UK Gas Prices Fall 38% in March Yr-on-Yr
UK NBP natural gas prices in March 2016 fell 38% from the same month of the previous year, due to the ongoing slump in global commodities markets, including oil, as well as increased global LNG supply and a mild winter limiting demand.
The system average price for March 2016 recorded by system operator National Grid was 29.28 pence/therm (0.999226 p/kWh), falling 38% from 47.21 p/th the previous March.
The system average price is a reference price for daily gas used in industry settlement procedures.
There was very litle change from month to month. March 2016's gas price was down just 1% from the 29.58 p/th average price recorded for February 2016.
Lower wholesale prices are feeding through into retail markets. British Gas, the UK's biggest household gas supplier, and part of energy company Centrica, has cut its tariffs three times in the last year. Household gas prices fell 5% in February and August 2015 and again by 5.1% on March 16 this year.
British Gas estimates the average household could save around £100 (€130)/yr on its bills as a result.
Energy companies argue that wholesale prices make up only part of the household bill, and that bills should not be expected to fully reflect changes in the wholesale market. Energy suppliers face additional costs including customer service, energy transport and environmental obligations.
Gas bought in forward markets could also have been more expensive than gas bought in the daily market reflected by the system average price.
UK national transmission system gas demand averaged 284mn m³/day in March 2016. This was up 8% from the 264mn m³/day recorded for the same month the year before. It was lower on the month, dropping back 5% from the 299mn m³/day seen in February 2016.