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Ofgem confirms National Grid has tools to keep the lights on this winter

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What’s the outlook for the security of electricity supply in Ofgem’s latest analysis?
Capacity margins have been falling as many older coal and oil-fired power stations are closing due to age and European Environmental Regulations. Most of these plants have already closed and the rest will shut down by 2015 or earlier. Unprofitable gas fired power stations have also been closing or mothballing.

The margin is likely to be tighter than previously expected for winter 2015/16 due to further power station closures over the last year. However to manage lower margins Ofgem has given National Grid tools it can use to balance the electricity system if needed.

These tools allow National Grid to contract with generators and businesses to provide additional balancing services, outside the normal operation of the market. You can find out more about how National Grid does this, and view an infographic guide, in our section Electricity Security of Supply.

Using the tools National Grid has secured 2.56 gigawatts of additional balancing services for this winter. As a result National Grid projects a manageable margin for this winter at 5.1 per cent above demand.

There is uncertainty on the outlook in 2016/17, and a significant opportunity for industry to play a role in delivering security of supply, for example by returning mothballed plant to the market or improving the availability of their plant. Margins could also be boosted by higher imports from neighbouring countries.

National Grid will also consult on extending the additional balancing services for winter 2016/17. We think this is a prudent step.

We expect a reduction of the risks to security of electricity supply for 2017/18 due to plant returning to the market.

OFGEM Not Overly Impressed by British Gas’ Price-Cut

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Following British Gas’ announcement of a 5% price-cut OFGEM released the following statement:
Commenting on today’s gas price cut by British Gas Ofgem’s Senior Partner for Markets Rachel Fletcher said:

“We are pleased that British Gas’s most loyal customers are seeing some of the benefits from lower wholesale energy prices. However, the Competition and Markets Authority last week found that active consumers get a much better deal than those who don’t shop around.”

What is true for domestic consumers certainly applies to business customers.

2.56GW Standy Capacity Over Winter But Tight Forecast For Coming Years

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As reported by The Energyst National Grid is confident it has secured sufficient reserve capacity for the coming winter.
However there are warnings about future outlook for the coming years. National Grid says margins will be tight over the next few years but is still confident it has the tools to deal with even the toughest winter conditions.
Lord Redesdale on the other hand predicts blackouts and price rises of up-to 25% over the next year.
He says we waist 40% of the energy we use but would need to halve that to bring us below the point where we are going to have brownouts or blackouts.
While time has come for everyone to invest time and money in energy efficiency we would also recommend longer term electricity contract to protect you from likely price rises.

Following The Recent Budget – No More Green Energy Contracts

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While some suppliers have offered in the past cost neutral green energy contracts this will no longer be the case.
With the chancellor’s announcement that green energy will no longer be exempt from Climate Change Levy, the extra cost of green energy can no longer be offset against the savings of the CCL.
I suppose suppliers have used this option to finance their renewables obligation, thus being of little benefit to the overall environment.

However I would like to know how suppliers are going to treat customers when the change takes place in mid-contract.

CMA report finds competition in the energy market is not working as it should.

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CMA has yesterday published it’s report of the energy market:

Roger Witcomb, Chairman of the energy market investigation, said among other points:

– There are millions of customers paying too much for their energy bills – but they don’t have to.

– Whilst competition is delivering benefits to increasing numbers of customers, mainly through the growth of smaller suppliers with cheaper fixed-price deals, the majority of us are still on more expensive default tariffs. Many customers do not shop around to see if there’s a better deal out there – let alone switch. The confusing way energy is measured and billed can make comparing deals understandably daunting.

While this relates to the domestic market, it also very much applies to commercial customers.
Far too many businesses just allow their contract to auto-renew with their current supplier or go onto a variable or even deemed rate.
Either way they can end up paying ££££’s more than necessary, which in a tight economic climate can weigh heavily onto their profit margins.

This report should serve as reminder to pass on copies of your current gas & electricity bills to your trusted energy broker.
Once received Alpine Utilities Ltd will analyse your bills and check whether immediate action needs to be taken or make a note on our diary to contact you nearer the time.

Cheaper off-peak electricity for business consumers

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OFGEM published yesterday a factsheet to outline what is happening and the benefits of P272. This can be accessed through https://www.ofgem.gov.uk/sites/default/files/docs/2015/07/factsheet_131_cheaper_electricity_for_businesses_web_0.pdf

The idea is to charge customers more accurately for the time of use where peak times typically early evening costs more than off peak times when there is less demand and more renewable electricity available.

Any maximum demand smart meter that comes up for renewal after 5th November, will be half-hourly metered for 45 days and then charged accordingly.

While this arrangement should offer some savings to some larger business, it will be difficult to tender a supply for the most competitive offer, as the final prices will probably only be available long after the start the contract.
Alpine Utilities will request some further clarification on this point.

Cycling and walking ‘saves UK £1m a day’

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ELN reports: The UK economy has saved more than £1 million a day by cycling and walking.
The savings have been made as a result of improved health and reduced congestion, pollution and greenhouse gas emissions.

So just think of your own health and take out your bike to get to work; you’ll be doing everyone a favor.

When will your Maximum Demand meter change to HH

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OFGEM have now accepted industry concerns about the short time scale in implementing P272, the changeover of maximum demand electricity meters (profile 05 – 08) to Half Hourly.
OFGEM has therefore agreed to extend the implementation date to 1st April 2017.
However, in order to minimise the risk of change over in mid contract; any profile 05 – 08 acquisition or renewals from 5th November 2015 with advanced meters will have to move to HH within 45 days.
So for many MD customers the next time they renew their contract or change supplier they will be moved to HH.
We have yet to receive communication from the suppliers that any MD site with start date after 5th November will have to be quoted as HH.
We would also like confirm what prices will customers pay during the 45 transition period?
While OFGEM sees many benefits from the change we are somewhat concerned of the cost impact it will have on small businesses.
Alpine Utilities will monitor developments and seek to advice its many MD customers on the best options.

Third Gas Discovery in the Norwegian Sea

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ELN reports that Norway’s oil and gas firm Statoil has found more gas in the Norwegian Sea – we can only hope this will reduce gas prices even further.

Amber Rudd tells Big Six to cut energy prices & Energy customers ‘owe suppliers £503m – Is there a connection?

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As reported by Energy Live News:

Newly-appointed Energy Secretary Amber Rudd has written to British Gas, E.ON, EDF Energy, npower, SSE and ScottishPower asking them about their plans to cut gas and electricity bills.

The letter reportedly states: “In light of the greater regulatory stability we are providing and continued stability in wholesale gas prices, I believe energy suppliers should be seeking to regain the trust of consumers by reflecting this in their pricing decisions.”

Another newsbit reads: It revealed almost four million householders – 260,000 more than last year – are in debt to their energy suppliers, with the average debt at £130 – up from £128 last year.

uSwitch makes it clear:

Price comparison site uSwitch, which questioned more than 2,000 UK adults, is calling on suppliers to make “double-digit” tariff price cuts, “better reflecting the 25% reduction in wholesale gas and 18% cut in wholesale electricity costs in the 12-month period to winter 2015/16.

Ann Robinson, Director of Consumer Policy at uSwitch.com said: “Pre-payment meters were forcibly installed in almost 100,000 homes last year due to debt, yet our figures suggest this could be just the tip of the iceberg. This is evidence that energy has become totally unaffordable for millions of homes. Disposable incomes may be on the up but people are still under relentless pressure just to cover the cost of essential bills.

“Energy suppliers must urgently pass on double-digit reductions to their customers – many of whom have admitted to going cold this winter in an attempt to keep their bills down.”

An online survey suggests; 69% believe the Government is not doing enough to bring energy bills down.