01 January 0001
Bira and Utility Options talk about what’s really happening behind the scenes of the energy crisis
The story so far
Following the lifting of Covid restrictions, there was a large demand for energy in the UK and on the 9th of September 2021 there was a fire at one of the main interconnects between France and UK. With power capacity now reduced for the country, low gas stock levels, and extremely poor wind generation for months, prices soared in a matter of days. This was the actual start of the current energy crisis. Russia’s invasion of Ukraine followed in February 2022, which saw prices increase further.
Prices settled to pre-war levels between April and June but reductions in gas exports to Europe by Russia in July caused prices to rise again, higher than when the war initially broke out. Issues with Russia’s Nord Stream 1 pipeline continue to unsettle the market.
The largest single component of a typical energy invoice is commodity costs (also known as wholesale energy prices) and these have hit record levels, along with retail prices. Non-commodity costs such as transportation and distribution charges have also risen, along with Renewable Obligation (RO) and FiTs (Feed in tariff). Many of the 30+ suppliers who went bust in 2021 & 2022, failed to pay their Renewable Obligations and the shortfall had to be picked up by the remaining suppliers.
What happens next
It is most unlikely that these high energy prices will come back down to pre-covid levels. So, what can be done?
Things have started to change for the better as the EU has announced that they will offer help to Europe and this will indirectly benefit the UK. The panic buying of gas to fill stores is slowing (less demand). The UK’s new PM will announce plans for aid shortly. This news has created a downturn in prices already and depending on the final plans should see rates decreasing.
Suppliers are quoting increases upwards of 400% to 900% over pre-Covid prices. Utility Options say this would be unsustainable for up to 10% of UK businesses.
Businesses with contracts due for renewal over the next few months will be most affected.
What action can you take if your contract is ending?
- Lower energy consumption wherever possible
- Decide if the current variable rates are actually better than a fixed contract
- Stay in touch with our partner for the most up-to-date advice
Utility Options is a Bira-approved service partner with account managers who have great experience and a “hands-on” approach to energy procurement. They will always offer the best advice to Bira members. For example, if moving onto a supplier’s variable rate is the best advice, Utility Options will say so. Commercially, this is not in their best interest but they would much prefer members’ businesses survive and come back later rather than to leave them in a precarious position over the next year or so.
Once members have joined Utility Options they receive support throughout the contract and UO will remind them of their renewal, whilst automatically offering the best available prices at the time. This ultimately saves a lot of time and effort for small businesses, whom too often simply renew with their existing provider for the sake of convenience. Often a costly mistake.
You could still make savings
Although the energy market is in turmoil, further considerable savings can still be made with telecoms and water.
Visit our Bira/Utility Options page now, or contact Utility Options to seek advice on 0800 195 0123 or email bira@utility-options.co.uk
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