//August Price Risk Report

August Price Risk Report

Summary of last months report:

Overview:
Despite in month peaks and troughs, gas and electricity prices for winter 2018 renewals held relatively stable during July.
Whilst, the heatwave should have caused drops in the gas price, the increased demand by power stations to fuel the consumption of cooling systems, air con and fans equalled this out.
The power price was assisted with strong wind and solar production during the month but with increased demand in the month the dependence on traditional production methods increased.
In direct contrast, the cost of oil fell by nearly 6% in month. This was caused by increases in exports in Saudi Arabia and the Libyan government regaining control of four export terminals.

August Energy Price Outlook

Ginger Price Risk header August

What to watch out for:
With European gas storage at a lower level than is normal for this time of year and with only a few months before winter, the market is subject to high levels of volatility should there be any unplanned outages in gas pipeline or electricity generation.
With c36% of the UK energy being imported, there is an ever increasing likelihood of a “no deal” Brexit. Should this occur, the UK would no longer be part of Europe’s internal energy market that allows energy to freely flow across the EU. Should no mechanism be in place this would force market movement.

Recommendations:
Whilst there is potential for a reduction in cost during August, the risk factors currently outweigh the reward, in our opinion. Our recommendation is that end users should secure energy contracts within the next month for any start date in 2018 as the volatility in the market may expose them to higher increases.

August News Stories

CRC and CCL
With the Carbon Reduction Commitment (CRC) scheme being abolished in 2019 there are severe increases in Climate Change Levy (CCL) being introduced in April 2019. Whilst CRC only applied to large users CCL applies to the vast majority of users regardless of consumption levels. The increases can be seen below:
(Should a business use 100,000 kWhs of electricity and 200,000 kWhs of gas this would equate to an increase of £536 per annum in CCL alone. Certain business types and uses are exempt from CCL, please contact us to find out more.)

August table

Penalty for Npower
Large energy supplier, N Power, now face a £2.4m fine as they fail to meet advanced meter installation deadlines. It has also been noted that standard meters have been installed on business customer sites, which should have been advanced meters.

ESOS Phase 2
If your business (at group level) employs more than 250 staff or has an annual turnover greater than £38.9m, with a balance sheet in excess of £33.5m, you must partake in The Energy Savings Opportunity Scheme (ESOS).
ESOS requires the organisation to measure its total energy consumption, including buildings and vehicular, conduct energy audits to identify energy saving opportunities and report compliance to the Environment Agency.
Non-compliances can incur a variety of penalties from the EA. These can be upto a £50,000 fixed penalty plus £500 per day.
Compliance with the second phase of the scheme must be completed and reported to the EA by 5th December 2019.
Ginger Energy does not complete or manage the ESOS obligations for clients, but we do provide large amounts of the required data and can recommend trusted partners to manage the ESOS process.

Centrica Energy Supply Profits
Centrica, has released it’s energy supply profits (from their UK business energy supply division). From the reports, we can see that the I&C customers losses are continuing. In other news, Centrica also revealed that CFO, Jeff Bell, will be stepping down from his position in October.

By | 2018-08-06T13:47:05+00:00 August 6th, 2018|Uncategorized|0 Comments