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Business Energy Pricing Report 19th February 2021

Updated: Jul 5, 2023

Energy bills are driven by both the price of energy on the wholesale market and Third-Party Costs (TPCs). TPCs include non-energy costs set by the government, network (the National Grid), policy and system costs and electricity transmission/distribution costs.

The biggest single cost on a bill is the price of the energy. The wholesale cost of the energy makes up approximately 40% of an electricity bill and 70% of a gas bill, with the remaining being TPCs, which have been continuously rising in recent years and can be volatile.

This pricing report focusses on the energy element of a bill to help you keep track and understand the wholesale energy market and the factors affecting the price of your contracts.


Oil has seen the longest streak of daily gains since February 2019, as a decline in US crude oil inventories highlight depleting global supplies, mainly because of OPEC+ production curbs.

Winter storms in Texas have hit record levels and temperatures across the US have plummeted driving up demand for heating fuels. Texas has reached single-digit temperatures and since Thursday has been hit by snow and sleet, with even more expected. This, in turn, has impacted oil production along with outages, currently affecting 1.27 million people.

Temperatures in the UK, on the other hand, are forecasted to be higher than seasonal norms, with increase wind generation expected which will result in a drop in demand for energy along with a drop in the reliance on burning fossil fuels and help make contract prices slightly cheaper.

Global vaccination efforts continue, bringing hopes of life returning to some form of normality soon and a recovery in oil demand. At least 178,092,680 doses of coronavirus vaccines have been administered around the world.

According to a new report by ElectraLink (who are responsible for operating the data hub that underpins the UK energy market), energy switching decreased by almost a quarter in January, compared to the previous month. With Ofgem’s recent announcement of an increase in the standard variable tariff price cap, along with Third Party charges set to increase this April, try to avoid the more expensive tariffs by switching your next business energy now.

Bullish Factors (upward pressure on markets):

· Rising tensions in the Middle East.

· Reduction in oil surplus, mainly from OPEC+ production cutbacks.

· Record winter storms hitting Texas, also impacting oil production.

· Global vaccination efforts continue.

Bearish Factors (downward pressure on markets):

· Forecast for warmer temperatures in the UK, above seasonal norms.

· Increased wind generation.

· Further deliveries of gas supplies coming into the UK.

MARKET REPORT Gas and Electricity

Gas contract prices increased on Tuesday, following unplanned Norwegian outages which reduced gas supplies into the UK. However, both gas and electricity contracts were slightly cheaper on Wednesdays close, pressured by increased wind generation which provided more energy than predicted and required less reliance on fossil fuels as well as the above seasonal temperatures in the UK.

Despite contract prices being slightly lower this week, electric prices are still over 37% more expensive than this time last year and gas contract prices 50% more expensive! This is supported by the rally of crude oil prices and increasing global energy demand.

Wholesale gas and electric 12 month historical prices

Crude Oil prices are still on the rise and have marked their 4th consecutive week of gains, with Brent increasing by 9% since this time last year before the pandemic impacted global prices.

Reports show a continued drop in supply which highlights demand is

Wholesale crude oil prices 6 month period

increasing. The extreme cold weather in the US has also impacted oil production in Texas which has all pushed the wholesale price of oil higher and increased contract prices further.

Both Brent and WTI trading over $60/bbl this week, which is the first time for WTI in over a year and experts predict this rally will continue throughout the year.

Current price standings:

Brent Crude = $64.61/bbl

WTI Crude = $61.42/bbl

ENERGY NEWS Tensions in the Middle East

Tensions have mounted between Washington and Tehran since 2018, when former United States President Donald Trump abandoned Iran's 2015 nuclear deal with six major powers and reimposed sanctions on the country and show little sign of easing under Joe Biden’s presidency.

Oil prices increased on Monday after Iran said that an attempt by the U.S. to seize a cargo of over 2 million barrels of oil on the grounds that it came from Tehran was an act of piracy, adding that the shipment did not belong to the Iranian government.

Washington claims the crude on the Achilleas ship was exported covertly by Tehran to avoid U.S. trade sanctions. The Department of Justice filed a suit in a U.S. court this month to seize the cargo, alleging that Iran sought to mask the origin of the oil by transferring it to several vessels before it ended up aboard the Liberian-flagged Achilleas tanker destined for China.

“The shipment belongs to the private sector,” a spokesman for Iran’s foreign ministry, Saeed Khatibzadeh, told reporters in Tehran on Monday, without providing further details. “It’s unfortunate that it’s happening under Mr. Biden’s administration.” Last week, an Iranian deputy oil minister also denied any knowledge of the Liberia-flagged vessel.

Despite the sanctions, Iran has increased petroleum exports in recent months, though they remain far below levels from early 2018, when Trump abandoned the nuclear deal.

Oil Price Rally

The wholesale price of oil has increased by over 24% since the start of the year, despite Covid-19 mutations and increased restrictions or lockdowns around the world.

Crude Oil has been increasing even further this week marking its 4th consecutive week of gains. It has climbed more than 14% so far this month alone as the OPEC+ alliance’s supply curbs, led by Saudi Arabia, are helping to deplete an oil surplus left in the wake of a pandemic-driven demand slump.

With oil stores reducing, the winter storm in Texas has also created some supply concerns with traders estimating a few hundred thousand barrels a day of output in Texas may be impacted by well shutdowns, disrupted road transport and power outages, crimping American supplies just as global markets are seen to have rebalanced.

Vaccine rollout milestones were also hit in the US and UK, with the UK surpassing 15 million Covid-19 vaccinations. This has all contributed to ongoing bets of economic recovery from the coronavirus pandemic and hopes energy demand will soon be restored.

The Bank of America has predicted that oil demand could rise at the fastest pace since 1970 over the next 3 years which could send prices soaring. Citigroup (an American multinational investment bank and financial services corporation) also expects Brent crude to reach $70 a barrel by the end of the year, which will push energy contract prices even higher than before the pandemic.

For a free no obligation business energy quote, please visit our website and upload a full copy of your most recent bill.

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