Gas price rise spiral set to end:
The rise in gas bills may finally be over and prices are set to drop over the next two years. That's the message coming out of the gas markets, where the "forward" price has been coming down rapidly. It has fallen 20% since April and prices are now at almost the same level as this time last year. The chief energy regulator this week warned the gas companies to pass on the price cuts as soon as possible and promised action against laggards. But the prospect of price falls means households need to look carefully at price capping deals being touted by gas companies. Be especially wary of "lock-in" deals which tie you to a fixed tariff for a year or more. They may look less good value in 12 months' time. New pipelines from Norway and continental Europe have helped ease concerns over winter supplies, as have a drop in oil prices. The forward delivery wholesale price is key because the price paid now for gas bought on long-term contracts greatly influences prices paid by consumers. Joe Malinowski of switching service TheEnergyShop.com says: "With prices now at the same level they were a year ago, consumers can start to think that they are over the worst and there is a light at the end of the tunnel." But this means that capped deals that were popular in February no longer make sense. "As things stand, the range of capped deals is fairly limited and you will typically pay a premium of £240 a year when compared with the cheapest deals available if you switch supplier. While it is possible there will be further price hikes, we do not believe it will be near the 30% level. Consequently, we don't believe the premium for capped deals is worth it." Npower currently offers a "gas guardian" tariff, fixed at the British Gas quarterly cash/cheque price for gas at March 1 prices - before its September 4 increase. However, there was no obvious mention of it on its website this week, so it may be about to be scrapped. Powergen also has a capped price product which on average costs £144 a year more than the standard floating dual fuel tariff. Both should now be avoided, according to Malinowski. He says British Gas loyalists should switch to its "Fix and Fall" product as this has no lock-ins and customers can switch at a later date. Since January 2004, average household energy bills have risen by 69% or £407. The average joint bill for gas and electricity now stands at just under £1,000 a year per household. Gas bills alone have risen by 85%. Electricity-only customers have seen 50% rises. In the past year each of the power companies have increased prices twice, with three rises from npower. TheEnergyShop says that over the past three years British Gas has been the most expensive supplier, while Atlantic Electric & Gas remains cheapest. Scottish Hydro Electric was the cheapest electricity supplier. Npower, Powergen and Norweb were most expensive. Wholesale price falls tend to take at least six to nine months to feed through to consumer bills. The industry regulator Ofgem this week warned companies that it will act if it thinks they are not passing on the price falls to consumers. It has the power to fine them 10% of turnover if it finds that they are keeping prices artificially high. 17.9.06