Wholesale energy prices are increasing as forecasters warn that there’s cold weather on the way and as a result business gas prices could start to rise.
The news over the last few weeks has been about the Big Six energy companies cutting domestic electricity and gas prices as a result of the fall in wholesale energy prices since last summer. However, wholesale energy prices are now rising as forecasters warn cold weather is on the way.
The forecast of cold weather for the next month has seen power and gas markets driven up as cold temperatures raise concerns about supplies. Business gas prices and electricity prices differ from domestic prices partly because energy is bought for business use largely from the day ahead market. However, day ahead power has increased by £0.60/MWh to £44.00/MWh because the markets expect demand to increase.
There’s been even more movement in longer term prices. Summer 12 power has risen by a significant amount – £3.10/MWh to £45.30/MWh. This is the highest it’s been for 5 weeks, so it’s not an insignificant increase.
International energy markets are also higher largely as a result of uncertainty over the situation regarding Iran. In addition EU power prices have risen and as a result coal prices have also gone up.
The message is clear. With the threat of a prolonged cold spell and concern over power supplies, if your business energy contract is due for renewal, compare business gas rates and electricity prices now. Prices are on their way up so renew before they start to increase.