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

Energy costs: 2019 ended on a low and this continued into the beginning of 2020 once a formal agreement was made between Russia-Ukraine’s gas transit. The market graphs attached only cover up until the day before the US airstrikes in Iraq on 3rd January. However, prices were volatile for the day and increased but have since come back down today. We expect the market will continue being volatile over the next couple of weeks but hopefully milder temperatures and wind generation will reduce the hike.

Upside: 

French Nuclear Issues –  EDF have been forced to repair electrical components after a significant event and launch precautionary checks are other reactors. This has been extended to end of January/February due to maintenance complexities.

Geopolitical Tensions – Oil prices have been increasing prior to the attack on Iran’s general due to the ongoing US & China deal. Any further escalation relating to the US & Iran tensions will likely drive oil prices higher.

Downside:

Gas storage – This remains significantly high at 88% fullness; compared to 68% fullness this time last year.

Temperatures – Predictions are that milder temperatures will be extended in the continent and there are no major supply issues.

Wind output –  Good wind levels predicted over the next couple of weeks.

Could go either way:

Brexit/Sterling – Until an agreement is reached over Brexit, this will remain an area of significant risk. Boris Johnson plans to remove the possibility of further Brexit extension regardless of the position of trade talks with the EU fuelling fears of a ‘Hard Brexit’. Sterling has strengthened since the UK’s General Election last week.

Carbon (CO2) markets – Prices remain low, but have shown some signs of recovery in recent days.

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 give me a call to discuss this further.

A copy of our detailed market report is available: Eneco Market Information early Jan 2020

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