The Cornwall Index of Domestic Energy Supply Costs is updated monthly, tracking the costs that electricity and gas suppliers face. It is baselined to a value of 1,000 points in January 2012 and is calculated using Ofgem’s typical domestic consumption values (TDCVs) for medium users.
In December 2017 the electricity index grew by 27 points to 1,517, a strong increase after the modest 3 point rise seen in November. It brings the electricity index to the second highest level since our records began, only falling behind December 2016 when the index peaked at 1,690 points. This increase was caused by rising wholesale costs, which went up by 42 points in December. The upward pressure on wholesale costs, principally in the first half of the month, was caused by outages across Europe as well as lower generation output from renewable generation in the UK.
The overall increase was counteracted by lower network costs, most notably through reduced Balancing Use of System (BSUoS) charges.
The gas index continued to show substantial increases in December, rising 72 points to 1,100; the highest index value recorded since February 2014. As with electricity, the increase was driven almost exclusively by rising wholesale costs. Day ahead prices reached a four year high of 60.5p/therm on 12 December as a result of the explosion at Austria’s Baumgarten gas distribution hub, restricting supplies across Europe. This upward pressure on prices was further compounded by uncertainty over repair timescales for the Forties gas pipeline in the North Sea, and bullish demand in Europe and China at the start of the month, driven by colder temperatures and the gasification programme respectively.