Ms Aoife MacEvilly:

We would not have much insight into the individual hedging strategies of suppliers because that is confidential commercial information. That is the basis on which they compete with each other. Those who are hedging typically adopt a laddered strategy over time. The electricity or gas they are selling to a customer at this point might have been bought in combinations of three months ago, six months ago, nine months ago and 12 months ago in different percentages. The benefit of hedging to customers is that it reduces volatility. In the past their customers may feel they have been exposed to a lot of volatility because the retail prices increased by so much.

However, this contrasts with what we saw in wholesale markets where prices were literally doubling overnight at one point. A price of 50 pence per therm was a typical gas price prior to the crisis and we were seeing prices spike to 500 pence or 800 pence, meaning £8 per therm which is many multiples. Customers would not have been exposed to those extremes. They would have been paying a price that would have been hedged during those periods. As we now hopefully come through to a period of downward pressure on wholesale prices, the same applies where suppliers will generally have hedged the gas or electricity they are selling. Therefore, it takes more time for it to unwind. On the question of when, we would not necessarily be able to predict. It also depends on the longevity of the downward pricing cycle that we have seen.