‘SeeMore’ Energy Markets: February Review

Craig Watson • 3 March 2023

'SeeMore' Energy Markets: February Review

This February we saw wholesale prices continue to fall. The day ahead market was relatively stable with the price dropping slightly over the course of the last 4 weeks. It started the month at £148/MWh and closed at £127.10MWh representing at 14% decrease in price and returning to levels similar to August 2021. February 6th saw the highest price of £172.50MWh with February 17th seeing the lowest price of £120MWh. This continues the 2023 trend of price steadily decreasing. A meter that consumes 10,000KwH per month would be seeing commodity costs of £1370.50 compared to £3400.30 it would have been paying based on the day ahead price on December 1st.  For those who were out of contract in December, staying on the day ahead rates and waiting for prices to fall will likely prove to have been a superior strategy to taking the rates available then.


After a winter that saw reduced levels of gas consumption across Europe, the UK government have made plans to reduce energy costs for specific industries and announce the latest round of Energy schemes.


OFGEM announced that the energy price cap will change from £4279 to £3289 for the April-June quarter. With the level of support provided by the government set to be reduced from April 1st - this could lead to a 20% increase in the bills of the average household. From April 2023 - April 2024 the Energy Price Guarantee is expected to save the average household around £500, whereas a typical household was predicted to save £900 from the price guarantee that was in place from October 2022 - March 2023.

 

This announcement suggests that OFGEM see the declining price in the wholesale market as something that will be sustained even if wholesale price movements aren’t immediately reflected in the bills most households will receive.  


It is likely energy costs will remain at the forefront of people’s minds for the foreseeable future as it was revealed by The Centre for Sustainable Energy that standing charges have risen by more than 80% in the last year. These price rises are mostly felt when a customer moves from the previous fixed rate contract to a new deal and could come as some surprise to people whose contracts are due to expire in the coming months. Although with the trend of commodity prices starting to decrease, this could go some way to offset the increased price in bills that people can expect to see.


The UK has also felt the impact of higher energy prices in the supply of groceries. Items which previously may have been taken for granted as staples are now facing shortages. Frost in Morocco and Spain lowered tomato production this winter, and - with UK energy prices high - it hasn’t been cost-effective to make up for these supply shortfalls by heating greenhouses. Horticulture was not included in the Energy and Trade Intensive Industries scheme which provides support to specific industries. Although the UK government is trying to offer support elsewhere.


Last week the government announced that it is looking to provide industry-specific support to help energy-intensive industries remain internationally competitive. The chemical and steel industries will be among the industries supported, with the proposals expected to help over 300 UK businesses. 


Outlook

During the coming month the EU will meet to discuss reforming the energy markets. The aim will be to shield European consumers from the type of price fluctuations that were witnessed last year, with European electricity prices being disproportionately impacted by the price of gas. Currently, it appears that there is disagreement amongst EU nations about the best way to approach any such reform, with interventions in free-markets often leading to inadvertent costs being passed on to customers. As well as there being a lack of agreement on the extent to which renewables can be relied upon, and whether Nuclear power should be used as a key part of any energy strategy.  The finalised proposal will be made on March 14th, after that the final reforms will be negotiated. Although any impact we see from this is unlikely to come into force before 2024.


Fears remain that the Russia-Ukraine conflict could further impact energy prices across Europe. While Europe has been looking elsewhere for it’s energy needs – increasing imports from the US and Kazakhstan, while also seeing Norway begin to increase it’s output – there is still some reliance on Russian exports (10% of Europe’s gas still comes from Russia).

 

However, the head of RWE – Germany’s largest utility – has moved to assuage the remaining concerns. He stated that he doesn’t believe we will see gas prices as high as 2022’s peak again. After a mild winter, and with European gas storage levels considerably higher than this time last year, a lot of the tension surrounding the gas market seems to be dissipating. With French nuclear energy returning, European storage levels at 65% (compared to 29% last year), and Germany completing construction of it’s floating LNG terminals, the outlook is significantly more positive than it was for most of 2022.

The British Industry Supercharger

30 October 2025
With government-imposed charges making up an increasing percentage of business energy bills, it is becoming difficult for many UK industries to remain competitive in international markets. This led to the introduction of the British Industry Supercharger (BIS). A scheme for energy-intensive businesses that aims to counteract many of the government-imposed environmental levies and the rising transmission charges. In this article, we cover how it works and what your business needs to know to benefit from it. What is the British Industry Supercharger? Launched on the 1st April 2024, the British Industry Supercharger is a strategic package of relief measures aimed at energy‐intensive industries (EIIs) such as steel, metals, chemicals, cement, glass and paper. The aim is to reduce electricity non‐commodity costs so UK foundational industries can compete with businesses in nations with lower energy costs. The BIS is comprised of 3 sections: 1. Relief from Renewable Levies This provides businesses with exemptions from paying Renewables Obligation (RO), Feed-in Tariff (FiT), and Contracts for Difference (CfD). These charges were added to invoices in order to fund green-power generation. Under the Supercharger, eligible EIIs can receive up to 100% exemption from these charges. 2. Network Charging Cost Compensation This offers discounts on electricity network charges - including Transmission Network Use of System (TNUoS) and Distribution Use of System (DUoS) fees. These fees cover the cost of maintaining the national grid and distribution networks, but can represent a large proportion of industrial energy bills. The BIS introduces a Network Charging Compensation (NCC) mechanism, reimbursing eligible firms for around 60% of these costs. 3. Capacity Market Exemption The scheme offers eligible business a full exemption from Capacity Market charges. The Capacity Market is funded through indirect charges on electricity bills with the aim of funding generators to ensure they are available during supply-peaks.

Why UK Energy Prices Keep On Rising…

21 October 2025
Why UK Energy Prices Keep On Rising… And what it means to manufacturing and engineering companies over the next few years Over the past decade, UK energy prices have changed dramatically. Not only in terms of overall cost but also in how those costs are made up. Ten years ago, the largest part of a business electricity bill came from the commodity element: the wholesale price of electricity. Non-commodity charges -- often used to support the infrastructure of the electricity grid or government energy policies -- were relatively modest. In 2013, the typical breakdown of electricity costs for a business user was around 60–65% commodity and 35–40% non-commodity. Today, that picture has flipped. For many manufacturers, non-commodity charges now make up over 60% of the total bill, with the non-commodity percentage of the bill increasing each year. This shift explains why energy bills have remained stubbornly high, even during periods when wholesale prices fell. Grid reinforcement, renewable subsidies, and balancing costs have grown year on year, with these costs baked into every unit of power consumed, regardless of wholesale prices.

What happens when a supplier fails?

14 October 2025
In the last decade, over 50 UK energy suppliers have gone out of business. With Tomato Energy being issued with a provisional order this week, it seems as though their name will be the latest to be added to the list of defunct suppliers including Bulb, Avro, and Spark Energy. For customers of a supplier that is on the brink of going out of business, this can be a scary time, but there is a process in place to ensure they are not at risk of losing their supply. Who is responsible? OFGEM (The Office of Gas and Electricity Markets) are a non-ministerial government department tasked with regulating the energy markets and networks. In cases where a supplier goes out of business, OFGEM provide a safety net to ensure that customers supply won’t be disrupted. What is the process? OFGEM may elect to appoint an administrator. If this is the path they choose, then no action is necessary from the supplier’s customers. At some point, the administrator may choose to shut down the supplier, at which point, all existing customers will be moved to a new supplier of the administrator’s choosing.

MHHS: Market-Wide Half-Hourly Settlements

6 October 2025
Market-Wide Half-Hourly Settlement (MHHS) What is MHHS? MHHS stands for Market-Wide Half-Hourly Settlement. Currently, most electricity is billed based on estimates or meter reads that can be provided monthly, quarterly, or sporadically. With MHHS, electricity consumption will be accounted for and billed in 30-minute blocks. The idea is that with more precise, time-based data, suppliers and networks can match supply and demand more accurately. This helps reduce waste and allow more flexibility in how electricity is used across the system. Who does it apply to? Previously, only large industrial and commercial users needed to have half-hourly meters, but MHHS is intended to apply across the whole electricity market in Great Britain. This includes domestic consumers, small businesses, large industrial users, and everything in between. That means most electricity users will be indirectly affected, even if they don’t see anything change in how their meter looks, the rules behind billing and settlement will shift behind the scenes.

September 2025 Review

1 October 2025
September Review By Adam Novakovic We have reached the time of year where the summer months have started to fade and we begin to think about the colder seasons. This month saw the UK government recognise Palestine as a country, although they still seem unable to recognise the harm their energy policies are causing UK businesses. With further charges set to be added to UK energy bills and rising non-commodity costs, it was a relief that wholesale energy prices remained fairly flat throughout September. A recent report from independent analysts Cornwall Insights revealed that large energy users who aren’t covered by Government schemes could find that they are paying a further £450,000/year in non-commodity costs by 2030. With non-commodity costs such as DUOS and TUOS charges –which are used to fund the infrastructure responsible for the transmission of electricity – now accounting for over 2/3rds of total electricity costs for some businesses, it is of growing concern that these charges are set to continue rising. With the TUOS charges for 26/27 expected to increase significantly , the non-commodity charges are starting to have a negative impact on UK businesses ability to compete against foreign businesses with fewer governmental charges on their energy bills. This growing concern is yet to be addressed but could have a huge impact on many industries in the next year.

RIIO - ET3 and increasing costs

25 September 2025
Following on from our previous article about rising TNuOS costs , we look at the reasons behind energy price rises, and which other items on your bill are likely to increase in the near future. What is RIIO – ET3? RIIO: “Revenue = Incentives + Innovation + Outputs” is Ofgem’s regulatory framework for setting how much network operators can recover from users while delivering value, efficiency and innovation. The current RIIO-2 period ends 31 March 2026, and RIIO-ET3 (also called RIIO-3) will run from 1 April 2026 through 31 March 2031.

How TNUoS costs are set to rise

17 September 2025
How TNUoS costs are set to rise As the UK pushes towards a low-carbon energy system, there has been a sharp rise in costs for businesses connected to the grid. The National Energy System Operator (NESO) has released its latest five-year outlook on Transmission Network Use of System (TNUoS) charges, and -- from April 2026 – energy costs will rise significantly to fund the country’s energy transition. What Are TNUoS Charges? NESO uses the funds from TNUoS charges to build, operate, and maintain the high-voltage transmission network across Britain. The forecasts for 2026/27 have indicated that NESO will be looking to almost double the revenue generated in the previous year. While suppliers pass these charges on to both households and businesses, the scale of the increases ahead will be most acutely felt by large energy users.

ESOS Phase 4: What Businesses Need to Know

8 September 2025
ESOS Phase 4: What Businesses Need to Know The Energy Savings Opportunity Scheme (ESOS) Phase 4 is underway, starting on 6 December 2023, with a compliance deadline of 5 December 2027 . UK businesses must understand ESOS Phase 4 eligibility , key changes, and deadlines to ensure compliance and avoid penalties. This guide covers everything you need to know about ESOS Phase 4 for UK businesses . Who needs to comply with ESOS Phase 4? The ESOS Phase 4 eligibility criteria remain consistent with Phase 3. Your organisation qualifies as a “large undertaking” if, on the qualification date of 31 December 2026 , it meets all of these requirements: Based and registered in the UK Employs 250 or more people Has an annual turnover above £44 million Has an annual balance sheet total over £38 million To confirm your ESOS Phase 4 eligibility , visit our site and answer the questions to see if your business should be participating. Even if you don’t currently meet these criteria, crossing the threshold by the qualification date means you must submit a compliance notification by the ESOS Phase 4 deadline of 5 December 2027 . If your business qualified for Phase 3 but no longer meets the criteria, you must submit a “Do Not Qualify” (DNQ) notification via the Environment Agency’s MESOS portal. Key requirements for Phase 4 Phase 3 introduced the requirement for organisations to create an Action Plan that set out how you intend to cut energy use and when. That same principle continues in Phase 4, along with mandatory progress reporting in the years that follow. However, there are some updates to note: Action plan progress must now be included within your ESOS assessment. If commitments aren’t met, your business will need to explain why. Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) are no longer valid routes to compliance. While net zero reporting will not yet be mandatory, you can choose to adopt the new PAS 51215 standards for voluntary energy and decarbonisation reporting. This could give your organisation a head start before net zero requirements arrive in Phase 5. These ESOS Phase 4 key changes ensure businesses focus on actionable energy efficiency measures and transparent reporting.

August 2025 Review

1 September 2025
August Review By Adam Novakovic August was a month that saw the return of domestic football and the return of one of the most prolific energy narratives of the last 5 years, as the conflict between Russia and Ukraine once again dominated the headlines.

Nuclear Regulated Asset Base Levy

29 August 2025
Nuclear Regulated Asset Base Levy: What It Means for Your Electricity Bills From this autumn, UK businesses will see a new charge appear on their electricity invoices: the Nuclear Regulated Asset Base (RAB) Levy. This charge will help finance new nuclear power stations such as Sizewell C, but it also means yet another non-commodity cost will be added to bills. What is the RAB model? The Regulated Asset Base (RAB) model is not new and has been used for decades to fund water networks, energy grids, and other large-scale infrastructure. Instead of waiting until projects are completed, it allows investors to receive steady returns during construction. The aim is to lower the overall cost of borrowing by sharing risk between developers, government, and consumers. In 2022, the Nuclear Energy Financing Act cleared the way for this model to be applied to nuclear energy. The logic is that by reducing financial risk, investors will be more willing to commit to long-term projects. For the government, it helps accelerate the nuclear build-out that is essential to the UK’s 2030 clean power targets. For consumers, however, it means paying towards new power plants years before they produce a single kilowatt-hour and before they can help lower unit rates.