Energy costs: The reductions seen in August have rebounded as the market has surged over the last week due to nuclear plant issues in France, a drone attack at an oil facility in Saudi Arabia, the earlier than expected closure announcement for Groningen’s gas field and Russia reducing exports through Europe. Furthermore, the maintenance has started in the Norwegian along with unexpected issues at the Gulfaks field causing tighter imports and low wind generation.
Upside:
Maintenance –Maintenance related outages from Norwegian and North Sea gas remain high. There is ongoing technical issues at Cameron LNG export field in the US which could limit LNG exports to Europe.
Brexit/Sterling – Until an agreement is reached over Brexit, this will remain an area of significant risk. If the UK crashes out, Sterling may devalue further amplifying any increases in fuel markets.
Downside:
Gas storage – Storage levels remain healthy for this time of year across Europe.
Coal markets – Prices have been volatile over the last week but they are slowly settling down again.
Oil prices – Although the drone attack in Saudi Arabia; a surge in oil outputs is expected from non-OPEC producers from the US, Norway and Brazil.
Carbon (CO2) markets – Prices have been volatile due to energy trends but they are slowly settling down again.
LNG deliveries– LNG shipments are expected to continue until the end of the month.
Could go either way:
Wind output – Wind generation is expected to fall.
French Nuclear – At least 5 reactors are affected by the current weld component issue but it is yet to be confirmed if any reactors will need to shut down for maintenance which could cause supply fears over Winter.
Temperatures – Forecasters are predicting Winter may be colder than normal.
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.
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?
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 mid September 2019
Gas and electricity prices from 2009 to date are available here: Eneco Gas and Electricity Pricing Trends Sept 2009 to mid Sept 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
