‘SeeMore’ Energy Markets: February Review

Craig Watson • 3 March 2023

'SeeMore' Energy Markets: February Review

This February we saw wholesale prices continue to fall. The day ahead market was relatively stable with the price dropping slightly over the course of the last 4 weeks. It started the month at £148/MWh and closed at £127.10MWh representing at 14% decrease in price and returning to levels similar to August 2021. February 6th saw the highest price of £172.50MWh with February 17th seeing the lowest price of £120MWh. This continues the 2023 trend of price steadily decreasing. A meter that consumes 10,000KwH per month would be seeing commodity costs of £1370.50 compared to £3400.30 it would have been paying based on the day ahead price on December 1st.  For those who were out of contract in December, staying on the day ahead rates and waiting for prices to fall will likely prove to have been a superior strategy to taking the rates available then.


After a winter that saw reduced levels of gas consumption across Europe, the UK government have made plans to reduce energy costs for specific industries and announce the latest round of Energy schemes.


OFGEM announced that the energy price cap will change from £4279 to £3289 for the April-June quarter. With the level of support provided by the government set to be reduced from April 1st - this could lead to a 20% increase in the bills of the average household. From April 2023 - April 2024 the Energy Price Guarantee is expected to save the average household around £500, whereas a typical household was predicted to save £900 from the price guarantee that was in place from October 2022 - March 2023.

 

This announcement suggests that OFGEM see the declining price in the wholesale market as something that will be sustained even if wholesale price movements aren’t immediately reflected in the bills most households will receive.  


It is likely energy costs will remain at the forefront of people’s minds for the foreseeable future as it was revealed by The Centre for Sustainable Energy that standing charges have risen by more than 80% in the last year. These price rises are mostly felt when a customer moves from the previous fixed rate contract to a new deal and could come as some surprise to people whose contracts are due to expire in the coming months. Although with the trend of commodity prices starting to decrease, this could go some way to offset the increased price in bills that people can expect to see.


The UK has also felt the impact of higher energy prices in the supply of groceries. Items which previously may have been taken for granted as staples are now facing shortages. Frost in Morocco and Spain lowered tomato production this winter, and - with UK energy prices high - it hasn’t been cost-effective to make up for these supply shortfalls by heating greenhouses. Horticulture was not included in the Energy and Trade Intensive Industries scheme which provides support to specific industries. Although the UK government is trying to offer support elsewhere.


Last week the government announced that it is looking to provide industry-specific support to help energy-intensive industries remain internationally competitive. The chemical and steel industries will be among the industries supported, with the proposals expected to help over 300 UK businesses. 


Outlook

During the coming month the EU will meet to discuss reforming the energy markets. The aim will be to shield European consumers from the type of price fluctuations that were witnessed last year, with European electricity prices being disproportionately impacted by the price of gas. Currently, it appears that there is disagreement amongst EU nations about the best way to approach any such reform, with interventions in free-markets often leading to inadvertent costs being passed on to customers. As well as there being a lack of agreement on the extent to which renewables can be relied upon, and whether Nuclear power should be used as a key part of any energy strategy.  The finalised proposal will be made on March 14th, after that the final reforms will be negotiated. Although any impact we see from this is unlikely to come into force before 2024.


Fears remain that the Russia-Ukraine conflict could further impact energy prices across Europe. While Europe has been looking elsewhere for it’s energy needs – increasing imports from the US and Kazakhstan, while also seeing Norway begin to increase it’s output – there is still some reliance on Russian exports (10% of Europe’s gas still comes from Russia).

 

However, the head of RWE – Germany’s largest utility – has moved to assuage the remaining concerns. He stated that he doesn’t believe we will see gas prices as high as 2022’s peak again. After a mild winter, and with European gas storage levels considerably higher than this time last year, a lot of the tension surrounding the gas market seems to be dissipating. With French nuclear energy returning, European storage levels at 65% (compared to 29% last year), and Germany completing construction of it’s floating LNG terminals, the outlook is significantly more positive than it was for most of 2022.

November 2025 Review

1 December 2025
By Adam Novakovic Whilst November’s budget may have disappointed businesses hoping for governmental assistance in the battle against high energy prices, the wholesale market offered some hope. With the mandated need for EU nations to replenish their reserves now in the rear-view mirror, buying pressure dissipated, and there were many positive stories that helped send prices downwards. The first half of the month saw small rises and drops that largely cancelled each other out, but from November 18 th through to the 28 th , wholesale gas prices fell approximately 12% and reached their lowest levels since July’24. There is normally a slight delay before the wholesale price drops are passed on to the end user, but for those with contract expiry dates in the next 6 months, the coming weeks may present opportunities to obtain quotes at rates more favourable than at any other point in 2025. One of the main reasons for optimism regarding future gas supplies is the peace talks being held between Russia and Ukraine. Any formal deal will almost certainly include a lifting of sanctions on Russian gas sales and provide a significant supply boost to the global market. However, there may still be obstacles to overcome before any peace plan is finalised with Ukraine and Russia both unwilling to concede territory.

How the 2025 Budget Neglects the Concerns of Struggling UK Businesses

26 November 2025
By Adam Novakovic With many British businesses struggling to navigate the challenges that soaring energy costs have had on their ability to compete internationally, there was a sense of optimism that the government would introduce measures designed to alleviate the pressure that many companies have been burdened with. As we close out 2025, Energy costs are typically within the top 3 overheads for any business operating from commercial property & rising costs are fast becoming the most significant risk to sustainability, which has far wider impacts to the UK economy. Unfortunately, no such measures were forthcoming and the announcement fell flat for those that need it most. Hopes of expanding the NCC or EII discounts to further sectors, or reducing VAT levels on gas and electricity, turned to disappointment, as only minor changes were announced. One such change was the government’s decision to abolish the Energy Company Obligation (ECO) and to fund a substantial portion of Renewables Obligation costs through general taxation. Although these measures are aimed at easing pressures on domestic consumers, they also remove some of the cost drivers within the wider energy system. With fewer policy-driven levies feeding into wholesale and supplier operating costs, businesses may experience a modest dampening effect on future price rises, although this is unlikely to translate into immediate or substantial reductions in commercial tariffs. The Budget did reinforce the government’s commitment to green investment through its updated Green Financing Framework, which will fund green expenditures that tackle climate change, rebuild natural ecosystems and support jobs in green sectors. While this is unlikely to have any short-term impact on energy costs, one small positive -- when compared to previous green schemes -- is that this programme will be funded by the issuance of gilts and bonds, rather than passing the cost on to suppliers who invariably pass the cost on to the end users.  Despite the need for assistance with rising energy costs, small and medium-sized enterprises (SMEs), many of which remain exposed to fixed-term contracts negotiated during the recent price spikes, are not going to see any immediate relief, and the accountability seems to remain solely at the door of the business owners to find their own ways to minimise costs.

The Ever-Increasing Standing Charge

23 November 2025
The ever-increasing standing charge By Adam Novakovic While finding ways to decrease consumption can help lower your electricity and gas bills, many of the savings accrued through reduced consumption can be seemingly wiped out by constantly increasing standing charges -- charges that end-users have no control over. As standing charges continue to rise, we take a look at the reasons behind this and whether this trend is set to continue. What are standing charges? A standing charge is the fixed daily fee you pay for your utilities before you’ve used a single unit of gas or electricity. The intention behind the standing charge is that it covers aspects of the energy network that require funds regardless of usage levels, such as: National Grid and local network costs Supplier operating costs and smart metering Some industry and government policy schemes A recent government consultation found that around half of the typical electricity standing charge is made up of network costs alone, with a further quarter linked to operating and industry costs.

October 2025 Review

3 November 2025
October Review By Adam Novakovic In the month of Halloween, October energy price movements were free of jump-scares. Whilst prices moved up slightly at the start of the month, they marginally decreased throughout the remainder of October. Ending the month slightly below the levels seen at the end of September. The expectation this month was that European gas reserves would be the key story impacting energy prices. The European Network for Transmission System Operators for Gas (ENTSOG) released their report on the Winter supply outlook. This confirmed that Europe is well prepared for the coming winter, with 83 % gas reserves recorded as of the 1 st of October, and infrastructure resilient enough to meet demand without Russian pipeline gas. Their projections had Europe ending the winter season with over 30% storage even in the most severe scenarios. There is also the expectation that any unforeseen supply disruptions can be mitigated through increased LNG imports -- supporting the EU’s goal of phasing out Russian gas while emphasising continually reducing demand. During the first week of October Russia launched a wave of drone attacks against Ukraine -- the largest since the war began. These strikes have damaged Ukrainian gas production and left storage at 42% of capacity. This has forced Ukraine to look at importing large quantities of LNG from Europe this winter. With the deal that brought Russian gas to Europe now expired, Europe faces added demand pressure. This comes despite Europe significantly reducing Russian gas imports and increasing LNG imports from other nations. With there currently being a large quantity of LNG available for importation, and with EU gas reserves being in a healthy position, it seems as though further conflict may not have a large impact on energy prices. This could change however if Europe were to experience a particularly cold winter.

The British Industry Supercharger

30 October 2025
With government-imposed charges making up an increasing percentage of business energy bills, it is becoming difficult for many UK industries to remain competitive in international markets. This led to the introduction of the British Industry Supercharger (BIS). A scheme for energy-intensive businesses that aims to counteract many of the government-imposed environmental levies and the rising transmission charges. In this article, we cover how it works and what your business needs to know to benefit from it. What is the British Industry Supercharger? Launched on the 1st April 2024, the British Industry Supercharger is a strategic package of relief measures aimed at energy‐intensive industries (EIIs) such as steel, metals, chemicals, cement, glass and paper. The aim is to reduce electricity non‐commodity costs so UK foundational industries can compete with businesses in nations with lower energy costs. The BIS is comprised of 3 sections: 1. Relief from Renewable Levies This provides businesses with exemptions from paying Renewables Obligation (RO), Feed-in Tariff (FiT), and Contracts for Difference (CfD). These charges were added to invoices in order to fund green-power generation. Under the Supercharger, eligible EIIs can receive up to 100% exemption from these charges. 2. Network Charging Cost Compensation This offers discounts on electricity network charges - including Transmission Network Use of System (TNUoS) and Distribution Use of System (DUoS) fees. These fees cover the cost of maintaining the national grid and distribution networks, but can represent a large proportion of industrial energy bills. The BIS introduces a Network Charging Compensation (NCC) mechanism, reimbursing eligible firms for around 60% of these costs. 3. Capacity Market Exemption The scheme offers eligible business a full exemption from Capacity Market charges. The Capacity Market is funded through indirect charges on electricity bills with the aim of funding generators to ensure they are available during supply-peaks.

Why UK Energy Prices Keep On Rising…

21 October 2025
Why UK Energy Prices Keep On Rising… And what it means to manufacturing and engineering companies over the next few years Over the past decade, UK energy prices have changed dramatically. Not only in terms of overall cost but also in how those costs are made up. Ten years ago, the largest part of a business electricity bill came from the commodity element: the wholesale price of electricity. Non-commodity charges -- often used to support the infrastructure of the electricity grid or government energy policies -- were relatively modest. In 2013, the typical breakdown of electricity costs for a business user was around 60–65% commodity and 35–40% non-commodity. Today, that picture has flipped. For many manufacturers, non-commodity charges now make up over 60% of the total bill, with the non-commodity percentage of the bill increasing each year. This shift explains why energy bills have remained stubbornly high, even during periods when wholesale prices fell. Grid reinforcement, renewable subsidies, and balancing costs have grown year on year, with these costs baked into every unit of power consumed, regardless of wholesale prices.

What happens when a supplier fails?

14 October 2025
In the last decade, over 50 UK energy suppliers have gone out of business. With Tomato Energy being issued with a provisional order this week, it seems as though their name will be the latest to be added to the list of defunct suppliers including Bulb, Avro, and Spark Energy. For customers of a supplier that is on the brink of going out of business, this can be a scary time, but there is a process in place to ensure they are not at risk of losing their supply. Who is responsible? OFGEM (The Office of Gas and Electricity Markets) are a non-ministerial government department tasked with regulating the energy markets and networks. In cases where a supplier goes out of business, OFGEM provide a safety net to ensure that customers supply won’t be disrupted. What is the process? OFGEM may elect to appoint an administrator. If this is the path they choose, then no action is necessary from the supplier’s customers. At some point, the administrator may choose to shut down the supplier, at which point, all existing customers will be moved to a new supplier of the administrator’s choosing.

MHHS: Market-Wide Half-Hourly Settlements

6 October 2025
Market-Wide Half-Hourly Settlement (MHHS) What is MHHS? MHHS stands for Market-Wide Half-Hourly Settlement. Currently, most electricity is billed based on estimates or meter reads that can be provided monthly, quarterly, or sporadically. With MHHS, electricity consumption will be accounted for and billed in 30-minute blocks. The idea is that with more precise, time-based data, suppliers and networks can match supply and demand more accurately. This helps reduce waste and allow more flexibility in how electricity is used across the system. Who does it apply to? Previously, only large industrial and commercial users needed to have half-hourly meters, but MHHS is intended to apply across the whole electricity market in Great Britain. This includes domestic consumers, small businesses, large industrial users, and everything in between. That means most electricity users will be indirectly affected, even if they don’t see anything change in how their meter looks, the rules behind billing and settlement will shift behind the scenes.

September 2025 Review

1 October 2025
September Review By Adam Novakovic We have reached the time of year where the summer months have started to fade and we begin to think about the colder seasons. This month saw the UK government recognise Palestine as a country, although they still seem unable to recognise the harm their energy policies are causing UK businesses. With further charges set to be added to UK energy bills and rising non-commodity costs, it was a relief that wholesale energy prices remained fairly flat throughout September. A recent report from independent analysts Cornwall Insights revealed that large energy users who aren’t covered by Government schemes could find that they are paying a further £450,000/year in non-commodity costs by 2030. With non-commodity costs such as DUOS and TUOS charges –which are used to fund the infrastructure responsible for the transmission of electricity – now accounting for over 2/3rds of total electricity costs for some businesses, it is of growing concern that these charges are set to continue rising. With the TUOS charges for 26/27 expected to increase significantly , the non-commodity charges are starting to have a negative impact on UK businesses ability to compete against foreign businesses with fewer governmental charges on their energy bills. This growing concern is yet to be addressed but could have a huge impact on many industries in the next year.

RIIO - ET3 and increasing costs

25 September 2025
Following on from our previous article about rising TNuOS costs , we look at the reasons behind energy price rises, and which other items on your bill are likely to increase in the near future. What is RIIO – ET3? RIIO: “Revenue = Incentives + Innovation + Outputs” is Ofgem’s regulatory framework for setting how much network operators can recover from users while delivering value, efficiency and innovation. The current RIIO-2 period ends 31 March 2026, and RIIO-ET3 (also called RIIO-3) will run from 1 April 2026 through 31 March 2031.