[MAW]

Currently, wholesale gas and electricity prices have collapsed.

Spot price for electricity is negative.

We are incessantly told that gas is bought forward months in advance.

If companies like EON are not loading up on as much Gas now for a few months time, and are not distributing as much free electricity as possible then in my view they are acting against our interests.

At the very least, the VERY least, in a few months time we should have some the cheapest gas we have ever had.

If not, then we will know for sure we have all been and are lied to.

[retrotecchie]

@MAW

Prices have hardly 'collapsed'. I suspect it will be many months until wholesale gas is back down around the 50-80p a therm mark again. The ultra low prices in mid 2020 were down to global demand plummeting as industry globally was disrupted by the pandemic.

[MAW]

Looks like a collapse to me. Adjusting for inflation as well, its a dramatic drop.

The only other "asset" I can think of that has been so spectacularly manipulated is crypto. That chart just tells you all you need to know.

Yes it may be many months, I fully expect those dramatic falls in the price of gas to be reflected in my bills just as fast as the dramatic rises were. No more, no less.

As I said, if not, its absolute proof we have been lied to. The treasury dept. should right now be loading up with as many gas forward contracts as they can lay their hands on.

If not, well, we know what to think don't we.

[retrotecchie]

@MAW

But as I keep saying....nothing you or I can do about it. You have a choice...pay the man, or arrange your own alternative energy provision without going through the system. If you can find a different supplier who you think is more honest and/or cheaper, then no one is stopping you.

[meldrewreborn]

Originally Posted by MAW

At the very least, the VERY least, in a few months time we should have some the cheapest gas we have ever had.

If not, then we will know for sure we have all been and are lied to.

The fundamental problem with your argument is that gas prices have still to get down to the levels of 2018 - mid 2021, with no assurance that they will ever get to those levels again. Nobody knows where or when or even if the prices will stabilise, nor at what level.

So while you are welcome to your opinions, just don't expect many of us here to share them, as the data doesn't support them in any shape or form.

The latest forecasts are for the EPG for the average user to be £3,000 from April (up 20%), for OFGEM price capped figures to drop from a high in April, down in July, and down again in October, when they might - just might - drop below the EPG level. We can but hope. We might even see the re-emergence of fixed price deals and competition in the market, something currently vanishingly rare.

There is one absolute certainty, you could cut your bills by switching to Direct Debit tariffs and pricing, either with a fixed monthly direct debit, or paying by DD on receipt of bill. The average consumer pays £250 less per annum this way, than paying by non DD methods.

[MAW]

Originally Posted by retrotecchie

@MAW

But as I keep saying....nothing you or I can do about it. You have a choice...pay the man, or arrange your own alternative energy provision without going through the system. If you can find a different supplier who you think is more honest and/or cheaper, then no one is stopping you.

Yeah thats right, its a free market isn't it. LOL. Bit like the fraud where they tell us the railway network is a free market when there is only one set of rails and one set of trains.

[Mailman]

@MAW

Today's spot prices indeed paint a rosy picture for where gas prices are going but after another breezy day in the NE and with the likelihood of unsettled and windy weather to come over the next week I can see spot prices will continue on a downward path if the mild and windy weather continues. Yeeh my bills will come down quickly ......NOT

However, as you rightly point out companies such as Eon Next can and must buy energy for a future date. So the day to day market is really only part of the picture. Have you looked at the complete picture provided by ICE that lists the futures contracts prices starting from March 23 and shows an increasing price to a year's time of 225p/therm because of the way the futures market works. Roll back to nearer to today's date and the price/therm is still rising throughout the remainder of 2023. If anything it might encourage buyers not to hedge at all unless the underlying price starts going upwards again.

Point being if you expect suppliers to hedge their supply obligations don't expect them to pay less than the spot price on the futures market. Then we have the situation where companies don't hedge (or hedge very little) buying cheaper gas/electricity and have fixed tariffs in the expectation of little or moderate future price increases. I've experienced the effects of little or no hedging via Breeze, Yorkshire Energy and Avro. Does this ring any bells?

[MAW]

Not sure big energy suppliers hedge via ICE futures?

Thought they usually buy forward OTC with big wholesale suppliers ?

(a forward is very similar to an exchange traded future, except it is direct between individual counterparties and not published).

Irrespective of that, I would most certainly expect them to use their huge buying power to get better prices than advertised on the traded futures markets.

I havent looked, so I dont know how many contracts are simple CFDs traded by speculators v actual physical delivery contracts entered into by consumer/producers.

225p/therm is still a lot cheaper than last year isn't it?

[retrotecchie]

@MAW

Yes, 225p is indeed cheaper than 300, but it was a lot lower than that the year before!

[Mailman]

Originally Posted by MAW

Not sure big energy suppliers hedge via ICE futures?

Thought they usually buy forward OTC with big wholesale suppliers ?

(a forward is very similar to an exchange traded future, except it is direct between individual counterparties and not published).

Irrespective of that, I would most certainly expect them to use their huge buying power to get better prices than advertised on the traded futures markets.

I havent looked, so I dont know how many contracts are simple CFDs traded by speculators v actual physical delivery contracts entered into by consumer/producers.

225p/therm is still a lot cheaper than last year isn't it?

All ICE does is give an idea (At the moment) of the likely direction of wholesale gas prices for energy suppliers. Perhaps the Ofgem Wholesale Forward Prices better show the actual price that energy suppliers paid (although they only go up to Nov 21st 2022 when they were 299.67p/therm). If spot prices keep tumbling down and down then for sure this will feed into the futures/forwards markets.

As to the specific way the energy suppliers actually pay and trade for gas and electric. I have no expertise or knowledge so cannot really make any comment. 😌