Energy costs: Both short and long term energy markets shot up over the past fortnight for multiple reasons. Hurricanes in the Gulf of Mexico shut down oil and gas production for a week, cooler temperatures in the UK boosted demand, wind output lows put pressure on diminished gas supplies for power production, gas outages in Norway and the North Sea further restricted supplies, carbon and coal markets roared upwards and renewed French nuclear output concerns weighed in. We may see further increases in the next fortnight with temperatures likely to remain below seasonal norms and concerns building that any economic recovery from the Covid pandemic may be restricted by increases in taxation to pay for Government support packages and the continued failure to secure a Brexit deal. Hopes of increased LNG deliveries into the UK may also be challenged by increasing prices on Asian markets.

Upside: 

Maintenance/outages – Unplanned maintenance is likely to impact supplies further as we approach Winter.

Demand  – UK demand has been higher over recent weeks due to lower temperatures. This is likely to continue for the moment.

Oil markets – Oil markets have increased to around $45/barrel and will likely increase further as OPEC’s production cuts meet increasing demand.

Wind output – This is likely to remain low over the next fortnight with spells of moderate wind.

LNG – Higher market prices in Asia are diverting LNG cargoes from the UK and Europe.

Weather – temperatures are likely to remain below seasonal norms increasing gas demand for power production.

Downside:

Gas storage – European gas storage remains high but recent withdrawals have been made due to increasing demand.

Could Go Either Way:

Sterling – Brexit negotiations have returned to the news over the last fortnight. Problems in this area will feed through to exchange rates and impact energy prices.

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 the Targeted Charging Review (TCR) is added to the other distribution, transmission, Electricity Market Reform (EMR), Capacity Market, Energy Intensive Industries (EII) charges already in place.

Climate change levy (CCL) again changed on April 1st. Your CCA related CCL exemption rates changed at the same time (Gas to 81%, Electricity to 92%). 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

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 Market Information early Sept 2020

Gas and electricity prices from 2009 to date are available here: Eneco Gas and Electricity Pricing Trends Sept 2009 to early Sept 2020

A copy of our environmental charges and Climate Change Levy rates from 2012 to date: Environmental Pass Through Charges and CCL ppkWh Updated 21.07.20

A copy of RO/CFD guidance document: RO_CFD_Guidance_Revised_July_2018

SECR: SECR EA Guidelines

TCR Charges (Targeted Charging Review): TCR Charges (Targeted Charging Review)