Eneco Gas and Electricity Pricing Trends Jan 2015 to early March 2020-1

Energy costs: Since mid-February, longer term prices have continued to bounce around a 13 year low but have not broken through due to the continued spread of Coronavirus slowing down economic activity and resulting slumps on oil and coal markets due to oversupply. While shorter term prices have steadily risen caused by lower wind output and temperatures and a variety of power and gas production outages. Looking forward, OPEC are looking increasingly likely to introduce further production cuts with Russian co-operation and national banks are looking for ways to stimulate economic activity to alleviate the effects of Coronavirus. Additional upward pressure on prices will result from extended nuclear outages expected in the UK and across Europe. However, LNG deliveries continue to arrive in the UK to replenish diminishing gas stocks and there is the prospect of milder temperatures and increasing wind as we approach mid-March.

Upside: 

Outages  – The markets continue to be affected by a variety of outages.

Oil pricing – Although oil prices have slumped due to oversupply, OPEC look set to introduce production cuts imminently.

Downside:

Gas Storage – This remains significantly high across Europe at 61% fullness; compared to 42% fullness this time last year.

LNG Deliveries – As prices remain low in the Far East deliveries continue to head towards Europe and the UK.

Temperatures – Temperatures are likely to increase over the coming fortnight.

Wind output –  Wind generation is predicted to increase.

Coal Markets – Coal prices have slumped in recent weeks due to Coronavirus related economic slowdown.

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. The rhetoric continues on both sides.

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) 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.

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 March 2020

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

A copy of our environmental charges and Climate Change Levy rates from 2012 to date: Environmental Pass Through Charges and CCL ppkWh Updated 05.11.19

A copy of RO/CFD guidance document: RO_CFD_Guidance_Revised_July_2018

SECR: SECR EA Guidelines