Summary of last months report:
With periods of high wind and solar generation throughout May we have seen reductions in gas and electricity costs across the board.
The severe spikes seen in April across all contract terms have dissipated in May with all markets dropping. As can be seen on the graph below, winter 2019 is now c3% less than the same time last year.
A combined effect of warmer weather quelling demand, Brent Crude oil prices declining and LNG tanker arrivals remaining strong, with 16 arriving last month, was the system remained over supplied which in turn reduced prices. This should continue or at least not reverse during June as maintenance at the Norwegian Troll Field is scheduled to end.
Electricity has followed the path created by gas, due to our generation mix still being reliant on gas fired generation, with the average drop of 2.3% during May. Although winter 2019 dropped during May, this is still c5% higher than the same period last year. Renewable generation is forecast to remain unseasonably high however should colder weather, which is expected for June, materialise demand may increase.
Brent Crude prices decreased for the first time this year, falling from $72/bl to $65/bl. The main factor forcing the market is the continued “trade talks” between China and the US in which both sides have hinted at their willingness to use natural resources a weapon in any trade war. In addition, the US has announced tariffs on Mexican goods which has boosted the US oil market putting further pressure on Brent prices. One mitigating factor could be if OPEC decide to extend their production cuts, this has been suggested by numerous commentators.
June Energy Price Outlook
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 risk 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 in 2019, or Q1 of 2020, contact us to commence their renewals ASAP. Starting the process does not mean that you have to secure now if you decide not to but you should review the options that are open.
For customers seeking longer term flexibility we can offer a range of blend and extend options or flexible purchasing.
June News Stories
Our very own Richard James completed the Wolf Run to raise money for Acorns raising £387. If you would like to support Rich and Acorns you can donate here.
CRC AND CCL:
With the Carbon Reduction Commitment (CRC) scheme being abolished in 2019 severe increases in Climate Change Levy (CCL) have been 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:
|Taxable commodity||Rate from 1 April 2016 p/kWh||Rate from 1 April 2017 p/kWh||Rate from 1 April 2018 p/kWh||Rate from 1 April 2019 p/kWh||2018 – 2019 Increase p/kwh||2018 – 2019 Increase %|
BRITAIN’S COAL FREE TWO WEEK RECORD
‘Britain has not used coal to generate electricity for two weeks – the longest period since the 1880s. The body which manages the way electricity is generated said coal was last used at 15:12 on 17 May.’ The UK government plans to phase out the remaining coal-fired plants in the UK by 2025 in an attempt to reduce carbon emissions. Click here to read more on this news story.