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Prices that consumers pay are affected by the wholesale price of energy, which is the price companies pay to buy the gas or electricity they sell on to the end user. The market price is influenced by a number of factors; the price of the input fuel used to produce electricity, as well as demand spikes and supply changes.
Companies buy wholesale energy weeks, months and years in advance as well as on the day of use in order to smooth the purchase price over a long period to avoid price spikes.
This protects consumers from volatility in the international markets and ensure enough energy is procured to keep the lights on. From there has been a general downward trend in the wholesale electricity price, this is manly driven by decrease in gas prices and increase in the amount of electricity generated from renewable technologies.
The graph below shows the general trend in the wholesale electricity price Source: For short-term delivery within-day london energy brokers association the next dayelectricity is mostly traded through exchanges — london energy brokers association electronic platform that matches offers and bids through an auction process.
The two exchanges are:. It is also possible to trade electricity for delivering further ahead in the future for example, you can buy electricity for the next winter or summer period. Most of the trading for longer-term delivery are done via brokers: The London Energy Brokers Association publishes some data on these trades.
Energy companies buy a proportion of their supplies ahead of time. Purchasing ahead like this is called hedging and helps to even out prices over time. The number of suppliers continue to increase london energy brokers association the retail market. Last year fourteen new suppliers entered domestic market whereas the already operating small and medium suppliers continued to expand. The Retail energy markets in report by Ofgem indicates london energy brokers association the total london energy brokers association share of small and medium sized companies supplying energy in the UK increased by 4 p.
In total in March forty-three companies actively competed on the energy market. Furthermore, a positive trend of growing rates of energy supplier switching london energy brokers association to increase, please see Energy UK switching monthly statistics for more information.
In order to increase transparency of the sector, Ofgem requires the six largest energy companies to publish their annual financial statements know as Consolidated Segmental Statements CSS. How to make a complaint Energy industry codes Code of Practice for Accurate Bills Feed in tariffs What happens if my electricity meter behaves unexpectedly?