Account Number: 4001 4353
3rd September 2008
Dear Mr. & Mrs. Vernon
There’s been a lot of speculation in the media lately about electricity price rises so it probably won’t come as a big surprise to hear that it’s happening now. I’d like to try and explain the background to you if I may, I think it’s important context to understand.
In the last few months we’ve witnessed some of the most dramatic increases in energy prices the world has ever seen. The price of oil has doubled, taking gas with it and the price of coal has almost trebled.
There are a number of factors driving these price increases. In the main soaring global energy demand particularly from China and India is putting huge pressure on the whole supply chain, and this has been exacerbated by speculators - banks and other middle men who gamble on which way prices will move.
The price of these three primary energy sources on the world markets has a direct bearing on electricity prices, as this is how the world still gets most of its electricity. The impact of this on UK electricity prices is inevitable since the UK is no longer self sufficient in oil or gas. We compete in world markets to buy these energy sources.
Wholesale electricity prices in the UK increased by 50% in the first half of this year and have doubled in the last twelve months – we are at levels never before seen.
Electricity prices to business have increased recently to compensate for these market movements. The first domestic price rise was announced last month by EDF and other suppliers have followed suit. The latest increase has now been notified by NPower – the Big Six supplier for your area.
Our policy, indeed our promise, is to match exactly the prices of the Big Six in each area, and so we need to raise our own prices. But this is not just a matter of policy and we won’t be adding to our profits from this. It’s a matter of necessity that we raise prices to match our increased costs.
For the last few months we have been absorbing significantly higher costs. Following NPower’s price increase now will allow us to restore our position. Quite honestly, we could not have gone for many more weeks without raising prices, even if NPower had not.
I know that it can seem counter intuitive to some of our customers, that we should be affected by rising prices for fossil fuels. But until we generate the majority of our own power from green sources we will remain affected by the ‘market’ and the same is true of the UK as a whole.
We are making great progress towards that goal as a company. Our current proportion of self generated green electricity is about 30% (against a UK average of 5%) and it’s rising at almost 10% per year.
To maintain this momentum we spend each year more per customer building new sources of green energy than all the UK’s electricity companies put together, by a long way.
We can only do this because we have customers like you, people who seek to bring about real change with their electricity bills.
I hope that I might have shed a little light on the global background and made this price rise a little easier to understand, if not to bear. Nobody likes price rises, I understand that. It’s something that won’t go away though.
The world is running out of energy and as it does so the price will continue to rise. Motive enough we hope for the government to enable a wholesale change as to how the UK gets its energy – we’re not waiting for that however. We’ve built over 12% of England’s wind energy already and will continue to accelerate our spending on new green sources.
We’ve set out our new prices below, alongside the old ones for easy reference.
Just to be clear, these prices are exactly matched to NPower’s for conventional power, and we have to match their price to be able to continue the work that we do. I do hope you can understand that and will continue to be with Ecotricity.
If you have any questions please do give us a call on 0845 555 7 100 or drop us a line at
pricechange@ecotricity.co.uk .
Best regards,
Dale Vince OBE
Managing Director
New Energy – Price change from 3rd September 2008 (all prices including VAT)
Old Price
New Price
Standing Charge (pence per day)
0.00
0.00
First 728 day units per year (pence per unit)
20.9
24.19
Above day 728 units per year (pence per unit)
14.72
17.05
Night units (pence per unit)
4.78
5.53
Ecotricity Group Limited; Company No. 3521776
Registered Office: Axiom House, Station Road, Stroud, Gloucester, GL5 3AP
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