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

Energy costsEnergy markets slumped by at least 10% in August, prompted by weaker oil, coal and carbon markets and concerns of an economic slowdown. In September, the resumption of LNG deliveries to the UK, largely absent in August and expectations of temperatures higher than seasonal norm into October, provide a much needed buffer against the continued uncertainty surrounding Brexit plans. However, until these plans are clarified, the direction of the energy markets will remain unpredictable.

Upside:

Gas maintenance – Maintenance related outages from Norwegian and North Sea gas remain high.

Brexit/Sterling – Sterling strengthened slightly in August. However, until agreement is reached over Brexit, this will remain an area of significant risk. If the UK crashes out, Sterling may devalue further amplifying any increases in fuel markets.

Downside:

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

Coal markets – Coal markets have slumped in line with other energy markets due to oversupply and concerns of an economic decline.

Oil prices – Oil prices have been dampened by increased concerns of a global economic downturn.

Carbon (CO2) markets – Prices have slumped over recent weeks following the trends set by the wider energy complex.

LNG deliveries– LNG shipments are expected to resume to the UK in September.

Could go either way:

Wind output –  Wind generation is expected to fall as we enter the second half of September.

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 September 2019

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