Operation Yellowhammer: Planning for post-Brexit electricity price rises
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Operation Yellowhammer: planning for post-Brexit electricity price rises

13/09/2019

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With news that the Government is planning for electricity price rises post-Brexit, how can you protect your business?

On Wednesday 11 September, the Government published Operation Yellowhammer, revealing that business (and domestic) consumers in Northern Ireland and Great Britain could face significant electricity price rises after Brexit.

We’ve talked before about all the things that could cause electricity price rises after Brexit, including:

  1. Cuts in EU infrastructure investments: the UK imports 5% of its electricity and 12% of its gas from the EU via interconnectors, taking advantage of the single market and frictionless trade. More interconnectors are planned… but those plans may change after Brexit.
  2. Increased transportation costs: without access to the single market and the customs union, the UK could be facing tariffs on energy imports from the EU, which will put up costs.
  3. Leaving the EU Emission Trading System: under the EU ETS, it’s cheaper to generate electricity from clean fuels than it is from coal. Power stations and energy suppliers don’t know how much it will cost to generate electricity outside the EU ETS – and that cost uncertainty will be passed on to consumers eventually.
  4. Withdrawal from Euratom, the EU’s nuclear cooperation agency: this could have a serious impact on the UK’s ability to generate nuclear power, negatively affecting our energy security and likely causing price increases in the long-term.
  5. Currency fluctuations (the biggest immediate issue): the sliding pound has already added at least £2bn to the UK’s energy bills since the referendum. This pushes up the cost of imports – it costs more money to import the same amount of energy – and, because energy suppliers aren’t charities, that increased cost will be passed on to consumers.

We’re not gamblers, but post-Brexit electricity price rises seem like a pretty sure bet.

What does Operation Yellowhammer actually say?

Here’s the relevant section:

Snapshot of the paragraph in the Operation Yellowhammer papers relating to electricity price rises

If you don’t understand that, don’t worry, you’re not alone.

Let’s break it down:

  • Supplies won’t be interrupted – the physical infrastructure won’t change and the lights will stay on, but how planned new interconnectors will be affected and at what cost remains to be seen.
  • Northern Ireland is currently part of the all-island Single Energy Market covering NI and the Republic of Ireland. Electricity generation across the island has been integrated since 2007 (before that, the ROI and NI were powered by two separate systems).
  • The SEM physical infrastructure won’t change, but the impact Brexit will have on the legal relationship between ROI and NI is uncertain.
  • Some energy suppliers could go bust, pushing up electricity prices for businesses and domestic consumers as they start paying standard rates until they sign up with a new energy supplier.

It’s unclear whether the final point relates only to Northern Ireland or the UK as a whole, but given the conditions and issues we outlined at the start of this blog…

Do you think electricity in the UK is going to get cheaper after Brexit?

How you can protect your business

We’re going to be straight with you:

If or when Brexit happens, the UK’s energy market will change. Your business will probably end up paying higher prices for electricity. But…

You don’t have to pay those higher prices now.

Renewing your electricity contract with your current supplier now (or switching to a new electricity supplier altogether if you can find a cheaper deal elsewhere) will protect you from price increases for the length of your deal.

That gives you time to watch and see how prices change after Brexit, figure out how much your electricity will cost in the future, and start preparing for the hit.

If you need some advice, give us a call on 0808 164 2222 or benchmark your current business energy deal online at our website and see if you can make savings now.

If you’ve used an energy broker in the past, there’s a good chance you’ll be able to make significant savings – energy brokers typically add 8-40% uplift to your unit rate (their sales commission and fee), unfairly inflating the price you pay.

Whatever you do, don’t wait.

After all, you don’t want to pay a broker’s bill as well as a Brexit bill.

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