1. Tough financial forces and lousy summer
weather appear to be determined to test and take
charge of the wholesale power supply market.
Prices tumbled throughout the middle of June to unique lows. Annual gas costs are now 15%
lower than the same time last year, whilst annual power 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, and even
which reliable stalwart coal is having a difficult time of things, with slipping prices buffering the
fall of dark spreads slightly to a £17.9/MWh premium to spark spreads.
So what's been setting off these price crashes? Well, concerns about debt inside the Eurozone
nations hasn't assisted. Greece lurches from crisis to crisis plus even the election of a fresh
government is doing small to allay worries about its long-term future. But it's slowing financial
growth in the US and China that has really pushed international vitality markets downwards.
Brent Ameratex Energy Crude Oil tumbled to $97.6/bl, its lowest level because January 2011,
and annual API coal dropped to a new 20-month low of $95.4/t.
But, all of this is advantageous news for customers. While we may be lost out on that 'BBQ
summer' the forecasters promised you, both domestic and commercial end-users have seen
stamina costs drop inside real terms. A fall inside inflation has additionally aided to stabilise the
retail marketplace, however 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 plus gas fees, has given the British economy a brief respite,
throughout which it has a chance to drive up creation and keep the delicate heart of UK PLC
beating for a while longer.
Ironically, it's been the biomass marketplace which has held the fort. Despite biomass contracts
dropping, with costs for 2013 down 1% to £88.5/t, costs are nonetheless 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 inside Snetterton, Norfolk, which have finally been
given 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 and storm following storm has
resulted in a rise inside 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 countless folks to do anything they wouldn't normally do inside June - they turned
the heating up. The result was that although the nationwide program decreased 0.1%, the
regional system climbed 2.2%. To date, summer demand (measured from April 1st) was down
7.8% on the nationwide system nevertheless up a staggering 31.1% found on the territorial
system, compared to the same time last year.

2. What this indicates is the fact that whilst gas demand for force generation is down year-on-year,
consumption by households and tiny companies has risen. This signifies which gas expenditure
is acting because a barometer for the productiveness of the UK economy and whilst the big
consumers can be trying, homes plus businesses 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 costs usually fare in the upcoming few weeks usually depend on three details - the
resolution (or otherwise) of the Eurozone crisis, plus the economic condition of the US plus
China. If they begin to wobble you can see prices begin to climb back up again.