After trying (unsuccessfully!) to set up a new electricity supply to a business site, finding Senco Energy to act on our behalf was absolutely the best thing we could have done! They’ve found a great contract for us, in a very short space of time, and explained the process along the way. Very professional and friendly – I wish I’d saved myself time and gone straight to them in the first place! Huge thanks from us, and I wouldn’t hesitate to recommend them to anyone.
The British government is constantly striving to improve our outlook on the environment and is looking for different ways to achieve business and domestic buy in. The policies around the protection of energy has developed quite considerably over the years. In 1962 they implemented the Pipes Act, 1986 saw the Gas Act, 1998 was the Petroleum Act and ever since 2004 the Energy Act has been amended 3 times. Energy has been, and always will be a key commodity to any developed, or developing nation.
The reduction of carbon emissions is not only one of the key protocols of the Kyoto agreement, but is also steadily becoming a big area of trading for many countries and organisations. In June 2010, Barclays Capital bought Swedish carbon emissions trading firm, Tricorona, for £98 million pounds, signaling the growth of the emissions trading sector. Carbon reductions are good not only for the environment, but are also a huge area of income if there is excess to be traded.
The most recent Energy Act to be implemented, the Energy Act 2011, focuses on one key area, The Green deal. The main crux of the Green deal is to create a new funding mechanism to help organisations implement energy efficient measures without having to pay the upfront costs. The government has set a ‘Golden Rule’ to the Green Deal and that is – The charge attached to the bill should not exceed the expected savings.
Essentially the way it works is that the company that installs or recommends the energy measures will not receive any money upfront from the client. They will instead be paid from the savings on the client’s bill, and this will be paid directly from the supplier. It is an interesting funding mechanism, but no doubt the government will have to have grants in place as it will be difficult to get buy in from the suppliers.
To achieve the 34% carbon reductions by 2020 that were agreed in the Climate Change Act 2008, it will require the UK to reduce carbon emissions in our homes/communities and workplaces by 29% and 13% respectively. The Green Deal has been put in place to help us achieve these targets. The UK has one of the oldest developed building networks and whilst this is a great feat, it also means that many of our buildings are highly inefficient when it comes to energy. The way the government is touting the new initiative is that it is bringing our buildings up to date.
A further key area to the Energy Act 2011 is that as of April 2018 it will be unlawful to rent out a private, or business premises that does not to reach a minimum energy efficiency standard. There is a huge drive to ensure businesses buy in to the initiative, but the focus will have to be on the landlords even more so than the actual business owners. Some of the processes that are involved with the development and installations of energy efficient measures can be quit taxing and sometimes can deter companies from taking them on board. If companies do not see any immediate savings and do not buy into it, the dependence will then fall on to the landlords and also people looking to be ‘greener’.
There is also huge resistance from the energy suppliers. Currently the government’s proposal is expecting the energy companies to overhaul their payment systems to accommodate the payments to the energy efficient suppliers. Many energy companies have claimed that it is not feasible for their payment systems to be developed by October 2012, as was originally stated.
It would seem that the government needs to amend the Act and make it mutually beneficial for the environment as well as the key stakeholders in the agreement for it to really blossom.
The threat of Iran developing a nuclear weapon is becoming an ever more realistic possibility. Although Iran categorically deny that they are enriching uranium for anything more than commercial energy development, the recent trip by U.N delegates indicates other wise.
The European Union and America have placed a trade embargo on any imports of Iranian oil as well as prohibiting any organisations dealing with Iranian banks. It is worth noting that Iran is the third largest oil producing economy on the planet and is the second biggest member of the Organisation of the Petroleum Exporting Countries, formally known as the OPECs. The OPECs was setup in 1960 by 5 original member states; it now consists of 12 members mainly from Africa and the Middle East. The OPECs generally hold 2 meetings a year, one in March and one in September, and the main topic of conversation is deciding what their output should be for the forthcoming 6 months. The decision on output is predominantly to control the price of oil to protect their long-term interests. They hold 79% of the world’s crude oil reserves and 49% of the world’s crude oil production.
With Iran being the current leading state of the OPECs, there is cause for concern that the embargo instated by the EU and America will have a long lasting effect on energy prices. It is also worth noting that Iran controls one of the world’s most strategically important straits, a strait that 20% of the world’s oil runs through, this is the Strait of Hormuz. The bigger picture needs to be understood. Iran is head of the OPECs; the OPECs controls 49% of the world’s oil production and the embargo could affect the world’s largest producing conglomerate to alter their production and this will subsequently increase the price of oil. There is evidence that this is already happening. For the first time since July 2008 the price of Brent Crude oil surpassed $128 per barrel and there are predictions that it will surpass $150 per barrel this year. The price of crude oil is always a good measuring stick for energy prices across the board.
The basic price of anything is determined by simple economics. Supply and demand. As soon as demand out weighs supply, there will always be a surge in price. When a singular country has the power of being the world’s third largest oil producer, controlling an oil passage that 20% of the world’s oil runs through and is also head of a conglomerate that controls 49% of the world’s oil production there is a worry that it will be able to control basic economics when it comes to oil prices.
With the wheels in motion and the price of oil surging, can this be controlled? This week there have been reports that Singapore and India have started to re-enter into contracts with Iran to purchase their oil. On one hand there is a moralistic objection to this, equally there is a need to relieve the rest of the world’s oil producing countries to ensure the price of energy is maintained at a feasible level.
In a day and age where we scrutinise over a few pennies here and there on our balance sheet, it’s important to remember that the cost of energy affects our profit margins by thousands of pounds. It is therefore hard to criticise India and Singapore for buying Iranian oil when it inevitably will help reduce the average companies energy costs. On one hand you have Iran controlling the supply, but for there to be equilibrium in economics you need to have someone controlling the demand; that is where we can give thanks to India and Singapore.
In recent months, much has been said with regards to energy companies sales tactics and practices in the domestic sector. However, there has been little mainstream media focus on the commercial sector, often with the view that organisations are big and ugly enough to look after themselves.
Sadly, as many are aware this has resulted in a level of miss-selling on behalf of both energy suppliers and energy brokers/third party intermediaries (TPI’s) alike. Whilst the majority of TPI’s within the market act in a professional and trustworthy manner, unfortunately this cannot be said for all.
TPI’s play an important role in the energy procurement market, providing a route to market for many of the large ‘Big Six’ and smaller independent energy suppliers. With the reduced sales and operational support of many of the suppliers, TPI’s provide an invaluable service, generating genuine competition within the oligopolistic energy supply markets.
For many years the industry has been calling for Ofgem to implement and maintain a code of practice, which now appears to have taken a move in the right direction. Regulation is required to provide greater levels of transparency whilst ensuring customer satisfaction throughout the complete process. Here at Senco Energy, we strongly support Ofgem’s proposed TPI accreditation scheme and feel it can have great effects in regenerating trust within the marketplace.
Of vital importance is that SME organisations are aware of supplier practices especially roll-over procedures and the damaging effects this can have on their overall energy expenditure. A sensible energy consultancy, with relationships with key UK suppliers will take the time and care to fully understand an organisations requirements, communication key messages from day 1 in a transparent and effective manner.
Despite the proposed regulations not yet coming into effect. Here at Senco Energy we have developed and strictly adhere to our own Energy Code of Practice. Should you have any questions or queries regarding our CoP of the wider scheme proposed by Ofgem, please do not hesitate to contact us directly.