UK Gas Prices Fall 42% in Feb Year-on-Year
UK NBP natural gas prices in February 2016 fell 42% from the same month of the previous year, responding to a mild winter, increased global LNG supply and the general downturn in global commodities markets.
The system average price for February 2016 recorded by system operator National Grid was 29.58 pence/therm (1.00941 p/kWh), falling 42% from 50.85 p/th the previous February.
February 2016's gas price was also down 8% from the 31.98 p/th system average price recorded a month earlier for January 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 are due to fall 5.1% from March 16 this year, the company said in mid-February.
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 299mn m³/day in February 2016. This was pretty much unchanged from the 298mn m³/day recorded for January 2016. It was slightly lower, falling 2%, from the 306mn m³/day seen in February 2015, according to National Grid data.