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

Energy costs: While short term gas and electricity prices have been buffeted up and down by the crash in oil prices and stock markets and changing weather conditions, longer term prices from Summer 2020 onwards have been largely stable bouncing around the 2008 lows reached in early February. This can be explained by expectations that as Europe closes down in response to the spread of Coronavirus, consumption in Asia and the Far East will start to increase. Home working is also expected to offset some of the loss in industrial and commercial consumption, although data from Italy and France suggests a 7-17% reduction in gas and electricity consumption is likely as the UK goes into lockdown. However, although the international travel bans and oil oversupply are likely to keep oil prices low for the coming months, this may not feed through to corresponding falls on gas and electricity markets. Additionally, increasing demand for LNG in Asia restricting deliveries to Europe and expectations of low wind output into late March may also prevent any significant price falls.

Upside: 

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

LNG– Prices are increasing in the Far East, which will reduce deliveries to Europe and the UK.

Wind output –  Wind generation is predicted to fall during the second half of March.

Downside:

Gas Storage – This remains significantly high across Europe at 57% fullness; compared to 41% fullness this time last year.

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

Coal Markets – Coal prices have continued to slump in recent weeks due to the economic slowdown caused by Coronavirus.

Oil pricing – Although oil prices have continued to slump due to oversupply this has not fed through to corresponding falls in gas and electricity prices.

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. However, all parties are more focused on solving the Coronavirus outbreak.

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. Revised non-energy cost predictions will be available shortly.

Climate change levy (CCL) again change on April 1st. Please see the attached pass through charge information for details. Your CCA related CCL exemption rates will change 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

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 mid March 2020

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