The Deregulated Market

In April 1990 the deregulation of the electricity and gas industry started the three-stage process towards a free market in energy supply and services. The initial stage involved only the very large consumers. The second stage in April 1994 released the 100kW demand electricity sites and, more importantly, gas sites consuming more than 2500 therms ( 73,000 kWh ) per year. This was the first real mass market for energy and allowed most small to medium sized businesses to reduce their energy costs. The third step, a totally free market, was phased in during the late 1990’s. It was not just the market for energy that was changing. Almost every aspect of energy use, from meter operating and reading to supply, installation and groundworks were open to competition. Pressure from both gas and electricity regulators led to the streamlining and reduction in cost of many of the unseen elements in the price of a kilowatt of energy. Gas transportation costs and electricity distribution charges were reduced. The market for wholesale electricity, ‘’the pool’’, was subject to new trading agreements, which further reduced the cost of a kilowatt of electricity. Whilst all these measures resulted in lower and lower energy costs, and greater competition for your business the tariff rates charged by many suppliers have remained high. The introduction of Environmental Levies, Climate Change Levy to gas and electricity bills in April 2001 and the Renewable Fuel Obligation in April 2002 (to be increased again in 2003) has made the need to find the lowest energy prices of paramount importance. In the latter part of 2000 the gas and electricity market started to suffer from the first serious increases in the wholesale price of gas. Bills to larger users doubled in twelve months. This eased back in 2002, although prices were 50% higher than in 1999. By the middle of 2004 all energy prices were moving upwards with the wholesale prices peaking in mid 2006. Wholesale energy prices have fallen throughout the latter part of 2006, with this trend continuing into 2007.