Utilities Market Knowhow!
In the last month we have seen considerable increases to both the Gas and Electricity Year Ahead Wholesale prices, reaching the levels last seen mid-2015. There were a number of factors contributing to these increases, but the vote to leave the European Union was an influence both in the lead up to the vote and continues to be.
Oil prices did hit a nine month high of $52 a barrel, but they remain relatively stable, in the region of $50.
Previous issues which impacted on the Oil price were the disruption to supplies from Canada due to the fires and damage to the infrastructure in Nigeria, following attacks. Both of these situations have now improved. The vote to exit the EU may also cause a slowdown in our economy and Europe’s lessening demand for Oil.
Coal prices saw large increases with lower production levels. It is expected these are not likely to continue to rise much further, as demand reduces with a move away from Coal, due to environmental policy and a cheaper Gas alternative. As prices rise, production levels should follow.
Gas prices moved higher with increased import costs due to the lower value of the £, which through increased generation costs, also impacted on Electricity. The EU Referendum vote has reinforced the sentiment being built into prices, with concerns over future investment.
What does this mean for me…
The Year Ahead Wholesale price graphs show increases for Gas and Electricity. For contracts which need to be closed or for customers who still wish to close at 2015 levels, there is good value in doing so now.
Additional environmental levies and costs for measures to ensure generation is available, have meant that Electricity prices are on the rise, beyond the Wholesale %.
Although the short term supply outlook appears healthy, there is a great deal of uncertainty as to which direction prices will go, so for the more risk averse, all 2016 and 2017 contracts should be considered.
Should you require further information, contact your lpm Estates Manager now.
Life Property Management work closely with utilities broker Indigo Swan, to bring the best energy rates to their clients. Indigo Swan’s Market Knowhow is a regular, comprehensive report on the position of the Utilities Market.
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