Sharing is caring!

The EU Referendum, Brexit and your energy prices

Today is an important day for Britain. With opinion divided on whether or not the country should remain united with Europe, the UK is waiting on tenterhooks to hear the results of the EU Referendum.

Read also our Smart Energy Guide July: Smart Energy Guide: Brexit and UK Energy Sector

 

Would a Brexit affect electricity prices?

Economists and market analysts have worked hard to deliver the facts on how a possible ‘Brexit’ would affect UK businesses. While nobody can unequivocally say what will or will not happen if Britain leaves, many energy experts believe it will negatively impact the energy industry, particularly the electricity sector.

This is largely because the UK’s electricity infrastructure requires more investment over the next decade than over the last two, due to our decarbonisation plans and capital stock upgrades[1]. A Brexit would mean the UK would have to negotiate new terms with foreign investors, who in turn would ‘demand a higher rate of return to compensate for the greater risks’[2].

Furthermore, as a Brexit would certainly devalue the pound[3], the price of the required equipment, technology and services would increase.

The resultant effect of these factors would likely drive-up electricity prices for British customers.

 

What about gas?

Gas prices are not expected to rise immediately after a possible Brexit, due to a low likelihood of supply interruptions, which usually result in increased pricing.

In the longer term however, a Brexit could mean the UK is excluded from EU ‘solidarity principles’, in which EU countries commit to supplying their neighbours in the event of a gas supply crisis. If this happens we would be exposed to greater supply security risks in the future, resulting in a less stable market.

 

How will it affect public tendering?

For the public sector, there has been significant concern about the public tendering process if Britain votes to leave. Currently, the Official Journal of the European Union (OJEU) systematises the tendering process for any public sector utility service contract to the value of £164,176 or more as per PCR 2015.

Many have complained at the bureaucracy that this directive brought with it but, interestingly, the UK’s approach to procurement legislation actually goes beyond the requirements imposed by the EU[4]. Indeed if the EU procurement process were to be repealed, it is more than likely a similar one will take its place[5].

 

Monarch’s commitment to you

As the UK’s longest running independent energy broker, the Monarch Partnership have and will always be, committed to managing the energy requirements of Britain’s public and private sectors. For almost 30 years we have devised systems and procurement practices to reduce energy costs for our customers. The combination of our highly-skilled team and the technology we employ means we will ascertain the most competitive prices in the volatile market that a Brexit might bring. We will take on any possible new procurement legislation, fully conforming to all legal requirements and will work with energy providers to handle any possible issue that the market could encounter.

Since 1987 we have seen many significant changes to the energy market and we pride ourselves on our fast response to each and every one. Whatever happens with the EU referendum, you can rest assured that our team will continue to deliver the high-level service and low prices you expect.

[1] p.2: http://www.vivideconomics.com/wp-content/uploads/2016/03/VE-note-on-impact-of-Brexit-on-the-UK-energy-system.pdf

[2] As above.

[3] Some estimates predict a fall of up to 20 per cent against the US Dollar: https://next.ft.com/content/932e7073-d6f0-3048-a641-cca9c4baf984

[4] http://www.sharpepritchard.co.uk/news/brexit-what-will-it-mean-for-public-procurement-in-the-uk

[5] http://www.publiclawtoday.co.uk/local-government/procurement/308-procurement-and-contracts-articles/29149-brexit-and-public-procurement

Mindy Vehvilainen

Author Mindy Vehvilainen

As head of marketing, Mindy is chief string-puller for all of Monarch's and The Groups output, lead generation and communications with the wider world. At the heart of her work is a passion for all aspects of the industry and a refusal to ever stop learning. The only person in known existence to juggle twenty different jobs with no loss of quality or enthusiasm.

More posts by Mindy Vehvilainen

Leave a Reply

NEWSLETTER

News and Updates


Please enter an email address