Summary of last months report:
Throughout January we have seen reductions in gas and electricity costs across the board with prices achieving a 6 month low on some contract periods. Below is an example of this, is the wholesale gas costs for contracts starting summer 2019.
- With French nuclear bringing generators back online after a 9-month outage and temperatures being above forecasted levels the stress on the network to deliver supplies to match heating needs was lessened.
- Oil however is a different story. After seeing large-scale reductions over the last few months oil prices raised c12% during January. This was primarily caused by US sanctions on Venezuela, a decline in US stockpiles and OPEC/Russia continuing to cut supply.
February Energy Price Outlook:
Areas of concern:
The main areas of concern are still weather and the increasing problematic BREXIT situation.
Despite recent drops in the market the wholesale costs remain high, year on year. This could lead to further drops, especially in the summer months, but with many risks factors remaining live, the market is subject to increased volatility should any of these factors come into play.
Due to the above we would suggest all customers with contracts renewing Q1 or Q2 of 2019 contact us to commence their renewals asap. Starting the process does not mean that you have to secure now if you do decide not to but you should review the option. The risk adverse should look to agree in the short term whilst the market is till in backwardation. Those with greater appetite for risk may wish to monitor the market over the coming 6-8 weeks.
February News Stories:
The Nemo Link:
The Nemo Link inter-connector that connects the UK and Belgium’s electricity systems via sub-sea cables, allowing two countries to trade electricity has gone live, click here to read more.
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 they would currently pay £5830 in CCL and from April this will increase to £8470. If your business is currently involved in the processing or manufacturing of ceramics, metal or glass you may me eligible to pay zero CCL. Call us now to discuss.
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.