If wholesale prices were to rise, npower would be paying more for the energy it supplies to customers. We try to protect our customers from sudden jumps in price – but if the increase was sustained for some time we would have to look at passing on at least some of that to our customers – meaning higher bills.
With regard to your question about fixed margins, we have historically offered a tracker tariff, but the recent highs in wholesale prices would have meant that customers on this tariff would be paying much, much more for their energy – and this would not be competitive with other tariffs and other suppliers. Through our current tariffs, we take a longer term view of the market and offer variable prices which means that we have been able to protect our customers when prices peak. View graph A to see how our prices have compared to wholesale prices over time.
Finally, in answer to your question about the “day ahead market” - there are a number of markets in which all suppliers buy energy for their customers, this helps them spread the risk. The day ahead market is generally used if suppliers want to top up supplies, say during an unexpected cold snap, or if they have surplus to sell during an unexpected warm period. The day ahead market is very volatile and isn't always a true reflection of the current state of the market.
