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Winter is coming: How energy buyers can prepare for dark months to come

With Britain in the middle of a mini-heatwave, it can be easy to forget about the coming bad weather. But energy buyers always need to be aware of what’s round the corner. And the coming winter is looking particularly bleak buying conditions for a number of reasons. Britain’s gas stores have been depleted following a problem at a storage facility, which has become worse in the last week. The Brexit effect is also putting undue pressure on buyers. Wholesale prices for gas and electricity have already increased, and uncertainty about future prices could drive them up even further.

Power supply issues

Wholesale gas prices have rocketed following after it was announced that the UK’s largest gas storage facility would have to remain closed until next Spring. Centrica’s Rough site, which accounts for over 70 percent of Britain’s gas storage capacity, has had to undergo a lot of maintenance in recent years. And the decision to close it until mid-2017 will put a large dent in Britain’s storage capabilities, which are already small compared to other European nations. During peak times in the Winter months the Centrica site can provide up to 10 percent of the country’s total gas consumption. And with that gas not available, it has already put upward pressure on forward winter rates. Wholesale gas prices for this winter grew by 10 percent on the UK market following the news, closing at 46.65 pence per therm, the highest it has been for a year. Energy suppliers that have been charged with plugging short term capacity shortfalls this winter and in the future are expected to make billions over the next few years, by keeping energy available for use at short notice. In the future, these problems are likely to continue unless serious action is taken to address Britain’s gas storage capacity, and its energy generation infrastructure more generally.

The Brexit effect

Britain’s referendum decision to leave the European Union has also had an impact on energy prices. Prices have increased at domestic and non-domestic levels. Crashing markets and a falling pound, compounded by the political uncertainty that came along with the referendum vote, pushed energy prices up to a nine month high. In the domestic sector, twelve energy providers pulled fixed-rate tariffs, replacing them with more expensive deals in the wake of the referendum judgement. Much of this has been in response to a weakening pound. Because Britain is a net importer of energy, downward fluctuations in the value of the pound makes energy more expensive. And with little sign of the pound rebounding, at least in the short term, buyers will need to be aware as they head into the winter months and the new year. Brexit’s effect on Britain’s energy infrastructure is also unclear. Although doubts over the future of the proposed Hinkley Point nuclear reactor in post-Brexit Britain could be a sign of things to come.

Get help in an uncertain energy future

Utility Helpline aims to protect its customers from price shocks, that’s why we work closely with clients and offer a huge range of flexile purchasing options to help minimise risks and maximise rewards. For purchasing strategy advice, contact your account manager and we can help you lock in a price today. Call 0800 043 0423.


Published by Utility Helpline on (modified )