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During the early months of 2008 the UK has witnessed a remarkable increase in the cost of heating and energy, with energy companies raising the cost of heating by double digit percentages.

In this article we will explain the reasons for this rapid increase in the cost of heating and its implication on your domestic day to day appliances (e.g. boilers) and your daily life and bank account.

On 18th January 2008, British Gas, the UK’s largest provider of power, has announced that around 13 million customers will be affected when it raises the cost of gas by 15 per cent. This increase to cost of heating followed similar heating cost increases by EDF Energy and nPower. EDF’s prices have risen by 7.8 per cent while its gas prices went up by 12.9 per cent. nPower’s prices went up 12.7 per cent and 17.2 per cent respectively.

The pressure these price increases put on typical UK household is obvious and for many among the poor, this poses a dilemma between running the boiler to heat the home or spend the money on food and clothing. Although many plumbers and heating engineers have been busy installing energy efficient boilers (such as condensing boilers or combi boilers), the level of penetration of such boilers is still low, according to the plumbers interviewed. As such, many households cannot benefit from lower heating bills due to the more efficient boilers.

All energy suppliers are facing increasing cost of gas and electricity as the wholesale prices have surged singe February 2007. According to EDF the price for gas has soared 117 per cent and electricity by 90 per cent over the period. The energy companies also highlight the increasing cost of meeting their commitment to the government to reduce their carbon emissions.

The increase in heating price is not equally distributed across the UK, and is linked to the cost of the distribution of the gas and the electricity. According to EDF, the cost of transporting electricity to its customers adds an additional 4 per year and another 32 for the gas customers. With such variations of cost increases, some nPower customers in the East Midlands are facing a rise of almost 24 per cent in gas prices and 27 per cent for electricity.

Although wholesale prices of gas have dropped from the highs of early 2006, they began to creep up again from February 2007. There are several reasons for this slow upward trajectory.

The production levels from North Sea oil fields have dropped fasted than anticipated. Accordingly, a high volume of gas has to be imported into the UK. As the price of gas is linked to the price of crude oil, the gas prices have swung up with oil reaching milestone levels of $100 per barrel. Rising coal prices have added pressure on coal-powered electricity producing plants and pushing cost of electricity further up.

Gas import into the UK has been difficult, especially since piping gas through Europe is complicated. The continent’s pipeline network is owned and run by various monopolies some of which are nationalised. Even the European Commission has highlighted that some of Europe’s largest energy firms were holding back gas supplies. The European Commission has promised to crackdown on such “anti-competitive behaviour”.

For domestic customers the only real option is to try and cut back on heating and electricity consumption. There is some room for manoeuvre by switching to another provider. Some of the UK energy providers are offering a long term contract that guarantees prices for a set period. This too can reduce the volatility and uncertainty.

Finally, any Corgi certified plumber or heating engineer can help by replacing your old boiler with a high efficiency boiler (such as condensing boiler or combination boiler). When installed by a skilled plumber, the high efficiency boiler can reduce the heating bills of a typical household in the UK by around 35%.

This page has been written with contributions from heating engineers from Essex and experienced plumbers from Balham. Several of the company's plumbing and heating engineers from Oxfordshire have worked on similar issues as well as some of our Gas Safe engineers from Fulham and our Ealing plumbers.