Energy prices in the last Quarter of 2018

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/790035/QEP_Q4_2018.pdf

The Quarterly Energy Prices (QEP) publication and the detailed associated tables provide information related to the prices paid for energy and fuels in the United Kingdom. Information is presented for both the domestic market (which are the prices paid by households for their energy and fuels) and the non-domestic sector (prices paid by industrial users of energy, commercial users and services). International data are also collated and presented in the publication to provide comparisons in prices with the European Union (EU) member states and members of the International Energy Association (IEA), this issue focusing on comparisons with the ‘EU15’. The publication also provides a summary of national information on prices for oil and petroleum products. In particular; road fuels which are also collated published online both on a weekly and monthly basis. Information about this release This release (published 28 March 2019) covers final data for 2018 calendar year, with a focus on the fourth quarter of this year. The release additionally serves as an update to the provisional figures for 2018 published in December. The main revision is to domestic energy bills. More details are provided in the commentary but as a reference for the scale of the changes, at the UK level, assuming a fixed but representative consumption, the average Gas bill was revised £1 up and the average Electricity bill revised £8 down. Highlights and Headline Figures Domestic Market Prices Households in the UK predominantly use electricity from the national grid (though some households do use fuel-based generators) to provide energy for lighting, utilities and heating. A significant number of households (approximately 23 million) also use gas for heating and cooking in their homes. This section details the average prices paid by households for their energy with updated and revised figures for 2018 replacing the estimates published in the December 2018 issue. Based on the consumer price index data, the price paid for all domestic fuels (Electricity and Gas but also other solid and liquid fuels) has risen by 6.8 per cent in real terms in the last quarter (October to December) of 2018 compared with the same quarter in 2017. (Table 2.1.2) Between Q4 2017 and Q4 2018, the average real term price index presented in the consumer price index - including Value Added Tax (VAT) - for domestic electricity increased by 7.4 per cent and domestic gas rose by 5.9 per cent. (Table 2.1.2) 7 Most consumers get their electricity and gas from an energy company and pay a tariff or bill. Annual data for 2018 suggests that the domestic energy bills paid by households increased by 5.2 per cent in current prices and by 3.2 per cent in real terms. (Tables 2.2.1 and 2.3.1) Assuming a fixed consumption level of electricity of 3,800 kWh per annum, household electricity bills increased by £49 to £668. Given a fixed consumption levels of gas of 15,000 kWh per annum, gas bills for households increased by £16 to £646. The combined average domestic energy bill increased by £65 from £1,249 in 2017 to £1,314 in 2018. (Tables 2.2.1 and 2.3.1) Average bills for those using prepayment meters increased by £22 (1.7 per cent) in current prices. This is following the revisions Ofgem made to its price cap, for customers who pay via the prepayment method, in 2018. Prepayment prices increased at a slower rate compared to the other payment methods. (Tables 2.2.1 and 2.3.1) In order to increase competition in the energy market Ofgem encourages consumers to switch energy suppliers to get the best deal. The number of these transfers made within the domestic electricity market increased by 3.9 per cent between the last quarter of 2017 and the same quarter in 2018, with an estimated 1,411,000 electricity transfers being made in Q4 2018. Since Q4 2017, gas transfers have increased by 2.4 per cent to 1,189,000 transfers within Q4 2018. (Table 2.7.1) Total transfers 1 over 2018 were estimated to be 9.9 million which the highest number recorded since Ofgem (who provide the data to us for re-publication) began recording this information in 2003. It is higher than the previous peak in 2008 of an estimated 9.6 million transfers in year. (Table 2.7.1) Industrial Sector UK industry is reliant on energy and fuels (particularly Gas and Electricity) to operate and this section gives insight on the prices paid by the non-domestic sector. Whilst the fuels are the same it’s not generally comparable with the domestic market given the different levies 8 The industrial sector in the UK is mainly dependant on electricity and gas. Between the last three months of 2017 and the same period in 2018, average industrial prices in real terms, though not seasonally adjusted and including the Climate Change Levy (CCL) - rose by 19 per cent for gas and by 8.2 per cent for electricity. (Table 3.3.2) Comparing the last quarter of 2017 with 2018, industrial prices for coal fell by 1.9 per cent but heavy fuel oil (not subject to CCL) increased by 17 per cent. (Table 3.3.2) The ‘major power producers’ are part of industry and use fuels to generate electricity. In the electricity industry between Q4 2017 and Q4 2018, the price of gas used for electricity generation increased by 31 per cent in cash terms whilst that for the coal used by power producers increased by 1.6 per cent. This differs from industrial prices as it uses a different quality of source material compared to industry. (Table 3.2.1) Oil and Petroleum Product Prices Petrol and oil derivatives are used by all sectors whether it be individuals using it to refuel their car or a company fuelling its fleet of vehicles. This section presents average ‘pump prices’ for petrol and the wholesale prices for oil and it’s derivatives. The provisional price of petrol in March 2019 was 120.1 pence per litre which was 0.8 per cent higher than that of a year ago, whilst the provisional price of diesel at 130.6 pence per litre was 6.3 per cent higher compared to a year ago. (Tables 4.1.1 and 4.1.2) The petrol price in March 2019 was 22 pence (15 per cent) lower than the most recent peak in April 2012 whilst the diesel price was 17 pence (12 per cent) lower. (Tables 4.1.1 and 4.1.2) The price of crude oil purchased by UK refineries, in £ Sterling terms, in February 2019 was 1.1 per cent higher than that a year ago. The price of Brent crude (a benchmark standard for the quality of the oil) in February 2019 at just over $63 per barrel was 7.1 per cent higher than the previous month though remained considerably below the prices seen between February 2011 and August 2014 when prices were above $100 per barrel.