This months energy report below highlights a considerable spike in gas tariffs due to the devastation unfolding in Ukraine. For hospitality businesses who are coming to the end of their energy contract in the next few months, we recommend taking stock as soon as possible. More information below.
Energy bills are driven by both the price of energy on the wholesale market and Third-Party Costs (TPCs). TPCs include non-energy costs set by the government, network (the National Grid), policy and system costs and electricity transmission/distribution costs.
The biggest single cost on a bill is the price of the energy. The wholesale cost of the energy makes up approximately 40% of an electricity bill and 70% of a gas bill, with the remaining being TPCs, which have been continuously rising in recent years and can be volatile.
This pricing report focuses on the energy element of a bill to help you keep track and understand the wholesale energy market and the factors affecting the price of your contracts.
Gas markets have unsurprisingly spiked this week amid the Ukraine Crisis. Rates have returned to the incredibly high levels seen last December, although they have not quite broken new record levels yet.
Wholesale gas prices were at 171p/therm on Tuesday morning, before Russia’s military invasion and this morning have continued to soar and are currently 66% higher at 284p/therm. Power prices have also followed a similar trend, up 55.6% since Tuesday and wholesale power prices are currently at 236.79£/MWh.
Markets are extremely volatile, and prices continue to increase daily as the tensions increase and the possibility of sanctions causing concerns over Russian gas supplies to Europe being disrupted. This has caused many energy suppliers to pull their pricing and cease taking on new customer contracts until the market settles.
If you are currently out of contract or coming up to the end of your contract in the next few months, we recommend looking to secure a contract with one of our suppliers who are still offering pricing at the moment. This is to ensure you do not end up on ‘out of contract’ rates which energy suppliers can raise, as business energy consumers are not protected by the price cap, only households are.
If you want to discuss this in more detail or better understand your options, please don’t hesitate to contact our team.
Energy report kindly provided by www.fidelity-energy.co.uk
Download full report here (pdf)