Monitoring trends in suppliers’ expected costs

Publication date
3rd August 2016
Closing date
14th September 2016
Policy areas
Status

Our market monitoring and consumer research forms a crucial part of our role as the regulator of the gas and electricity markets in Great Britain. One area that we prioritise in our monitoring work is tracking the different costs that make up consumers’ energy bills. Energy prices often move significantly from one year to the next, and although prices have fallen over the past two years, rising bills over the longer term have caused concern for consumers. It is important that stakeholders can understand what is driving these trends.

To improve transparency around what is driving how much consumers pay for their energy, we publish regular information on trends in suppliers’ costs. Historically, this has comprised both analysis of suppliers’ historic costs as reported in their financial statements, and estimates of trends in expected costs over the coming year published as part of our Supply Market Indicator (SMI).

In May 2015 we temporarily suspended our monthly SMI publication to carry out a review of our approach. We sought views on how we should replace the SMI – and what information we should publish to help increase transparency around what’s behind movements in retail energy prices.

In January 2017, after consideration of the responses to the consultation, we have decided on a new Supplier Cost Index.