Saturday, May 9, 2015
Is it a post code lottery?
Have you ever wondered why, when you are doing a price comparison for your energy, you are asked to enter your post code? You are probably thinking ‘I just want to find the cheapest supplier surely it doesn’t matter where I live’? Unfortunately it does.
If you use gas or electricity from a mains supply (i.e you don’t generate it yourself) it is the same as your next door neighbour, and even between regions one kWh or electricity is one kWh of electricity, so why the regional differences? We discussed in a previous post, that the energy that you buy from your supplier is the same, but there can be a big difference between the cost depending on the supplier that you are with. Also in the post, we discussed how there is a complex web of companies that are responsible in delivering the electricity and gas to your home: the power station operator, National Grid, regional network operators and your supplier. But, how big is the difference in cost between the regions of the UK?
Time to crunch the numbers
The Department of Energy and Climate Change publishes a lot of data each quarter on the UK energy market (in a report called Quarterly Energy Prices), and I have been crunching the numbers. The first graph shows the total annual cost of energy (gas and electricity) for each region of the UK. It should be noted that this analysis excludes Northern Ireland. Some other things to bear in mind, is that the figures quoted here are for standard tariffs and do not include any discounts such as direct debits etc.
The first graph isn’t too helpful, as there is differences in the both the gas and electricity prices. So, I did a bit of number crunching to find out the difference in both electricity and gas prices for each region compared to the national average AND also the difference in the combined bill. Regions with bars above the x-axis line (shown as positive) are more expensive than the national average and those with bars below the x-axis (shown as negative) are cheaper than the national average.
If you are lucky enough to live in the East Midlands then you have some of the cheapest gas and electricity, with a combined annual bill some £40 cheaper than the national average and about £80/yr cheaper than the a home in North Wales using the same amount of gas and electricity. Though North Wales has the highest gas and electricity bills £43/yr more than the national average, customers in North Scotland are not far behind (£39/yr) and have the most expensive electricity bills, £49 a year more.
Why is there a difference in cost?
In our previous post about a breakdown of the costs that go into making your energy bills, the cost of generating the electricity, or the wholesale price of gas, is just one component. Network costs is a broad category that covers the building and maintenance of the power lines, substations, gas lines and infrastructure that gets the energy to your home. Rural areas such as North Wales and North Scotland, with people living far apart requires more infrastructure than place with lots of town and cities, hence the increased costs.
Over to you
Just because you live in an ‘expensive’ region doesn’t mean that you can’t reduce your bills. Likewise, those of you living in a ‘cheap’ region shouldn’t sit back and think you can’t save money on your energy bills. It is important to shop around for the best energy tariffs for you. If you are a bit confused as to what to do next, get in touch with us via Facebook or Twitter. Remember that you can also ask us on the Forum too. If you found this article interesting you can use the social buttons below to share on Facebook and Twitter to help spread the word.
Feature image: Earth Hour (at least they said so…) Vassil Tzvetanov (Flickr). Used under Creative Commons licence.
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GB Energy Supply ceases trading – Guide for customers
GB Energy Supply, one of the newest, and in the past cheapest energy suppliers, has ceased trading. 160,000 customers, have been attracted to the company over the past couple of years because of their market leading cheap energy prices (and I count myself as one of these). DO NOT PANIC! The company and Ofgem have […]Read more