All seasonal power and gas contracts decreased over the last two weeks. Power and gas contracts were influenced heavily by falling commodity prices.
Both Brent crude oil and carbon emission allowances fell by more than 2% during the fortnight. The resumption of Russian oil exports and record high US oil production drove oil prices lower, whilst carbon prices fell on the back of weaker demand. These movements fed through to both GB gas and power prices.
Gas and power prices are expected to remain close to their current levels over the next two weeks. Any movement in prices is likely to be downwards with demand forecast to decrease amid warmer temperatures and global commodity markets such as oil and coal also likely to remain close to, if not below, current levels.
Third party charges and industry updates:
Ofgem launched its strategic review of the microbusiness retail market on 3 May. Ofgem said that it had concerns that the market is not working as well as it should, highlighting contract complexity and a lack of transparency as barriers to customer engagement. Separately, a survey by PwC and Energy UK found that 71% of businesses have an energy strategy, compared to 65% in 2017. The survey found that the biggest concern to small businesses was the price of energy.
Wholesale Power and Gas
Winter 19 power slipped 2.7% to £58.4/MWh, while the summer 20 contract lost 4.1% to £49.1/MWh. Power prices followed their gas counterparts lower, whilst a drop in the price of carbon emission allowances provided additional downward pressure. Carbon prices lost 2.1% to €26.0/t, amid falling demand for emission allowances following the 30 April deadline for emitters to surrender allowances to cover their emissions.
Winter 19 gas dropped 4.1% to 54.9p/th. Gas for delivery in summer 2020 fell 5.4% to 45.0p/th. Seasonal gas contracts were pushed lower by falling oil prices. Brent crude oil declined 2.5% to $71.0/bl, with record high US oil production and Russian exports restarting following an unplanned halt of deliveries due to contaminated supplies.
Third Party Charges and Industry Updates
Review of microbusiness retail market launched
Ofgem launched its strategic review of the microbusiness retail market on 3 May. Ofgem said that it had concerns that the market is not working as well as it should for microbusinesses, with a wide variety of contracts and lack of accessible price information hampering customer engagement. A vision for a positive microbusiness customer journey was set out and Ofgem is seeking inputs on the model and the issues that currently face customers at each stage of the journey. Following the analysis of responses and other evidence, Ofgem will set out its updated position and next steps in winter.
71% of businesses have an energy strategy in 2019, reveals PwC and Energy UK
A B2B survey by PwC and Energy UK has found that 71% of businesses now have an energy strategy, up from 65% in 2017. Surveying 500 businesses of varying sizes, PwC found that the biggest concern to small businesses was the price of energy followed by environmental and sustainability impacts. Of the small businesses which had an official energy strategy, 42% said that investments in smart energy were driven by reducing the cost of energy, while the most frequently planned investments were energy consumption monitoring, smart lighting and EV charging.
CCC urges government to achieve net zero greenhouse gas emissions by 2050
The Committee on Climate Change (CCC) urged the UK to adopt a 2050 target to end greenhouse gas emissions. The CCC has found that policies concerning low carbon electricity, efficient buildings and low-carbon heating are already in place to help achieve these targets. However, it said that policies would have to “ramp up significantly” for net zero to be achieved.
Breakdown of Third Party Charges 2019-20
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