It was good to see some positive news hitting the headlines last month with the government finally announcing an energy support package. The Energy Bill Relief Scheme puts a maximum price on the unit price cost of electricity and gas charged to businesses.
Some of the detail is still unclear but the latest information we do know is this:
The discount started on the 1st of October and will run for 6 months.
Businesses on existing fixed price contracts agreed on or after 1st April 2022 will be eligible for support. Electricity will be capped at £211 per MWh and £75 per MWh for gas for the duration of the scheme.
Customers entering new fixed price contracts after 1st October 2022 will receive support on the same basis.
Variable or deemed out-of-contract rates will come under an improved maximum discount of £345 per MWh for electricity and £91 per MWh for gas which is higher than contract rates.
Businesses on flexible contracts will be covered by the price cap of £211 per MWh for electricity and £75 per MWh for gas but the maximum discount would apply if the market was to increase above £616 per MWh for electricity and £180 per MWh for gas. Customers would have to pay the difference between the market rate and £616/£180 per MWh as the maximum discount is subject to market movement.
Businesses eligible for support do not need to do anything as suppliers will automatically apply any subsidised rates to bills from November backdated to 1st October 2022 if applicable.
Our team have been making sure all customers are receiving the maximum benefit from the scheme over the winter and are on hand if anyone needs further advice or support.
In the wider market, the Russian war rages on with suspected sabotage causing leaks on the Nord Stream gas networks into Europe. This has increased concerns over whether Europe can keep their gas storage topped up sufficiently for winter.
Electricity and Gas Prices
Overall prices have come down since the beginning of September, which is great news.
Unfortunately, winter prices have been creeping up again because of the potential gas supply issues.
Forward periods have been trading favourably at almost half the winter prices.
Flexible Purchasing Prices
Our flexible purchasing customers are buying on EPEX, a European auction for electricity, and Heron for gas. Because they auction every hour of each day, customers get the “market average” price as opposed to a fixed-term contract over eg a 12-month period. Being on these products means that you will pay the average of each day for the month and once the market falls the price will follow.
The EPEX price is currently 26.94 p/kWh (commodity). With the non-commodity added to this, the overall rate will be 37 p/kWh+.
The price for gas closed last week at 8.25 p/kWh for September’s delivery. The overall contract price will be 9.3 p/kWh+.
Carbon has seen further losses throughout September trading from €81 to €65 (20%) due to fears of a recession.
Oil prices have been on the decline throughout the month because of the fear of a recession.
OPEC+ are planning on a substantial cut to production by over 1 million barrels per day which would see prices increase as we move into the winter months.
For help and advice with your business energy contact our team.
0114 327 2645