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Bank Expects UK Gas prices to continue to rise

Deutsche Bank has raised its 2011 Brent crude forecast price from $107.75 to $117.50 a barrel due to tight supply margins and strong demand, and also lifted its natural gas price forecasts to reflect it.

Deutsche Bank (DBKGn.DE) also raised its Brent forecast for 2015 to $125 a barrel from $105 after recent informal output increases in Organization of the Petroleum Exporting Countries (OPEC) countries left less of a supply cushion.

“Reductions in OPEC spare capacity and a strong demand outlook lead us to raise our Brent oil-price forecast across the curve,” Germany’s biggest bank said in a research note on Tuesday.

“We raise our gas-price outlook by a similar amount as we believe market supply-demand dynamics will force a closer relationship between spotmarket and oil-indexed prices over this period.”

Benchmark Brent crude prices have risen by about a third since the start of 2011, hitting $127 on Monday, while UK gas prices have risen around 23 percent since violence in Libya cut exports to Europe in February.

The world’s biggest crude exporter Saudi Arabia increased output in March to make up for disruptions in fellow OPEC member Libya. But the holder of most of the world’s spare capacity has since cut back production, Saudi sources said on Tuesday.

Deutsche Bank said it expects global oil demand to rise by 1.65 million barrels a day (bpd) in 2011, while it forecasts OPEC spare capacity will shrink from 5 million bpd to 3 million bpd.

UK GAS
Because of higher oil prices, and UK plans to introduce a minimum charge for emitting carbon — effectively raising gas price which power generators will be prepared to pay before switching to dirtier coal — Deutsche also upgraded its 2013-2015 price outlook for continental European and UK natural gas prices.

The increase oil price forecast implies an increase in continental European oil-indexed gas prices of 12-14 pence per therm (or around 4.7-5.3 euros/megawatt hour) over 2012-2015 versus the bank’s previous oil-indexed price forecast.

Most UK gas contacts are not directly linked to oil prices. But they are influenced by crude because stronger oil means continental European companies may buy more gas in the UK as their oil-indexed supplies become more costly.

As a result, Deutsche has revised upwards its UK gas price forecast for 2013 by 3.6 pence per therm, based on the higher fuel switching price, and by 12-14 pence per therm for 2014-2015 because of the higher oil price forecast, the bank said.

The average price of futures contracts on the global benchmark UK gas market for the period from April 1, 2012 to March 31, 2013 was around 70 pence per therm on Tuesday.

Utility Contractor saves over £20,000 a year for the next 2 years

FreshNRG has today completed contract negotiations on behalf of our new client  a utility contractor operating throughout the UK and Scotland that will see them save over £20,000 per annum over the next 2 years. This saving applies to their 2 depot operation and was achieved following initial bill analysis and then negotiations with both the incumbent supplier and our full panel of utility companies. We have been able to make close to a 45% saving on gas contracts even in rising market. Our client will enjoy these savings for the next 24 months and also is now assured the best contract management and negotiations for the future thanks to our rigorous approach to client care and on-going management.

For cheaper business gas and business electric please don’t hesitate to contact us for further information about our services. Or why not talk to us about how we can make significant savings to your business communications.

Utility Contractor saves over £20,000 a year for the next 2 years

FreshNRG has today completed contract negotiations on behalf of our new client – a utility contractor operating throughout the UK and Scotland that will see them save over £20,000 per annum over the next 2 years. This saving applies to their 2 depot operation and was achieved following initial bill analysis and then negotiations with both the incumbent supplier and our full panel of utility companies. We have been able to make close to a 45% saving on gas contracts even in rising market. Our client will enjoy these savings for the next 24 months and also is now assured the best contract management and negotiations for the future thanks to our rigorous approach to client care and on-going management.
For cheaper business gas and business electric please don’t hesitate to contact us for further information about our services. Or why not talk to us about how we can make significant savings to your business communications.

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Energy Minister gives go-ahead on new gas fired power station

Energy Minister Charles Hendry today gave the go-ahead for ScottishPower to construct  a new 1,000 megawatt gas-fired power station near Hoo St Werburgh in Kent, adjacent to the existing Damhead Creek 800 MW gas-fired power station.

Charles Hendry said:

“This power plant will play a vital role in providing secure electricity supplies for the South East, as well as creating jobs in the region.

“It will be one of the most efficient power plants in the world, and be built carbon capture ready, which means that eventually CO2 produced by the plant could be captured and transported for storage under the North Sea.

“There is also potential, in the future, to use the heat created by the plant to supply the local area.”

The Damhead Creek 2 Combined Cycle Gas Turbine Plant could generate enough electricity to supply almost 1.5 million homes.

Observations of a broker

As the economic climate becomes tougher and companies compete with each other at ever decreasing margins taking control of a business’s overheads has never been more important.

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UK is using more green electricity than ever

Jan 10 2011 by Kelley Price, Evening Gazette
TEESSIDE’S bid to become a manufacturing powerhouse for wind energy has been given a boost after it emerged the UK is using more green electricity than ever.
Statistics from the Department of Energy and Climate Change (DECC) for quarter three show the UK’s electricity from renewable sources is at 8.6% – the highest level yet – and wind energy is up by a massive 37% on the same time last year.
Bosses at wind and marine energy trade body RenewableUK say more than half of the UK’s renewable energy production comes from wind – and green chiefs on Teesside say the area is well equipped to claim its share of the growing market.
The industry will have to wait until March to find out whether the UK has hit its 2010 target to produce 10% of energy from renewables, according to DECC. Teesside’s potential took a big leap forward, however, when the Round Three licensing got under way in 2010, unlocking a further 33 gigawatts (GW) – enough to power every home in the UK.
Teesside firms have already been stealing a march on the renewables sector with a string of world leading projects in 2010.
CTC Marine at Darlington and JDR Cables at Hartlepool were major players in the pioneering Wave Hub, a £42m giant “sea socket” off the coast of Cornwall, built to test various tidal power prototypes for the fledgling industry.
JDR Cables also won a contract to supply a massive 200km of cabling for the first phase of the London Array development, worth £33m, in November.
CTC Marine has clinched installation and trenching work for 80 infield cables on the BARD Offshore 1 Wind Farm Project in the western North Sea for Germany-based Norddeutsche Seekabelwerke GmbH (NSW). Meanwhile, Heerema Fabrication Group, also of Hartlepool, won work to build two substation platforms for the Sheringham Shoal wind farm off the Norfolk coast. Bosses say the move would guarantee 1,000 jobs on Teesside.
“There are no technological barriers to having a third of our electricity from renewables in the next 10 years,” said Alex Murley, head of technical affairs at RenewableUK. “It is perfectly do-able.
“Wind is also set to provide not just clean electricity, but the jobs and the economic regeneration this country needs.
“Onshore, the British Isles have the best wind resource in Europe, while offshore we are world-leaders. Building on these undeniable facts could transform the UK into a regional renewable energy powerhouse.”
DECC’s results, he said, gave the industry confidence that tough and legally binding EU 2020 targets for renewables, which requires 15% of all energy in the UK to come from renewable sources, could be reached.

Small firms complain over utility contracts

A third (35 per cent) of small businesses do not know when their utility contracts end and 31 per cent do not begin to consider the renewal until they get a letter from their current providers with the rest of the market.

That was the result of research from the Forum of Private Business.

The group said that a third of business owners surveyed by the Forum describe standards of customer service as ‘poor’ or ‘very poor’. Many cite contractual issues – including the practice of rolling businesses over on to often more expensive contracts with little warning.

Just 11% can understand their utilities contracts, 35 per cent think it is difficult to switch suppliers and 40 per cent feel that contractual terms and conditions are ‘poor’ or ‘very poor’. Almost half of all respondents (47%) are concerned that utilities costs are too steep.

“There must be better protection to stop the erosion of service provided by utilities companies to commercial customers, particularly after the demise of Energy Watch and then Consumer Focus,” said the Forum’s chief executive Phil Orford. “Ofgem does not have the necessary powers to protect all small businesses and, unless we establish proper levels of service and transparency which allow them to make informed choices, they will continue to suffer at the hands of utilities providers.”

He added: “At the very least protections that have been introduced for micro businesses should apply to all small businesses. There is absolutely no evidence that SMEs with more than 10 employees are better equipped to handle issues with utilities companies.”

Meanwhile, energy supplier Eon suggested more than half of small business owners do not read the terms and conditions of contracts they receive from their utilities suppliers.

As a result, Eon said it has radically overhauled the way it communicates with its small business customers by cutting the number of product names and by simplifying its terms and conditions.The company has cut their number of products to five, and the new terms and conditions, which have been radically simplified to signpost key contract details, start going out to customers this week.

The research also found that small business owners were least likely to read the terms and conditions provided by their water supplier (just 2 per cent), followed by energy supplier (24 per cent), or broadband supplier (26 per cent) and most likely to give their telephone or mobile contract most of their time (at 48 per cent).

The worst offenders by sector were businesses in telecoms and designers, with over two thirds stating they never read terms and conditions. Engineers followed with 64 per cent, closely followed by the legal profession (63 per cent) and public services (61 per cent), all saying they would file the information immediately, only referring to it if they needed a telephone number.
Source: Utility Week

Ofgem not to ban rollerover contracts for business

The decision taken by Ofgem not to ban rollover contracts for business energy customers means a jackpot for the “Big Six” energy suppliers worth up to a Billion pounds a year, according to some sources.

The calculation is based on the typical four pence per unit difference between tariffs for commercial electricity – currently eight pence versus twelve pence – equating to around £1,000 per year for the average small business. Based on average meter types 03-04 at 32k usage per annum.

Research shows that only 20 percent of businesses know when their energy contracts come to an end and even fewer are aware that there is a deadline for serving notice to the suppliers – which often expires up to three months prior.

By missing these deadlines, businesses are automatically rolled onto renewal tariffs and locked-in for a contract which is the same duration as the original term, thereby reducing a businesses opportunity of negotiating better prices.

Although Ofgem has softened the conditions required to serve notice, the new rules do not prevent companies from being rolled and, when they do come into force in January 2010, will only apply to new contracts.

Notice required for termination of business energy contracts:

  • Eon: 21 day window anywhere from 120 days ahead of the contract end date
  • British Gas Business: between 120 to 90 days ahead of contract end date
  • Scottish Power: between 90 and 45 days ahead of contract end dateNpower: at least 90 days ahead of contract end date
  • Scottish & Southern: at least one calendar month ahead of contract end date
  • EDF: at least 28 days ahead of contract end date

Research in 2008 found that 80 percent of businesses have their contracts rolled, primarily because they do not know their contact end date. This means that approximately 960,000 businesses are paying six pence per unit more than necessary (1.2m companies x 80 percent x 32,000 units x six pence = £1,843,000,000).

New Ofgem Regulations for Business Energy Contracts Come into Force

New Ofgem Regulations for Business Energy Contracts Come into Force

Monday 18th January 2010, new regulations from Ofgem came into force which will help to protect small businesses from extortionate high contract rates due to the automatic rolling over of energy contracts.

So what is considered to be a “small” business or “micro-business” as Ofgem class these companies they hope to protect with the new regulations now in force.

How do I know if I qualify under the new regulations?

The new regulations do only apply to businesses that fall into one of the following criteria:

  • Consume less than 200,000 kWh of gas a year, or
  • Consume less than 55,000 kWh of electricity a year, or
  • Has fewer than ten employees (or their full-time equivalent) and an annual turnover or annual balance sheet total not exceeding 2m Euros

It should be noted that a business need only fall into one of the above criteria to qualify as a micro-business and benefit from the new regulations.

The new rules will only affect those businesses that entered into a new contract on or after Monday 18th January 2010. Contracts signed prior to this date will remain under the old regulations until a new contract is entered into at the end of that contract term.

How do the new rules affect my business?

The new regulations will give you and your business more protection against rolling over onto a new contract when your current contract comes to an end. Here is a summary of how you may benefit from these new regulations:

  • Before entering into a contract the supplier must now explain the key terms and conditions of the contract to the customer, and make it clear that the contract is binding

This potentially means that key clauses may no longer be hidden in the small print of the contract. The supplier must now make the customer aware of key conditions that relate to the contract and that may influence whether the customer enters into the contract or not.

  • Within ten days of a contract being agreed, or an existing contract being extended, the customer should receive written copies in plain language of the full terms & conditions and a statement of renewal terms (if the contract is of a fixed length)

Previously if a contract had been agreed over the telephone it is unlikely that the customer ever received hard copies of the terms and conditions relating to the contract and so they would probably have been unaware of the termination notice period for the contract and “roll over” clauses.

Approximately 60 calendar days (but no longer than 120 days) before the end of the fixed term period suppliers must now send customers a statement of renewal terms and details of the key terms and conditions

Included in this the suppliers must inform the customer of what will happen if

  • the customer takes no action and the contract rolls over
  • the customer prevents their contract from being rolled over

After the customer has received these renewal terms they then have what is termed a “notification window” of 30 calendar days in which they would need to contact their current supplier in order to negotiate new terms for a new contract. If the supplier offers a new deal then this must be presented to the customer in writing and valid until the end of the notice period.

If the customer does nothing within the notification window, in that they do not contact their current supplier in writing, the contract can be automatically rolled over for a maximum of 12 months. This is, of course, provided that the supplier has already given the statement of renewal terms.

Therefore to avoid being automatically rolled over into a new contract the customer can now write to their supplier at any point from when they agreed the fixed term contract to the end of the notification window. However if the customer wants to cancel the contract they should also ensure that they do so in accordance within the terms of the contract.

In effect suppliers must now make sure that the customer is aware well in advance of when they should take action to terminate the contract and what will happen if they take no action after this statement of renewal terms is received.

What Can I do if I don’t qualify at the moment for the new rules?

As the new rules only apply from 18th January 2010, any new contracts entered into after this date will fall under the new rules. However for customers on existing contracts the new rules will only come into effect when the current contract is extended or a new contract taken out.

If your contract is not yet up for renewal to avoid the risk of being caught out by being rolled over into a new contract enter your details into our Contract Renewal Reminder service details may be found by clicking this link http://www.ukpower.co.uk/business_energy/contract_reminder/new

By entering your details here UK Power will send you a reminder email, based on the information given, to remind you when your contract is up for renewal and that notice must be given shortly.

Useful Questions and Answers

What if I think I qualify as a micro-business but my supplier doesn’t?

It would therefore be recommended that you speak to your supplier and make available to them any supporting evidence that you think qualifies your business under the conditions for a micro-business.

How can my current contract roll over for more than one year?

If in the terms of your existing contract the roll over period is for more than 12 months and you failed to notify your supplier that you wished to terminate the contract, within the termination notice period, then your supplier may still roll over your contract for the specified period in accordance with the existing contract. However any subsequent roll-over periods, after this one ends, will fall within the new regulations and so will be subject to a 12 month roll over period, if the customer fails to terminate the contract again. If your current contract specifies a roll over period in excess of 12 months, on your current contract, it would be advisable to set up a new contract to benefit from the new regulations when the current contract ends.

What happens if I sign my new contract through an energy broker?

Signing through an energy broker will mean that you will still be protected under the new regulations because ultimately it is the supplier that has the responsibility of ensuring that all the necessary information is provided to the customer when signing a new contract.

What else should I look for when signing a new contract?

Make sure that you have given the correct termination notice to your current supplier to terminate your contract

Ensure that you shop around for the most competitive price for the needs of your business

Make sure that you read all the terms & conditions for the new contract before committing yourself, whether verbally, online or signing a paper contract. Unlike domestic contracts there is no cooling off period.

Make sure you understand what the term of the contract is, the prices that you will be paying, are they fixed or will they vary and the key points of the terms & conditions with regard to termination notice periods etc. Keep all this information in a safe place so that you may refer to it in case of any queries or disputes with your supplier.