Wholesale UK gas and electricity prices have fallen further following the mild winter and lower commodity prices to five-year lows, energy market analysis has found.
Electricity prices finished 2015 at £36.764 per megawatt hour, a fall of 23% on the previous year, according to the ICIS Power Index. The index shows the daily price for electricity delivered over the next summer and winter, weighted to show extra demand in winter.
Gas prices at the end of last year were at their lowest level for six years, at 32.15p per therm, a 34% drop on the 2014 price.
Increased production capacity in 2016, milder temperatures and more liquefied natural gas (LNG) expected to come to the UK are thought to behind the price reductions.
“With a deep liquid gas market and plenty of capacity to regasify LNG imports, Britain is anticipated to be a key beneficiary of the global LNG oversupply,” said Ben Wetherall, head of gas at ICIS.
Zoe Double, head of power at ICIS, added: “Power prices have fallen less than gas because there is less spare supply capacity, with thermal generation continuing to struggle with profitability.”
Energy companies have been accused of overcharging consumers by not passing on lower wholesale prices.
Dermot Nolan, chief executive of Ofgem, speaking to the BBC about variable price deals, said: "We really should be seeing bigger retail cuts than we have seen so far."
Lawrence Slade, chief executive of Energy UK, which represents energy firms, said: "Energy companies are bringing down their prices with cheaper tariffs launched almost every week.
“Wholesale prices make up less than half of the average bill and the majority of the rest falls outside suppliers’ control so there will always be a difference between wholesale price falls and what customers actually pay."