Eneco Gas and Electricity Pricing Trends Jan 2015 to early Aug 2019-1

Energy costsMarkets have continued to experience volatility in the past fortnight with intraday movements of up to 10% of market value. However, the overall movement has been sideways. Upside pressure is being provided by Sterling’s continued devaluation, tensions in the Gulf buffeting oil prices, sparse LNG deliveries, increasing carbon prices and extensive summer gas maintenance increasing UK reliance on expensive European gas imports. On the downside, healthy European gas storage, expectations of higher wind output and lower temperatures decreasing air conditioning demand and decreasing coal markets are likely to counterbalance to some extent. Love or hate the idea of a hard Brexit, the markets hate uncertainty so expect volatility to continue.

Upside:

Gas maintenance – Maintenance in Norwegian and North Sea gas will increase over the next fortnight and continue until the end of August.

LNG deliveries– LNG shipments continue to head towards Europe although at a slower rate, but oversupply is predicted to continue into 2020.

Oil prices – Oil prices have increased due to tensions in the Persian Gulf amplified by Sterling devaluation.

Carbon (CO2) markets – Prices have hit all-time highs and look likely to continue that way, although a sell off may occur if the UK exits the EU without a deal.

Downside:

Gas storage – Storage levels remain healthy for this time of year.

Wind/solar output – Solar and wind generation is expected to increase in August.

Coal markets – Coal prices are expected to decrease as Chinese demand falls.

Could go either way:

Brexit/Sterling – No change here, with little prospect of an agreement in the short-term this continues to be an area of significant risk. If the UK crashes out, Sterling may devalue further amplifying any increases in feeder markets.

Non-energy costsOn the electricity side organisations will see further increases in pass through costs from both government and industry infrastructure providers in the coming months as distribution, Electricity Market Reform (EMR),Capacity Market and Energy Intensive Industries (EII) charges are ramped up.

Climate change levy (CCL) increased significantly from April 1st to offset the loss of CRC to Government revenues. Please see the attached pass through charge information for details. Your CCA related CCL exemption rates will increase at the same time (Gas 78%, Electricity 93%). Please ensure your PP11 forms are updated and sent through.

https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/Customs/1.0/PP11&template=PP11.xdp

Warning: more gas suppliers are passing through backdated Un-identified Gas (UIG) charges for 2017/18. Please contact us if you have any questions or unusual gas bills.

Are you eligible for an EII rebate?

Under current rules, if you qualify at an industry sector level and your business passes the 20% electricity intensity test you may qualify for exemption to CFD and RO charges. Please see the attached Government RO/CFD guidance document and give me a call to discuss this further.

A copy of our detailed market report is available: Eneco Market Information early August 2019

Gas and electricity prices from 2009 to date are available here: Eneco Gas and Electricity Pricing Trends Sept 2009 to early Aug 2019

A copy of our environmental charges and Climate Change Levy rates from 2012 to date: Environmental Pass Through Charges and CCL ppkWh Updated 15.04.19

A copy of RO/CFD guidance document: RO_CFD_Guidance_Revised_July_2018