Prices had been pushed up in response to a series of events which happened simultaneously putting enormous pressure on the supply of gas. North sea reserves began to run out far sooner than expected. There was limited capacity for gas storage as much of the necessary infrastructure remained un-built and the pipelines from the European mainland were running well below capacity.
London (PRWEB) April 26, 2007
Last year electricity4business, Britain's leading supplier of electricity to small and mid-sized businesses, was offering only one year contracts and advising businesses to hold fire before considering a longer term deal as wholesale prices were expected to drop.
Unfortunately, not all electricity suppliers were as scrupulous as E4B and some openly encouraged customers to sign up for three and five year deals supposedly to avoid any further increase in prices which had already doubled in a single year.
But even E4B could not have foreseen the scale of the actual fall in wholesale prices which are now standing some 60% lower than they were a year ago and for those who were lured into the trap it will be a long haul before they will be able to buy again at truly competitive rates.
However, for businesses nearing their contract end date and those who have not signed up to fixed-term rates there couldn't be a better time to fix rates for a longer period as the U.K. is now sitting on substantial short-term gas reserves which are keeping prices at the lowest levels seen in the last two years.
Nevertheless, there is no room for complacency since, as many businesses who have been pushed close to breaking point by the previous price push will testify, the only way is up when margins have been squeezed to the limit. And it's very much looking as though that point has now been reached.
Graham Paul, electricity4business's sales and marketing director who has always looked at the wider picture to predict what will happen with prices was spot on with his predictions of the drop in wholesale rates.
"It was only a matter of time before rates had to tumble in response to the U.K.'s improved supply position," claims Graham. "Prices had been pushed up in response to a series of events which happened simultaneously putting enormous pressure on the supply of gas. North sea reserves began to run out far sooner than expected. There was limited capacity for gas storage as much of the necessary infrastructure remained un-built and the pipelines from the European mainland were running well below capacity."
As soon as the storage facilities were put in place and the pipelines began to reach their true capacity prices began to topple. Added to this, the milder than average winter has held back demand resulting in a short-term oversupply and placing further downward pressure on prices.
"But it won't be like this for long," claims Graham. "There are already some important long-term signals on the horizon, not least the talks going on currently to form an OPEC equivalent from major gas supplying nations. GCEF, or Gas Exporting Countries' Forum is already in place and there are plans to establish a committee on the coordination of global gas prices."
Most individuals wouldn't have to think twice about fixing their mortgage rate longer-term when interest rates are very low but signals are pointing to an imminent rise. Perhaps this is due to the emotional elements tied up in bricks and mortar. Utilities, on the other hand, are devoid of emotion and it therefore requires more convincing to encourage businesses to save the very same pounds that can be achieved from a mortgage fixing deal.
It is electricity4business's mission to spread the news of these huge potential savings for small and mid-sized businesses and to encourage them to think ahead in order to avoid being caught in the trap, as many were last year, of crippling rises in their electricity bills.
E4B has now launched its special 3-year fixed rate product which, unlike others who charge a high premium for fixing rates, is surprisingly similar to its current highly competitive annual rate product and Graham is convinced that the uptake will be high as businesses become far more aware of the huge savings that can be made.
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Notes for Editor:
Electricity 4 Business Ltd
Electricity4business provides an alternative to the big 6 by providing cheap business electricity for small and medium sized businesses spending less than £100,000 per annum on their electricity supply.
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