Utility Aid: Energy outlook for the first quarter
Author: Stephanie Steele, partnerships coordinator at Utility Aid
At Utility Aid, we’re passionate about empowering the charity and nonprofit sector to save time and resources through tailored energy solutions. We work closely with councils and other organisations to help navigate everything from energy contract management to carbon reduction planning, all with a focus on sustainability and financial impact.
To help you understand the current state of the energy market and plan, we've provided a summary of the first quarter of 2025 and how this may impact the rest of the year.
World events will continue to affect UK energy prices, but we must focus on what we can control. UK and European gas storage is at its lowest in three years, at just 34% full. Replenishing it before summer ends is key to getting through next winter.
Oil
Oil prices hit a high in January due to the Organisation of the Petroleum Exporting Countries (OPEC) cuts and restrictions on trade with Russia and Iran. In January, oil exceeded $80/barrel. Still, prices are dropping due to increased U.S. production, a potential easing of sanctions on Russia, and threatened tariffs, which may hurt global growth.
Gas
Cold weather increased demand and lowered storage, but by February, enough LNG and Norwegian supply was available to last until spring. While peace seems unlikely, the U.S. may relax sanctions, and Russia, facing an economic crisis, might increase oil and gas exports. Some analysts even suggest the Nord Stream pipeline could restart by year-end, which may result in short-term price drops.
Electricity
UK electricity prices are still mainly driven by gas, the primary power source. This year has been mixed, with low wind and solar output in the first two months, but lower UK Emissions Trading Scheme (UKETS) carbon prices helped a bit.
Non-commodity
Non-commodity costs (sometimes referred to as non-energy charges or NECs) are added to bills to cover the costs of the National Grid transmission network, local distribution costs, renewable and environmental surcharges, and taxes. These costs, which add up to around 60% of bills today, ensure security of supply by subsidising the availability of capacity.
Some charges are based on a set formula, while others can be variable, depending on market conditions, demand and renewable generation.
Nuclear Regulated Asset Base (RAB) Charges
The government is backing new nuclear power to provide low-carbon baseload electricity. To fund this, a new charge (RAB charge) will help invest in nuclear plants like Sizewell C.
Review of Electricity Market Arrangements (REMA)
A major market review considers changing the current national wholesale market into multiple regional (or zonal) markets to reflect the balance of localised generation and supply. As this complex proposal evolves, we will provide further details on the potential impact and any customer preparations.
Make educated decisions when switching energy contracts
Did you know you can secure your new energy contract 12 months before your contract end date? This means you have plenty of time to shop around and make a more educated decision before switching energy contracts.
Utility Aid has developed its Switching Site, an online tool that allows you to generate quotes and secure contracts in minutes! Or if you'd like to speak to Utility Aid about your utilities, email [email protected] for support.
The following blog post is for informational purposes only and should not be considered professional or legal advice. The views and opinions expressed in this post are those of the author and do not reflect the official policy or position of the National Association of Local Councils. Any links to external sources included in this blog post are provided for convenience and do not constitute endorsement or approval of those websites' content, products, services, or policies. Therefore, readers should use discretion and judgment when applying the information to their circumstances. Finally, this blog post may be updated or revised without notice.
