These are what you pay for the energy bought to supply your home or business. They make up about a third of your energy bill. Suppliers buy energy from electricity generators and gas producers on the wholesale market.
Prices on the wholesale market can go up and down very quickly. They depend on what’s happening globally with fuels like gas, oil, coal and increasingly renewable fuels.
Demand also affects price. Wholesale prices are generally lower when demand is low and fuel availability is high. They rise when the opposite is the case.
Suppliers often buy energy in advance for their tariffs, some by as much as two to three years. They usually buy energy for fixed-term tariffs closer to when they launch them.
These differences mean wholesale price changes don’t affect all tariffs in the same way at the same time.