As of the 2nd of March, Gas and Electricity Year Ahead Wholesale costs were higher than last month. Oil was also higher at $78 from $66. OPEC+ will aim to increase production by 206,000 barrels per day from April 2026 but may struggle due to the current supply issues.
With the discussions which aimed to end Iran’s nuclear capability making little progress, the US and Israel launched missile attacks on Iran, looking to destroy nuclear infrastructure and aid regime change. In response, Iran has targeted numerous locations, including Oil and Gas production. The danger to shipping passing through the Strait of Hormuz and reported attacks on vessels, means its closure and disruption to supplies of Oil and LNG from the region.
Although Europe receives large volumes of LNG from the US, any loss of global supplies impacts on prices, which for the EU, at a time when Gas Storage is very low, means additional pressure on current resources and when looking to replenish supplies through the warmer months in readiness for winter 2026/2027.
The effect on customer’s contract renewals is currently significant when compared to more recent prices, although they are still far lower than those we saw in 2022 and 2023. The eventual scale of these increases and over what period is very much an unknown, but we will continue to be available to discuss options and provide guidance.
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 March, the Gas Year Ahead Wholesale cost was 98.49p/th, up from 74.81p/th in last month’s report and 6% less than 2025. Today, the 3rd of March, has seen prices once again move significantly higher.
Milder temperatures across Europe have meant that the withdrawal of Gas from EU Storage has slowed, although levels are still very low at just 30% full compared to 38% last year and 63% in 2024. From April we would normally expect Gas to be diverted into Storage in readiness for the winter, which is even more important this year with the end of Russian supplies of LNG to the EU from January 2027.
The military action by the US and Israel against Iran has triggered attacks by Iran on various targets, including energy. With the closure of the Strait of Hormuz due to danger to shipping, there is disruption to Oil and Gas exports from the region. Although Europe has become more reliant on Gas from the US, the reduction will mean increased global competition, which is inevitably causing prices to increase. Energy markets have been extremely volatile since the conflict started, which has resulted in energy suppliers struggling to offer customer contracts, due to price fluctuations.
We would encourage any customer with a contract that ends in the next few months, to discuss your renewals with us and we will look to provide additional market intelligence where required, guidance and support, for your unique circumstances.
On the 2nd of March, the Electricity Year Ahead Wholesale cost was £84.91/MWh, up from £76.17/MWh in last month’s report and 1% less than 2025. Today, the 3rd of March, has seen prices once again move higher.
Electricity Wholesale prices are being impacted by the large increase in the cost of Gas, which provided 31% of generation in February and 23% over the last week. Wind was unchanged at 32% and Imports via the Interconnectors were up at 13% from 12% in January.
Gas prices are being pressured by the disruption to supplies caused by the closure of the Strait of Hormuz and attacks by Iran on energy infrastructure in the region. This is creating a higher demand from other sources at a time when the EU has very low Gas Storage, which needs to be replaced for this coming winter. Electricity contract prices are not impacted to the same extend as Gas, due to the large proportion of the Electricity bill consisting of other charges. These have also been increasing to pay for investment in the network to allow for the electrification of the nation and Net Zero.
We would encourage any customer with a contract that ends in the next few months, to discuss your renewals with us and we will look to provide additional market intelligence where required, guidance and support, for your unique circumstances.
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