Energy costs: Short term gas and electric prices have plummeted by hitting 13 year lows across periods due to weakened demand, falling oil and carbon prices and windier and warmer weather forecasts. However, all forward periods after 2020 have been increasingly slightly due to a surge in oil prices in the last couple of days following from Trump’s comments expressing production cutbacks. If lockdowns are extended in Europe, prices will continue to be pressured on the short term and long term contracts. However, with current lockdown across countries, power demand has reduced considerably mainly between 10-17% although weather patterns may affect this moving forward.
Upside:
Outages – The markets continue to be affected by a variety of outages across the continent.
LNG– Prices are increasing in the Far East and more countries going into lockdown will reduce deliveries to Europe and the UK.
Closures – Two large coal-fired stations have officially closed in the UK this week which leaves only four operating in the UK.
Oil pricing – Oil prices have rebounded following the price war between Saudi Arabia and Russia and production cutback.
Downside:
Gas Storage – This remains significantly high across Europe at 54% fullness; compared to 43% fullness this time last year.
Temperatures – Temperatures are likely to increase over the coming fortnight.
Wind Generation – Windier conditions expected to increase in the country.
Demand – Demand across the continent has dropped due to the lockdowns.
Coal Markets – Coal prices have continued to slump in recent weeks due to the economic slowdown caused by Coronavirus.
Could go either way:
Brexit/Sterling – The UK left the EU on 31st January. The status quo continues until December 31st by which time a trade deal must be negotiated. However, all parties are more focused on solving the Coronavirus outbreak.
Non-energy costs:
On 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) again change on April 1st. Please see the attached pass through charge information for details. Your CCA related CCL exemption rates will change at the same time (Gas to 81%, Electricity to 92%). Please ensure your PP11 forms are updated and sent through.
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.
Is your organisation covered by the new Streamlined Energy and Carbon Reporting (SECR) scheme?
Designed to replace in part the Carbon Reduction Commitment (CRC) which ends this year and to follow on from the energy savings recommendations generated by ESOS compliance. Note, SECR will cover a wider scope of organisations than CRC and ESOS do. Full details are attached below.
SECR will require all large enterprises to disclose within their annual financial filing obligations to Companies House, their greenhouse gas emissions, energy usage (from gas, electricity and transportation as a minimum), energy efficiency actions and progress against at least one intensity ratio.
The scheme came into effect on April 1st, 2019 and will be required to be included in the first set of accounts published for financial years starting after this date.
The scheme covers publicly quoted companies (extending their current disclosure requirements) and UK incorporated companies or LLPs with two or more of the following.
- More than 250 employees
- A turnover in excess of £36 million
- A balance sheet in excess of £18 million.
UK subsidiaries, who meet the eligibility criteria, but are covered by a parent group’s report (unless the parent group is registered outside the UK) and companies using less than 40,000 kWh of energy during the reporting year do not have to provide disclosure. Note the reporting year should be aligned to your financial year.
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 update and give Abby a call on the main number to discuss this further.
A copy of our detailed market report is available: Eneco Energy Market Information Early April 2020
Gas and electricity prices from 2009 to date are available here: Eneco Gas and Electricity Pricing Trends Sept 2009 to early April 2020
A copy of our environmental charges and Climate Change Levy rates from 2012 to date: Environmental Pass Through Charges and CCL ppkWh Updated 25.03.20 (1)
A copy of RO/CFD guidance document: RO_CFD_Guidance_Revised_July_2018
SECR: SECR EA Guidelines
