Key Headlines

Wholesale:

The majority of seasonal power and gas contracts decreased, following downward movements in near-term contracts. Near-term contracts were driven lower by increased gas flows from Norway and falling demand amid higher temperatures.

Commodity markets were mixed with Brent crude oil falling 2.3% to $63.6/bl, while carbon emissions gained 3.3% to €25.8/t.

Looking ahead:

Cooler temperatures and a drop in LNG supplies are expected in the coming weeks; however, supplies from elsewhere including Norway are projected to remain strong and as such near-term prices are likely to remain relatively stable.

Global commodity prices are also forecast to remain steady over the coming weeks, with a number of conflicting factors expected to limit price movements.

Third party charges and industry updates:

On 25 June, Ofgem announced that under its Market-Wide Half Hourly Settlement reform microbusinesses will no longer be able to opt-out from suppliers having access to half-hourly electricity data. The Consumer Impact Report for 2018-19 was issued by Ofgem on 28 June, with the regulator expecting regulatory decisions to result in £2,555mn of direct benefits to consumers. The most beneficial decision was the implementation of the default tariff cap.

Wholesale Power and Gas

Power:

Seasonal power contracts moved lower with power for delivery in winter 2019 falling 2.6% to £54.0/MWh. Summer 2020 power slipped 0.9% to £43.4/MWh.

Power contracts followed their gas counterparts lower, although a rise in the cost of carbon emission allowances prevented prices from falling as significantly as gas prices.

Gas: 

Most seasonal gas contracts decreased with the winter 2019 and summer 2020 contracts experiencing the biggest losses. Winter 2019 gas dropped 4.8% to 48.4p/th and summer 2020 gas lost 2.5% to 43.4p/th.

Increased gas flows from Norway and lower demand as a result of warmer temperatures helped push near-term gas contracts lower, with these movements also feeding through to seasonal contracts. Oil prices also decreased providing further downward pressure on seasonal gas contracts.

Third Party Charges and Industry Updates

Ofgem confirms removal of opt-out option for micro-business half hourly electricity data access

Ofgem announced on 25 June that under its Market-Wide Half Hourly Settlement reform, suppliers will be allowed access to Half-Hourly (HH) domestic customer data and be required to process it for settlement purposes unless the customer opts out. Currently, access to HH data is undertaken on an opt-in basis for domestic consumers and an opt-out basis for micro-businesses; under Ofgem’s decision, in addition to the change to accessing domestic customer HH data, micro-businesses will no longer have the option to opt-out. The current regulations would continue for existing customers up until they change their electricity contract.

Ofgem decisions in 2018-19 to save consumers £2,555mn

The Consumer Impact Report for 2018-19 was issued by Ofgem on 28 June. The regulator set out a number of regulatory decisions made during the previous regulatory year, which it expects to result in £2,555mn of estimated direct benefits to consumers. Ofgem said that it spent £97mn delivering the benefits. The most beneficial decision was the implementation of the default tariff cap, which is estimated to bring £2,395mn of benefits over 2019 and 2020. Other beneficial decisions included the introduction of new guaranteed standards for switching, and the disallowance of £136mn of costs under the DCC’s price control.

Breakdown of Third Party Charges on the electricity and gas bill for 2019-20