State of the Energy Market – 29th March 2022

Daily Updates

Wholesale gas and power prices initially opened with further aggressive gains yesterday (30th March 2022), backed by the concern over what would happen when we reached the 31st March deadline set by President Putin for all gas payments by ‘unfriendly countries’ to be made in roubles instead of euros or dollars. Prices continued climbing through the early afternoon but following an announcement from the Kremlin clarifying that future payments for gas in roubles could be a gradual change as opposed to an immediate change on 31st March that had been previously indicated, this news helped prices to settle immediately.

Gas

Wholesale gas prices for April 22 initially fell on Monday (28th March) but increased during the day to close at 245.77 pence per therm. This was an increase of 3.8% against Friday’s close

Electricity

Wholesale power prices for April 22 increased on Monday closing at £220.40per MWh, up 4.8% against Friday’s close.

In other energy related news:

  • Germany, Italy and Poland are among the countries that have refused to follow President Putin’s demand for future gas payments to Russia to be made in Roubles. With a senior Russian official stating, ‘we cannot supply Europe with free gas’, it seems matters will come to a head on 31st March, which is the deadline set by Putin for the matter to be resolved. Unless a compromise can be reached, there will have to be an embarrassing stand down by one side or otherwise, it’s possible that Russia will turn off the gas taps to Europe, which would cause a huge supply problem. This is likely to be influencing the upward movements we’ve seen in the last couple of days.
  • Ofgem have published the results of a review they have been carrying out for over 2 years for Micro Business Customers (MBCs). They will be offering better protection for these smaller customers with the aim to bring them almost into line with the domestic sector. The measures include a cooling off period of 14 days after agreeing a contract with an energy supplier, a faster switching process enabling sites to transfer within 2 working days instead of the current 5 days for power and 15 days for gas and more rights for customers to protect them against aggressive sales pitches from energy brokers.  Any energy broker wanting to deal with MBCs will need to sign up to a Code of Practice, which will be run by the Citizen’s Advice Bureau.  All changes will apply from January next year and so suppliers and energy brokers have until then to get their systems updated accordingly.

Finally, the EU securities watchdog have released their findings on the review carried out on Europe’s Emissions Trading Scheme (ETS). Prices in this carbon market have increased dramatically during 2021, 150% increases in some cases and peaking just under 100 Euros per tonne. This extreme volatility drew the attention of the European watchdog. The findings indicated that there are no major abnormalities, but tighter controls are needed to improve transparency and monitoring. As a result of Brexit, the UK dropped out of the ETS and we have developed our own equivalent, the UK Emissions Trading Scheme (ETS).

Get in touch with us to see how your costs will be impacted – We can help you find solutions to mitigate against this.