BUSINESS HELPDESK HELP DESK
IS THE ‘ENERGY CRISIS’ OVER?
Marc Wheatley, head of operations at Full Power Utilities, providers of BME Energy Plus explains
IT HAS BEEN two years since the ‘energy crisis’ first started and one of the main questions being asked by energy consumers is whether we are now over the worst of it.
The last 24 months have seen unprecedented volatility and fear in the global wholesale energy markets, not to mention extreme, record high, end-user prices. Many commercial consumers have faced unmanageable increases in their energy costs, leading to difficult decisions, forced operational changes and a fierce scrutiny of how the energy markets, and suppliers, operate. So, where are we now? Wholesale gas and electricity prices fell sharply and consistently throughout 2023. From their highs in 2022, day- ahead markets have fallen from >£400/MWh for electricity and >350p/therm for gas, settling at the end of summer at around £80/MWh and 90p/therm. Whilst this puts consumers in a much better position compared to 12 months ago, end-user prices are still 30-50% higher than before the start of the crisis.
12
In addition, high levels of fear remain in the markets owing to continued, and new, geo-political tensions. This fear continues to drive volatility and price swings of up to 15-20% day-to-day are still commonplace.
It would be optimistic to say that the energy crisis is over, but we can say, with reserved confidence, that we are through the worst of it. Consequently, many consumers have taken the decision to enter the markets in recent weeks and secure their energy provisions for extended future periods.
Market intervention by the UK Government provided some support for those that secured longer term supply contracts last year when the markets were high. Although the support is minimal, relative to the Government’s previous scheme, the Energy Bill Discount Scheme (EBDS) continues to run until March 31 2024.
In addition, Ofgem has called on energy suppliers to ease their customer’s cash flow situation by offering ‘Blend & Extend’ (BE) contract options. BE contracts
“It would be optimistic to say that the energy crisis is over, but we can say, with reserved confidence, that we are through the worst of it.”
allow consumers on high energy rates to secure a new rate, based on current market conditions, and blend it with their existing rate to reduce what they pay for a kWh going forward, with the trade-off being that their existing contract is extended by a pre-determined period. If, as a consumer, you feel you could/ should be benefiting from a BE contract option, speak with your energy supplier or speak to your consultant about your options (if you have one).
A final point. Despite the softening of the wholesale energy markets, many consumers will have noticed recent increases in the ‘non- commodity’ elements of their electricity bills - most notably the standing charges (SC). Following Ofgem’s ‘Targeted Charging Review’, energy suppliers have, throughout 2023, significantly increased their SCs as a method of ‘passing through’ transportation and distribution charges, levied on the suppliers by National Grid. These increases should not immediately impact those that are currently locked into fixed contracts but will be apparent when the time comes to re-enter the market and secure your next set of supply contracts. BMJ
• The BMF Energy Plus service is helping to minimise the cost of energy for all BMF members. If you would like tailored advice, visit www.
fullpowerutilities.com/bmf or contact Sam Gottlieb-Hunt at
samgh@fullpowerutilities.com or on 020 8952 0125
www.buildersmerchantsjournal.net November 2023
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44
