Eurozone crisis could cut £100 from energy bills

by Marghaid Howie on 02 December 2011  |  13 comments
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We may be heading for another recession, but it's not necessarily all bad news...

If the Euro collapses, we’re predicting that the impact on global energy markets is likely to be similar to when wholesale prices crashed by 66% in 2008-9 following the collapse of Lehman Brothers. This led to two years of tentative price drops in household gas and electricity bills, with a fall of 6.9% in 2009.

Applied to today’s record average annual gas and electricity bill of £1,345, a 6.9% price drop would equate to a reduction of £93 next year. This doesn’t make up for the jump of around £170 we’ve seen from the price rises this autumn, but at least it bucks the upward trend.

Although a new European recession would be devastating in many ways, there is the thin silver lining that UK gas and electricity prices could finally start coming down, easing pressure on household bills at a time when it would be most needed.

Energy companies have to buy their supplies in advance, so it could be that smaller suppliers with less spending power to buy in bulk may actually benefit by responding more quickly to any drop in wholesale prices. First:Utility still tops the league of cheapest tariffs, and Ovo’s fixed tariffs remain competitive.

And a final bit of good news: ScottishPower has extended its £80 cashback offer until midnight 8th December, making its cheapest tariffs a great deal this week

Correct as of 2nd December 2011

* based on average dual fuel tariff costing £1,345 per year. All calculations are for a yearly average usage dual fuel household paying by monthly direct debit. Average usage defined by Ofgem as 16,500 kWh p.a. of gas and 3,300 kWh p.a. of electricity.

Compare energy tariffs at lovemoney.com