Energy costs: Long term energy prices have slipped slightly at the beginning of September but there has been an increase in short term energy prices due to a surge in emission prices, concerns over the French Nuclear supply and spikes in coal, carbon and oil. Further hurricanes in the Gulf of Mexico forcing up to 30% of LNG (reducing the number of LNG deliveries) and oil facilities to shut, further unplanned outages, unseasonably warm and windless weather have all bolstered prices up. The next couple of weeks are expected to be volatile and start increasing again towards the end of the month following concerns of power shortages in the continent, cold weather with low wind output, reduced LNG deliveries from the US and potential of further lockdowns in the country.

Upside: 

Maintenance/outages – Several new unplanned shutdowns pushing prices up. French Nuclear concerns following power shortages in Winter if weather is colder than normal which would cause further outages.

Demand  – UK’s power has continued being high as gas-fired power has accounted for 60% of daily power production.

Oil markets – Oil markets have been rallying up following oil facilities to shut from hurricanes, industrial action in Colombia and drop in oil inventories but predictions that Global demand will remain low this year following resurgence of Covid cases.

LNG – Facilities shut in US with Asian LNG prices rallying up.

Weather – Temperatures potentially remaining below seasonal norm and increasing likelihood (70% – 75%) of La Nina weather happening this Winter which would cause flooding in key coal-producing countries.

Downside:

Gas storage – European gas storage has been replenished which is now at 94% fullness in line with last year.

Could Go Either Way:

Sterling – Brexit negotiations have returned to the news. Problems in this area will feed through to exchange rates and impact energy prices.

Wind output – Expected to be picking up over the first half of the week but is predicted to ease thereafter.

Lockdown – Potential of another National lockdown could help reduce demand in the country but will impact the economy further.

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 the Targeted Charging Review (TCR) is added to the other distribution, transmission, Electricity Market Reform (EMR), Capacity Market, Energy Intensive Industries (EII) charges already in place.

Climate change levy (CCL) again changed on April 1st. Your CCA related CCL exemption rates changed 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

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 September 2020

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

A copy of our environmental charges and Climate Change Levy rates from 2012 to date: Environmental Pass Through Charges and CCL ppkWh Updated 21.07.20

A copy of RO/CFD guidance document: RO_CFD_Guidance_Revised_July_2018

SECR: SECR EA Guidelines

TCR Charges (Targeted Charging Review): TCR Charges (Targeted Charging Review)