Falling energy prices in the UK were driven by slowing economic growth in the US and China as well as concerns over debt in Eurozone countries like Greece. Wholesale gas and electricity prices dropped significantly from a year ago, benefiting consumers with lower bills. Unusually cold and stormy June weather increased gas demand from households and small businesses, even as demand from large industrial users decreased. The stability of the retail energy market and drops in fuel costs at the pump have provided a temporary respite for the British economy.

1. Tough economic forces plus lousy summer
weather seem to be determined to try and take
charge of the wholesale energy supply market.
Prices tumbled throughout the middle of June to fresh lows. Annual gas prices are today 15%
lower than the same time last year, while annual force prices fell to a two-year low and are 22%
down year-on-year.
Falling force prices dragged annual spark spreads down 7% to £3.4/MWh, plus even
which reliable stalwart coal is having a hard time of things, with slipping costs buffering the fall
of dark spreads slightly to a £17.9/MWh premium to spark spreads.
So what's been setting off these cost crashes? Well, concerns about debt in the Eurozone
countries hasn't helped. Greece lurches from crisis to crisis and even the election of a brand-
new government is doing small to allay fears about its long-term future. However it's slowing
economic development inside the US and China which has truly forced global energy markets
downwards. Brent Ameratex Energy Crude Oil tumbled to $97.6/bl, its lowest level because
January 2011, and yearly API coal dropped to a fresh 20-month low of $95.4/t.
But, all of this is wise news for customers. While you may be lost out on which 'BBQ summer'
the forecasters guaranteed you, both domestic plus commercial end-users have watched power
prices drop inside real terms. A fall inside inflation has also assisted to stabilise the retail
market, nevertheless the big difference has been at the pumps, where motorists have finally
started to find the numbers on the forecourts going down rather of up. This, combined with lower
electricity plus gas bills, has provided the British economy a brief respite, during which it has a
chance to push up production and keep the fragile heart of UK PLC beating for a while longer.
Ironically, it's been the biomass marketplace that has held the fort. Despite biomass contracts
dropping, with costs for 2013 down 1% to £88.5/t, prices are still about 6% higher 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 the approval of the plans for
a 40MW staw-fuelled biomass plant inside Snetterton, Norfolk, which have finally been provided
the go-ahead.
The real headline grabber throughout June and into July has been the atrocious weather the UK
has experienced. Lower than average June temperatures and storm after storm has resulted
inside a rise inside UK gas demand. Supply peaked at 223.1mcm on 11th June, inside the
center of the bad weather. Industry watchers believe which the unseasonably bad weather has
encouraged several people to do anything they wouldn't normally do inside June - they turned
the heating up. The result was which though the national system decreased 0.1%, the territorial
system climbed 2.2%. To date, summer demand (measured from April 1st) was down 7.8%
found on the nationwide program however up a staggering 31.1% on the regional system,
compared to the same time last year.

2. What this indicates is the fact that while gas demand for power generation is down year-on-
year, expenditure by households plus small businesses has risen. This means which gas
consumption is acting as a barometer for the productiveness of the UK economy plus whilst the
big consumers can be struggling, homes and companies are continuing to ride out the worst of
the economic storm, placing a more positive face on what has been a difficult few months.
How costs can fare inside the next limited weeks can depend on three points - the resolution (or
otherwise) of the Eurozone crisis, plus the financial condition of the US and China. If they begin
to wobble you can see prices commence to climb back up again.