Energy prices in 2015 fell, largely due to the drop in the gas price which has been falling since July 2014 and is now at similar levels to 2008. 2016 has started with several energy companies continuing to reduce prices, and this should be reflected in new contracts for SME businesses in 2016. Whether prices will ever get back to high 2014 levels in the medium term is doubtful, even when a global economic recovery occurs, as the global supply situation has changed significantly through a combination of factors including the development of shale gas in America, and Iran commencing to export again.
At the moment one of the factors keeping prices low is the mild winter and the subsequent high stock levels of gas, which is lowering the cost of short term energy – this would indicate it to be a good time to place a contract.
Things to watch out for in 2016
On 1st April 2016 Climate Change Levy will increase by .005p per kWh to 0.559p per kWh on electric and .002p per kWh to 0.195p per kWh on gas – the lowest annual increase since 2007. This will have a negligible impact to most BID levy businesses.
January 2016 The Competitions and Markets Authority will be issuing their delayed initial findings on the retail energy market, including recommendations on regulating energy brokers.
Users of “Maximum Demand” electricity meters will be being moved to half hourly settled meters under regulation “P272”. The energy companies have to complete this by 1 April 2017.
Did you Know :
Regardless of which supplier you choose all grid electricity in Canterbury is supplied through a single distributor, UK Power Networks, who charge the energy suppliers regulated fees which make up about 28% of the invoices you pay. Canterbury is in distribution Area 19 which is why your unique electricity supply number on your bill will always start with a 19.
Wholesale energy futures are traded in half years – Winter and Summer – normally the further into the future the contract is for, the higher “risk premium” is built into suppliers prices – which is why longer contracts normally have higher costs, even though you are buying more energy. The Wholesale price of energy makes up about 44% of your energy bill.