Market price experts at Icis said its Icis Power Index (IPI) fell 11 per cent from the end of 2013 to the end of 2014, with January seeing the lowest value in four years at £44.627/MWh.
Electricity prices take direction from gas wholesale markets which over the past year have trended lower despite concern over Russian gas supply through neighboring Ukraine as tensions between the two countries escalated.
A glut of available supply and relatively mild winter temperatures this year and last mean bearish fundamentals are expected to continue, while dramatic losses on the Brent crude market will also weigh on gas pricing levels.
“Electricity prices have lost a lot of value in 2014, and many of the same factors that depressed values last year, in particular the oversupply of gas and more renewable energy, are still in place for 2015,” said Icis’ head of power Zoe Double.
“This means that the part of the household electricity bill made up of energy costs is falling, and wholesale energy prices could fall further in the future,” Double added.
The lower wholesale price is expected to reduce costs for utilities by the end of this quarter, according to analysts. But political pressure to reflect the lower wholesale prices in consumer bills is already mounting.
Last week Chancellor George Osborne called on utilities to ensure that the market losses are passed through to consumers, while Labour opposition leader Ed Miliband said over the weekend that his party is set to bring a vote to Parliament seeking a fast-track law to enable Ofgem to force the cuts.
Late last week Utility Week contacted all of the big six energy suppliers, and none could confirm plans to comply with the calls for lower prices.