Eneco Gas and Electricity Pricing Trends Jan 2015 to mid July 2019-1


Energy costsMarkets leapt up significantly in the first week of July due to continued falls in the exchange rate (fuelled by Brexit concerns) magnifying increases in oil and coal prices, supply outages in Norway, low wind and solar output and hikes in carbon markets caused by an increase in gas for power burn. Subsequently, markets have shown signs of a downward correction. The heatwave expected across Europe next week may diminish nuclear output and Norwegian maintenance will be ramped up potentially limiting falls. However, projections of continued oversupply of oil (despite OPEC’s production cuts) and LNG into 2020 will provide a counterbalance.

Upside:

Gas maintenance – Maintenance in Norwegian gas fields will be ramped up over the next fortnight, and continue until the end of August.

LNG deliveries– LNG shipments continue to head towards Europe although at a slower rate, but oversupply is predicted to continue into 2020.

Oil prices – Oil prices have increased due to tensions in the Persian Gulf, but oversupply is predicted to continue into 2020 despite OPEC’s restrictions.

Coal markets – Coal prices have rebounded due to the beginning of the summer maintenance period.

Carbon (CO2) markets – Prices remain buoyant and look likely to continue that way.

Downside:

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

Wind/solar output – Strong solar and wind generation is predicted for the second half of July.

Could go either way:

Brexit/Sterling – No change here, with little prospect of an agreement in the short-term this continues to be an area of significant risk. If the UK crashes out, Sterling may devalue further amplifying any increases in feeder markets.

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?

In August, the Government announced a consultation to extend the existing scheme which will be concluded shortly. 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. We will keep you updated with any confirmed changes to the scheme likely to feed through in the next month.

A copy of our detailed market report is available: Eneco Market Information mid July 2019

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