Within a week of Ofgem’s 7 February announcement of increases to the levels of the default tariff and safeguard tariff caps for domestic energy consumers for summer 2019, three large suppliers had increased their standard variable tariffs (SVTs) to match. The increase in the cap itself has been largely anticipated, however, in this week’s Energy Perspective we find that, whether other suppliers follow this lead or not, it is becoming clear that we are entering a period of time when the gap between many larger supplier SVTs and the lowest market prices will be as wide as it was before the cap. This, we suggest, underlines the changing commercial risks in the energy market for all domestic suppliers in a world of price caps.
A one-off session held by the House of Lords Economic Affairs Committee on nuclear power on 12 February demonstrated the clear frustration around the lack of impetus from government in recent months on nuclear policy from its supporters. In this week’s Policy section, we provide an overview of the session, which included the Nuclear Industry Association’s CEO Tom Greatrex and Professor Dieter Helm. The former called for government to provide clarity on financing models for new nuclear by the end of 2019.
The implementation of four new Guaranteed Standards by Ofgem represents a further significant but necessary tightening in the requirements placed on suppliers. Our Regulation section looks further at the standards, which are to apply from 1 May and are intended to incentivise improvements to switching reliability and to support consumer confidence in the switching process.
The latest analysis from Cornwall Insight has indicated that energy supply costs are at their lowest levels since August 2018. In our Industry Structure section, we delve deeper into our data, highlighting changes in the market and finding that supplier costs have fallen for the third consecutive month, with both the electricity and gas indices down by at least 4%.
Since the start of 2019 SSE’s share price is up 13%. However, as Cornwall Insight Associate Peter Atherton explains in this week’s Nutwood it has been a difficult 12 months for the company, during which it has seen two profit warning and the collapse of a key strategic deal that dented investor confidence. The question posed following deeper analysis of last year is simple: where next?
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