A substantial decrease in domestic gas usage last month has saved the government £260 million on its Energy Price Guarantee, industry experts have estimated.
Analysts at BFY Group said the reduction in usage was likely to be primarily driven by a reaction to the high prices being faced by consumers.
BFY said the cold snap in December meant average temperatures over the month were 3.35°C, just over 1°C below the seasonal norm. Based on this temperature and consumer behaviour in previous years, BFY estimated that residential gas demand would have been 69.7TWh. Yet actual demand was 6.1TWh lower at 63.6TWh.
In addition to the significant savings made by the government, the consultancy estimates the reduction saved consumers £600 million in total.
Gemma Berwick, a manager at BFY, told Utility Week: “It is anticipated that this trend in reduced consumption continues in Q1-23, although weather forecasts are indicating that above seasonal normal temperatures are likely, so consumer driven reductions may be more subdued and benefits from weather driven demand reduction will be a key benefit to the consumer, and government’s, pockets as they were in October and November.”
Following the publication of BFY’s estimates, one industry expert said the government must reinvest savings made through energy rationing, lower wholesale prices and milder weather, as well as lower than anticipated delivery rates of pre-payment vouchers.
Speaking to Utility Week Peter Smith, director of policy and advocacy at charity National Energy Action, said: “Instead of bagging the difference at the same time as looking to reduce the targeted support from April, these savings should be being used to ensure the most vulnerable households receive deeper support and address the difference people pay due to how they pay their bills.
“Without re-investing these savings, we know the consequences of the looming cliff edge in April will be devastating to some households; particularly for low-income working age households that aren’t on means tested benefits or for people with medical conditions which could be badly exacerbated by the cold.”