1. Tough financial forces and lousy summer
weather appear to be determined to test and take
charge of the wholesale energy supply
marketplace.
Prices tumbled throughout the middle of June to new lows. Annual gas costs are now 15%
lower than the same time last year, whilst yearly force prices fell to a two-year low plus are 22%
down year-on-year.
Falling force prices dragged yearly spark spreads down 7% to £3.4/MWh, plus even that
reliable stalwart coal is having a difficult time of aspects, with slipping prices buffering the fall of
dark spreads somewhat to a £17.9/MWh premium to spark spreads.
So what's been setting off these price crashes? Well, concerns regarding debt in the Eurozone
nations hasn't aided. Greece lurches from crisis to crisis and even the election of a unique
government is doing small to allay fears regarding its long-term future. But it's slowing financial
growth in the US plus China that has truly forced global stamina markets downwards. Brent
Tycoon Energy Crude Oil tumbled to $97.6/bl, its lowest level because January 2011, and
yearly API coal dropped to a hot 20-month low of $95.4/t.
However, all of this is advantageous news for consumers. While we will be missing out on that
'BBQ summer' the forecasters guaranteed us, both domestic plus commercial end-users have
watched stamina prices drop inside real terms. A fall in inflation has also helped to stabilise the
retail market, yet the big difference has been at the pumps, where motorists have finally started
to find the numbers found on the forecourts going down instead of up. This, combined with
lower electricity and gas costs, has given the British economy a short respite, during which it
has a chance to drive up production plus keep the delicate heart of UK PLC beating for a while
longer.
Ironically, it's been the biomass market which has held the fort. Despite biomass contracts
dropping, with costs for 2013 down 1% to £88.5/t, costs are still around 6% high than this
time last year. They've recovered from their four-year low plus are at their highest level for five
months. This boost has been helped in no small measure with all the approval of the plans for a
40MW staw-fuelled biomass plant in Snetterton, Norfolk, which have finally been provided the
go-ahead.
The real headline grabber throughout June plus into July has been the atrocious weather the
UK has experienced. Lower than average June temperatures plus storm following storm has
resulted inside a rise in UK gas demand. Supply peaked at 223.1mcm on 11th June, in the
center of the bad weather. Industry watchers believe that the unseasonably bad weather has
encouraged several people to do something they wouldn't usually do inside June - they turned
the heating up. The outcome was that though the national program decreased 0.1%, the
territorial system climbed 2.2%. To date, summer demand (calculated from April 1st) was down

2. 7.8% found on the national program yet up a staggering 31.1% found on the territorial system,
compared to the same time last year.
What this indicates is the fact that whilst gas demand for power generation is down year-on-
year, expenditure by households and little companies has risen. This signifies that gas
expenditure is acting because a barometer for the productiveness of the UK economy and while
the big users might be trying, homes and companies are continuing to ride out the worst of the
financial storm, putting a more positive face on what has been a difficult few months.
How prices can fare in the upcoming limited weeks may depend on 3 things - the resolution (or
otherwise) of the Eurozone crisis, and the economic condition of the US and China. If they start
to wobble we can see prices start to climb back up again.