There are three main reasons why energy prices fluctuate across the country, varying by region;
- How much energy suppliers are able to sell to customers in their region
- How much energy suppliers buy from the national grid in their region
- How much the local energy distributors for the region charge suppliers for that energy
Electricity is supplied to households through Distribution Network Operators (DNOs) and energy suppliers. There are 14 licensed geographically defined regions of the UK with DNOs serving each region. Each network sets their own prices.
Gas is supplied by energy companies via a local distribution network. There are eight Gas Distribution Networks (GDNs) operating over separate regions across the UK.
Both electricity and gas network operators are regulated by Ofgem, so there are some regulations in place to ensure customers are not charged too much.
Each region's local distributor will have their own charges, these are passed onto customers through energy bills. Each region is different, which is partly down to the amount of energy they are able to generate and the price of generating that energy. Some regions can access cheaper energy if they have a more abundant supply of fossil fuels or renewable energy. Other regions might have plenty of customers but not enough cheap energy generating solutions, so the supply could be more expensive by the time it is delivered to homes.
To find out more about understanding your energy see here.