With the next phase of restrictions being lifted, businesses in the hospitality sector and beyond are keen to open their doors again…
However, one factor all businesses post Covid-19 need to consider is the effect the pandemic may have on their energy status. Due to the number of businesses in these sectors facing a perilous future, energy suppliers have become increasingly cautious of taking on risk. Many are asking for hefty security deposits or applying costly risk premiums to prices to cover what they see as additional risk – the energy suppliers do not want to be left holding onto debt should a supplied company fail! Some suppliers are taking an even more cautious approach, withdrawing prices altogether and not taking on new clients for the foreseeable future. Others are now beginning to enforce a clause in many supply contracts known as a ‘take or pay’ clause which requires a contracted company to use a set amount of energy during the contracted term. This is typically 80% – 120% of their estimated annual contracted usage or face penalty charges. While some energy suppliers have waived their right to apply this clause, many have not, and some businesses will return to work and discover an expensive hidden surprise on their invoice!
As we enter May, colder weather and limited renewable power generation continue to drive both the gas and electric markets upwards, seeing nearly a 15-20% increase in prices over just a few days! Coupled with increases in the oil markets and further cooler weather forecast as we move into May, the markets are expected to reach unusual highs for this time of year. The UK currently has minimal levels of gas stored to accommodate this abnormality and supply levels will be tested even further as the colder period continues.
Unexpected outages to the Norwegian ‘Troll’ gas and oil field in the North Sea, further serve to increase a turbulent marketplace along with a very quiet LNG schedule with only a handful of vessels due to arrive this month.
For help and advice and to find out how Fox Energy can support and assist your business, get in touch by calling 01233 884510 or email [email protected].