Business Energy Market Update: January 2025

At the beginning of December 2024, the outlook was becoming bleak with Russian gas flows beginning to tail off and the change in weather eating into European gas stocks causing wholesale prices to rise.

Thankfully, by the end of the month the market had dropped slightly but frustratingly these losses were negated by the wholly expected news that Russian gas will cease to be shipped through Ukraine and so we saw mostly sideways trading; with only small percentage gains on gas and electricity contracts further out into this year.

Some members may recall I wrote about OFGEM’s ‘call for input on standing charges’ earlier last year and in December an update from OFGEM was posted on their website. It seems OFGEM has taken a rather defensive approach, choosing to open their report with a number of reasons why the UK needs to pay higher standing charges on its energy bills and stating that higher fixed costs were here to stay.

Focussing exclusively on consumer tariffs, the report stated that any attempt to reduce standing charges would see costs move back into the unit rate and that this could negatively affect some vulnerable high energy users. A number of case studies were provided to underline this point.

Our protestations have not fallen on completely deaf ears however, OFGEM have stated they will “set up a new project to review and assess the recovery of system wide energy costs, such as electricity and gas network costs”. The review process will “develop proposals that balance efficiency, fairness, and simplicity in future charging and pricing models” and OFGEM say it will “protect existing and future consumers through the increased investment our energy system needs in the coming years”.

A further update is due out early this year and I will bring details as and when I have them.

In the meantime, if you have any utility related questions, the team at Clear Utility Solutions are on hand so please get in touch on 01327601122 or email hello@clearutilitysolutions.com