‘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.

ESOS Phase 4: What Businesses Need to Know

8 September 2025
ESOS Phase 4: What Businesses Need to Know The Energy Savings Opportunity Scheme (ESOS) is back for another cycle. Phase 4 officially began on 6 December 2023, and while the final compliance deadline of 5 December 2027 may feel a long way off, now is the time to start preparing. If your business was in scope for Phase 3, you’ll already be familiar with the process of calculating energy use, submitting an action plan, and reporting on progress. Phase 4 builds on that foundation, with a few important changes to be aware of. Who needs to comply with ESOS Phase 4? The rules on eligibility haven’t changed since the last phase. ESOS applies to “large undertakings” in the UK, meaning your organisation will qualify if, on the qualification date of 31 December 2026, it meets all of the following criteria: Based and registered in the UK Employs 250 or more people Has an annual turnover above £44 million Has an annual balance sheet total over £38 million To see if your business is eligible, visit our site and answer the questions to see if you should be participating in ESOS phase 4. Even if you don’t meet the criteria right now, if you cross the threshold on the qualification date, you’ll fall into scope and must submit your compliance notification by 5 December 2027. If your business previously qualified but no longer does, you’ll need to submit a “Do Not Qualify” (DNQ) notification to the Environment Agency through the online MESOS portal. Key requirements for Phase 4 Phase 3 introduced the requirement for organisations to create an Action Plan that set out how you intend to cut energy use and when. That same principle continues in Phase 4, along with mandatory progress reporting in the years that follow. However, there are some updates to note: Action plan progress must now be included within your ESOS assessment. If commitments aren’t met, your business will need to explain why. Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) are no longer valid routes to compliance. While net zero reporting will not yet be mandatory, you can choose to adopt the new PAS 51215 standards for voluntary energy and decarbonisation reporting. This could give your organisation a head start before net zero requirements arrive in Phase 5.

August 2025 Review

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August Review By Adam Novakovic August was a month that saw the return of domestic football and the return of one of the most prolific energy narratives of the last 5 years, as the conflict between Russia and Ukraine once again dominated the headlines.

Nuclear Regulated Asset Base Levy

29 August 2025
Nuclear Regulated Asset Base Levy: What It Means for Your Electricity Bills From this autumn, UK businesses will see a new charge appear on their electricity invoices: the Nuclear Regulated Asset Base (RAB) Levy. This charge will help finance new nuclear power stations such as Sizewell C, but it also means yet another non-commodity cost will be added to bills. What is the RAB model? The Regulated Asset Base (RAB) model is not new and has been used for decades to fund water networks, energy grids, and other large-scale infrastructure. Instead of waiting until projects are completed, it allows investors to receive steady returns during construction. The aim is to lower the overall cost of borrowing by sharing risk between developers, government, and consumers. In 2022, the Nuclear Energy Financing Act cleared the way for this model to be applied to nuclear energy. The logic is that by reducing financial risk, investors will be more willing to commit to long-term projects. For the government, it helps accelerate the nuclear build-out that is essential to the UK’s 2030 clean power targets. For consumers, however, it means paying towards new power plants years before they produce a single kilowatt-hour and before they can help lower unit rates.

Why electricity prices keep going up

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Why electricity prices keep going up By Adam Novakovic Electricity has always been more than just a utility it is an essential component in every part of UK business. Yet in recent years, costs have been climbing steadily, and today’s bills are weighed down by more than just wholesale market prices. There can be long periods of time where wholesale prices remain stable or decrease, yet the amount businesses are paying for their electricity continues to rise. A large part of the increase comes from policy decisions. Most notably the way the UK has chosen to fund decarbonisation, its reliance on renewables, and its failure to make a serious commitment to nuclear energy.

Back Billing

14 August 2025
Back Billing Recently we have been seeing an increase in suppliers issuing invoices for charges that are more than 12 months old. In this article we will be reviewing why you may not be liable for these charges. What Is a Back Bill? A back bill is issued when your supplier discovers that they haven’t accurately invoiced you. This can be due to missed readings, estimated charges, or issues with obtaining consumption data. These bills can include charges dating back weeks, months, or even over a year, leading to unexpected costs. The 12-Month Back-Billing Rule Under Ofgem’s rules, suppliers cannot charge domestic energy users or microbusinesses for energy used more than 12 months ago, provided that you: Never received an accurate bill for that period (even if requested) Were never informed of charges through a statement of account Had a Direct Debit but it was set too low to cover the actual charges When You May Be Asked to Pay for Energy Consumed More Than 12 Months Ago The only scenario where you could be charged for older energy usage is if the issue is deemed to be your fault. For example, if you deliberately prevented meter access or ignored billing requests, your supplier can back-bill you for up to six years.

July 2025 Review

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July was a month that saw an England international football team lift a trophy and the unfamiliar events weren’t just limited to the sporting arena. For the first time in recent memory, it wasn’t geopolitics and international conflicts that were the main drivers behind movements in the energy market. In this article we review the factors that did cause energy prices to change and how prices are likely to move for the remainder of 2025.

The EII Support Levy (ESL)

29 July 2025
What is the EII Support Levy? As of April this year, a new charge called the EII Support Levy may have begun appearing on your invoices. The ESL has been introduced by the government to fund the Exemption Scheme for Energy Intensive Industries (EIIs). This essentially means that businesses not categorised as operating in Energy Intensive Industries will be offsetting the costs of businesses whose SIC codes do fall under the EII umbrella. This is being done to ensure UK businesses with large energy costs can remain competitive internationally. Which businesses need to pay it? All non-domestic UK energy users who don’t have a SIC code that classifies them as being a part of an Energy Intensive Industry will need to pay it. How the charge is applied will be at the discretion of suppliers with some suppliers yet to confirm exactly how they will be applying the charge.

June 2025 Review

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June 2025 Review By Adam Novakovic The British summer is underway and it commenced with a heatwave, leading to record temperatures during the opening games of Wimbledon. However, energy prices would be largely dictated by events far away from the UK, as a need for cool heads in the Middle East was the primary driver of energy prices throughout June.

The UK's Modern Industrial Strategy

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The UK's Modern Industrial Strategy 2025 Electricity Discounts for Over 7,000 Businesses Thousands of UK businesses are set to benefit from a new government plan to cut energy costs, boost competitiveness, and support long-term industrial growth. As part of the newly launched Industrial Strategy, electricity bills for over 7,000 energy-intensive firms will be cut by up to 25% from 2027. What Is the UK's Modern Industrial Strategy? Unveiled on 23 June 2025, the government’s 10-year Industrial Strategy is designed to stimulate business investment, create over one million skilled jobs, and address key structural barriers that have hindered British industry — particularly high electricity prices and delays in grid connections. Central to this plan are two new policies focused on reducing energy costs for businesses: The British Industrial Competitiveness Scheme (BICS) An expanded British Industry Supercharger programme 

How the Iran-Israel Conflict Could Impact UK Energy Prices

19 June 2025
How the Iran-Israel Conflict Could Impact UK Energy Prices By Adam Novakovic Tensions between Iran and Israel have intensified in recent weeks, prompting renewed concerns across global energy markets — including in the UK. The immediate impact has seen some fear in the markets and prices have risen as a result. Any further signs of escalation that could disrupt global supply routes will likely provoke sharp spikes in wholesale energy prices. Soon after Israel launched initial attacks and Iran responded, the United States distanced itself from Israel’s aggressive military posturing, urging both sides to engage in diplomatic dialogue and to avoid an extended regional conflict. This initial reluctance to support a drawn-out confrontation has helped calm fears of a broader war, however, there have been some indications that the US position could change. If the US were to become more directly involved, then the outlook would worsen considerably. US involvement would increase the probability of ground troops being deployed in Iran, and of a prolonged war. Without prolonged hostilities, the energy market should resume its downward trajectory once immediate geopolitical risks fade. Both Iran and Israel lack the resources to sustain a protracted war without foreign support, and most analysts agree that military actions will likely remain confined to missile exchanges, drone activity, and cyber or intelligence-based sabotage, rather than a full-scale ground war.