As of the 1st of December, Gas and Electricity Year Ahead Wholesale costs were lower than both last month and last week. Oil remains stable in the region of $63 a barrel, with OPEC+ pausing the series of production cuts for now. Increasing tensions between the US and Venezuela could add upward pressure to Oil prices.
There has been a growing confidence in Europe that energy supplies are more stable than in recent years, especially with the hope that a peace deal can be put in place between Russia and Ukraine. Russia is being subjected to various restrictions, with more due, as the EU is planning to ban all Russian Gas from 2028. A deal would probably see some relaxation of measures and reduce price pressures.
EU Gas Storage is 75% full compared to 85% last year. Despite a short cold spell, so far, the heating season has seen mild temperatures which are expected to continue for a couple of weeks. This has meant that Storage levels have declined slower than 2024/2025, with the help of good supplies of Gas from Norway and LNG shipments, due to an increasing capacity and a lower demand from Asia.
Wind’s contribution to generation was a high 32% in November and 35% in the last week. This has reduced the need to use Gas.
The energy industry has changed how it recovers Electricity Distribution, Transmission and Balancing costs, under the Targeted Charging Review. This has moved some charges away from being based on the energy used and billed in the unit rate, to fixed charges incorporated within the Standing Charge or as separate items. This should give both the customer and the industry a more accurate way of calculating budgets, but the change has become noticeable within energy bills and created concern.
From April 2025 customers will have seen an increase in Transmission costs with an expectation of further increases from April 2026. Distribution costs are a little more complicated with the average fixed annual cost decreasing across networks from April 2025, remaining similar in 2026. Another element, the Available Capacity (AC), increased significantly for most from April 2025, with small reductions in 2026. This does mean that by managing the Agreed Supply Capacity, there is an opportunity to reduce the AC cost and potentially lower the Band which determines Transmission and Distribution fixed charges.
Balancing costs, which pay to avoid power cuts are increasing and the Energy Intensive Industries (EII) charge, which currently provides relief from various industry costs for EII customers at 60%, is increasing to 90% from April 2026.
Indigo Swan works closely with energy suppliers to help all our customers understand and manage changes.
Please contact us on 0333 320 0475 to discuss options or to get a latest update.
On the 1st of December, the Gas Year Ahead Wholesale cost was 69.53p/th, down from 80.60p/th in last month’s report and 35% less than 2024, which is in the region of a 20-month low. Prices are lower than last week.
Since Russia began to restrict Gas supplies into Europe and with the invasion of Ukraine, there has been a concern for Gas supplies across the continent. This resulted in some huge costs, needing state intervention to protect both domestic and commercial consumers. Time has allowed for additional supplies to be found and investment to be made, securing Gas from global sources. It may also be the case that this position has become the new norm, and so less concern for supplies is being built into market costs.
Temperatures across Europe have generally been mild, which looks to continue. EU Gas Storage is 75% full compared to 85% last year and 95% the year before. However, with a slow rate of withdrawals, Norway replacing Russia as the main Gas supplier and with a growing number of US LNG shipments, there is a more relaxed outlook. This is despite the EU banning Russian LNG from January 2027 and the intention to likely ban all remaining Gas from 2028.
We would encourage those with Gas and Electricity contracts that are due to end in the next few months and possibly further out, to potentially take advantage of the competitive prices and to engage with Indigo Swan to monitor positions closely.
On the 1st of December, the Electricity Year Ahead Wholesale cost was £71.39/MWh, down from £78.49/MWh in last month’s report and 16% less than 2024, which is in the region of a 20-month low. Prices are lower than last week.
The reduction in the cost of Gas due to an improved outlook for both winter supplies and the amount of Gas that will be required in the summer to replace the withdrawals, has meant that Electricity costs have followed. As Gas is an expensive fuel, it generally sets the price direction for Electricity.
The unreliable performance of Renewables will continue to be an issue until the significant planned improvements to infrastructure are in place. These will improve the movement of Electricity across the country, helping to manage the large Balancing costs. The increasing number of Battery projects will allow surplus and cheap power to be stored for use during periods of higher demand. Investment in Gas and Nuclear generation is still required as part of our diverse energy mix. In November, Wind contributed 32% of supplies up from 29% last month and just 22% in November 2024. This reduced Gas to 30% and Interconnectors to 12%.
We would encourage those with Gas and Electricity contracts that are due to end in the next few months and possibly further out, to potentially take advantage of the competitive prices and to engage with Indigo Swan to monitor positions closely.
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