The wholesale price of gas soared on Monday, stoked by predictions that the end of March will be colder than expected.
Reuters announces that UK wholesale day-ahead gas prices rose by 30% today up to 70p per therm as temperatures are expected to drop again to between 5-6C colder than average.
The UK’s domestic gas reserves have not yet recovered following the cold spell earlier this month, a problem exacerbated by a general shortage of storage facilities in the UK.
The cold weather has also created shortages in Europe causing the price of imported gas to increase. Data from Thomson Reuters suggests aggregate storage levels across Belgium, France, Germany and the Netherlands are well below levels seen over the same period the last three years.
As the North Sea gas fields become increasingly depleted, the UK has become more reliant on dwindling domestic storage facilities and price-volatile imports from Europe to meet changes in demand. A similar collection of events led to fears of a gas shortage earlier this month as the National Grid was forced to issue a gas deficit warning during the particularly cold period.
Separately, energy regulator Ofgem has proposed tougher price controls on energy firms that could reduce consumers bills by up to £25 a year.
The proposed price control framework, which will come into effect from 2021, will seek to protect consumers from carrying the cost of increased investment into the grid.
The regulator said it expected energy companies would need to invest “billions” into infrastructure to manage changes in the way the grid is used. These changes include an increase in people charging electric vehicles, storing energy in household batteries and selling excess solar energy back to the grid.
Ofgem said: “To make sure the cost to consumers is as low as possible, we are proposing the lowest rate ever for the amount we think energy network owners need to pay their shareholders, 3% to 5%, for raising this [investment] money.
“We anticipate this would result in savings for household customers of around £15-25 per year.”
Ofgem has launched a consultation into the proposal that is open for submissions until 2 May 2018.
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