We all know that our electricity bills are, and have been, going up for a while. We seem to be getting less and less for our money for exactly the same product, but why is this? Well, the general reasoning is due to the rising wholesale prices of electricity and upgrading the National Grid. Also, as the government demands more and more green energy, there is more investment needed in renewable generation. These factors and more are pushing up the price of the kWh without signs of stopping.
While this is happening, however, the majority of UK citizens are not seeing any increase in wages, meaning purchasing power per capita is dropping quite drastically. According to the ‘Office of National Statistics’ the number of adults working within 2% of the national minimum wage, around £13,824 (40 hours a week at 7.20p per hour), was 1,322,083 in 2015, which will have surely increased within the last year. This means that the average electricity bill can represent anything between 2-8% of the earnings of this portion of the UK population. Just how much, though, have prices risen over the years?
2006-2016 electricity prices
In order to compare the price of electricity across time, we need to use the Consumer Price Index (CPI). This measures the average prices in a chosen geography for everyday items such as petrol, groceries, electricity and clothing. Each figure represents a relative figure to the base unit which we would consider ‘average’. For this example we have chosen 2010 to be our base figure (100). We have also added a column to display the increase or decrease that occurs year on year.
Here we can see that there has been quite a profound increase in price, resulting in a 62.6% increase between 2006-2016, the largest being a 15.5% increase between 2007-2008. Taking this information and basing the percentage increases on one of the current average tariffs on the market today, we can estimate the yearly average prices. This is illustrated through the graph below:
This graph uses a current British Gas tariff as its base and the average usage of 3,100 kWh. As such, we can see that we are currently paying an average of almost £200 more per year for our electricity than we were in 2006.
- How much have gas prices changed?
- Find out here