With the traditional ‘2-week’ British Summer passing, ‘Winter is coming’ (to coin a phrase) and the weather and temperatures are becoming more unpredictable than ever.
The energy markets are highly volatile due to a perfect storm of the colder than seasonal weather, the introduction of Ofgem’s Targeted Charging Review (TCR), a lack of supply to the whole of Europe and political indifferences all driving prices up – the long-term forecast does not indicate this will pass for the foreseeable future with many analysts forecasting further large increases as we move into Autumn and further into 2022. These factors have seen incredible increases to wholesale energy costs which are just a mere percent or 2 from their all-time highs seen in 2005 with no indication they will not breach this imminently. As such many suppliers which offer variable market tracker products to both business and domestic customers – such as Bulb and Octopus Energy, are having to rapidly increase costs month on month in line with the increasing markets, placing many consumers under immense financial strain.
The UK remains starved of LNG shipping imports (Liquid Natural Gas) due to the boom in the Asian market drawing higher prices for shippers and as such there are no LNG vessels bound for Britain for the immediate future. Adding to this pressure, renewable energy output is still low leaving the UK to heavily rely on the very scarce and fast dissipating gas storage supply. There is an indication that Russia could finally send additional gas volumes to Europe over the Winter period, which has the potential to see gas prices fall and would keep Europe better supplied with gas; however, they have not supplied any gas to the European marketplace since the beginning of 2021 so this is more in hope than certainty, which would mean the UKs current energy drought is set to continue.
With TCR now also implemented into new electricity contacts, both business and domestic clients coming to market now will have this reflected in their offers and bills. The increases to the daily standing charge element have seen many medium and large business energy consumers such as in the laundry, care home and hospitality sectors, facing increases in standing charge costs of more than 1000%! From the 1st of April 2022 it gets worse as the second stage of TCR will be introduced, adding further considerable increases in cost to the KVA (availability) element of half-hourly metering (again these meters are commonly found in commercial laundries and the hospitality sector). Of course, it is hoped that by this point in 2022 that the energy markets will have stabilized and returned to their seasonal norms, not adding further financial pressure to businesses, but unfortunately the prognosis is not looking good.
With many companies struggling, there are options if you are concerned about paying your business energy bills; your first step is to contact either your current supplier or energy broker for advice regarding your payments, including possible payment breaks or reductions, more time to pay or possible access to hardship funds, but this is very dependent on your current suppliers.
For help and advice and to find out how Fox Energy can support and assist your business with the upcoming changes under TCR, get in touch by calling 01233 884510 or email [email protected].