Lower wholesale prices can equate to lower prices for consumers over time, but not necessarily by the same proportion. Some suppliers have cut gas prices over the last few months, but those cuts have generally been around 2.5% which is a long way from that 26% fall in wholesale prices.
There is good news though - the discounts available to new gas customers are the highest we've ever seen - and suppliers are able to offer these discounts because of those falling wholesale gas prices!
Here’s a look at the best gas packages currently available in Ireland.
Flogas is currently offering a 20% discount to new customers who sign up to a direct debit plan with the supplier.
That amounts to a unit price of 4.147 cent per kWh (excluding VAT). When taxes and the Standing Charge are added in, the average Irish household will spend about €798 a year on gas with Flogas.
And that’s a saving of €145 against standard rates.
If you like the idea of getting your gas and electricity from the same supplier, Energia’s ‘CHEEP338 Dual Fuel’ might be worth considering. It's the cheapest plan of its kind on the market.
An average Irish household will pay about €822 a year (including taxes and the Standing Charge) for gas and €998 a year (including taxes, the Standing Charge and PSO Levy) for electricity under the plan.
That all adds up to around €1,850 a year for gas and electricity from the one supplier.
Although gas usage is at its highest at this time of year for most households, with wholesale prices at a 5-year low, here's hoping that consumers will see these savings passed on early in the new year.