December 18, 2017

Oligopoly in Action… Again!

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Happy New Year to all our followers. We’ve been hibernating over the festive season in Scotland but are now back. I’ll begin posting a selection of interesting articles again every couple of weeks, starting next week.

A couple of months back I wrote about the market for domestic electricity and gas in the UK. You can find my post, which gives a little background on how the market is set up and regulated, here.

Around ten days ago EDF Energy announced that they were to cut their Gas prices for most customers by 5% because of downward movements in the wholesale price of gas. There is a good BBC video which came out on the day of the announcement below which includes a good discussion of the wholesale energy market.


 

If we skip ahead to yesterday afternoon we see that each of the “Big Six” has lowered its prices by a similar amount. You can see an excellent table of price increases and reductions over the past couple of years here. Rather than explain what’s been happening I thought I would ask a couple of questions.

What’s been happening in the wholesale market and what effect has this had on energy firms?

Why would all six companies reduce their prices within a week of each other?

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