As of the 2nd of February, Gas and Electricity Year Ahead Wholesale costs were higher than last month. Oil was also higher at $66 from $62. OPEC+ will continue with their pause on Oil production increases through March 2026, potentially adjusting output from April.
January saw a number of issues which added pressure to prices. The US stated that they would impose 10% tariffs against nations that objected to their ambition to take control of Greenland, possibly through force. If the US had not backed down, then there may have been some disruption to vital US LNG shipments to Europe. The cold spell in the US also raised concerns for US LNG deliveries. Threats made by the US towards Iran due to their Nuclear research, included the deployment of armed forces. A conflict could impact on the export of energy from the region. Despite more positive messages regarding a peace deal between Russia and Ukraine, no agreement has been found. The EU moved closer to formalising the ban on Russian LNG from January 2027 and all Russian Gas from October 2027. EU Gas Storage levels are now very low at just 41% full compared to 53% last year. In recent days energy costs have fallen, due to a more positive outlook for some of these issues.
A high demand for Electricity in January saw Wind generation provide 32% of supplies from 33% in December and Gas was 34% from 27%. The contribution of Imports from Europe fell to 12% from 16%.
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 2nd of February, the Gas Year Ahead Wholesale cost was 74.81p/th, up from 66.26p/th in last month’s report and 40% less than 2025. Prices are lower than last week.
EU Gas Storage is a growing concern with levels at just 41% full compared to 53% last year. A period of very low temperatures across Europe has required additional supplies for heating. When conversations with the US became tense and tariffs were threatened, there was the potential that the US may have used their vital LNG supplies to pressure opinion, in a similar way that Russia did in the build up to the war with Ukraine. This may have been the prompt for the EU to confirm that they wish to explore other sources to reduce this reliance.
Low EU Gas Storage at the end of the heating season means it needs to be replaced through the warmer months, keeping demand high. With the EU banning Russian LNG from January 2027, the assumption is that Storage levels need to be even higher before winter 2026/2027. This could be a challenge with the maintenance of assets and the potential competition for supplies from Asia. If the US does take military action against Iran, there may be reduced supplies from the Middle East.
We would encourage those with Gas and Electricity contracts that are due to end in the next few months and possibly further out, to engage with Indigo Swan to monitor positions closely. Should you wish a monthly Price Projection for your energy contracts, please contact us to discuss.
On the 2nd of February, the Electricity Year Ahead Wholesale cost was £76.17/MWh, up from £72.27/MWh in last month’s report and 24% less than 2025. Prices are lower than last week.
Electricity demand increased in January, requiring large contributions from both Gas at 34% of supplies and Wind at 32%. Imports from Europe were lower at 12%.
The reliance on Gas to provide some baseline Electricity and to react to changes in demand, means that it does normally set Electricity price direction. The huge investments which are being recovered through customer’s Electricity bills, to upgrade the network and ensure we have enough generation, does mean a reduction in price volatility. Concerns for EU Gas Storage have increased as they are just 41% full and will fall further before the end of the heating season. Gas Storage will need to be replaced through the warmer months in readiness for 2026/2027, especially with the EU ban on Russian LNG from January 2027. There are other potential price pressures from any US military action against Iran, LNG demand from Asia, low temperatures, and the increasing number of surprises.
We would encourage those with Gas and Electricity contracts that are due to end in the next few months and possibly further out, to engage with Indigo Swan to monitor positions closely. Should you wish a monthly Price Projection for your energy contracts, please contact us to discuss.
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