Rising winter prices – 3 reasons to arrange your new contract.
Rising winter prices can be attributed to a number of factors and could mean that prices previously quoted to customers may not be possible to fulfil due to the volatility of the market currently where power prices have surged £3-5.5/MWh.
We’ve noticed some steep fluctuations causing rising winter prices over the last few days.
The market was expected to be turbulent following OPEC’s decision to cut oil production in order to stem the falling price a barrel of oil has seen over the last 18 months, however, this has been intensified by news that Switzerland’s largest nuclear plant will now be out of action for the next four months, pending tests
Further woes can be seen with news that Germany’s nuclear capacity will be decreased by 40% in Q1 2017 for refuelling.
Finally, a colder UK winter forecast and rising coal prices, driven by Chinese demand, has meant that the market can expect rising winter prices over the coming quarter.
In addition to wholesale price rises, an announcement this week by Ofgem regarding a shortfall in Renewable Obligation (RO) recovery is affecting suppliers costs. Ofgem notes that there are also administrative costs to be recovered which are also rising winter prices.
Ofgem will publish a note on the extent of the 2016/17 RO administration costs in ‘due course’, in the meantime this uncertainty has fed through to suppliers pricing.