The latest supply-market indicator published by OFGEM – the market regulator – shows that ‘green taxes’ will add £94 – about 7% – to the cost of the average UK household dual-fuel bill over the next year.
The indicator is a 12-month forward look at cost trends in the domestic energy market. It estimates the average annual household bill and the annual cost per customer faced by a typical large supplier to deliver gas and electricity.
OFGEM’s goal in producing the indicator is to make the relationship between the costs faced by energy suppliers and household consumer bills more transparent and accessible. This makes the market clearer for consumers.
The latest indicators for April show that the average dual fuel bill for the next 12 months from April is £1,292. This is £3 lower than last month’s estimate and around £50 lower than OFGEM’s estimate a year ago.
This assumes seasonally normal demand, and takes into account the price cuts to variable tariffs announced by large suppliers earlier this year, as well as the introduction of a number of cheaper fixed tariffs to the market.
OFGEM estimate that wholesale gas and electricity costs, based on our assumption that suppliers buy their energy up to 18 months ahead of delivery, will be around £546 or 42% of an average dual fuel bill. This is around £7 lower than last month’s estimate. The equivalent estimate a year ago was £617.
The regulator estimates that the cost of environmental and social obligations for the next 12 months will be around £94, or approximately 7%, of the average dual fuel bill. This is around £2 higher than its estimate a year ago.
Supplier operating costs for the next 12 months are estimated to be around £177 or approximately 14 % of the average dual fuel bill. This is the same as its estimate a year ago.
The SMI analysis is available in full at Supply Market Indicator