Energy Update — 31 July 2025

Market Update

Prices have been trending down since the June spike caused by fears of a sustained conflict between Israel & Iran that would have impacted oil & gas supplies. However, recent favourable conditions are subject to new pressures, with forecast high temperatures in Europe, the U.S. and Asia increasing gas for cooling demand.

Further, Europe's gas reserves are currently at 68%, 8% behind the 5-year average, and UK gas storage remains low at 33% of capacity. Continued restocking will maintain demand through summer and autumn.

Most significantly, President Trump’s threat of sanctions on Russia and countries that continue to buy its oil and gas, most notably China & India, are driving prices upward. If China & India stopped buying cheap Russian exports and had to compete for other sources, it would mean higher prices globally. Trump's recent decision to halve the 50-day deadline brings sanctions closer.

As we head toward colder weather, markets will put an additional risk premium on potential interruptions to gas supplies. Whether this threat will force President Putin to agree a ceasefire with Ukraine, or if these sanctions will be deferred as many trade sanctions were, is currently unknown. While the long-term cost of gas & therefore electricity looks set to fall as global LNG supply increases from 2026 on. In the short term, there are currently more factors suggesting higher prices.

Business Energy Costs

In terms of average energy costs for pubs, prices have been stable over the last few months. Electricity rates are averaging around 24p & gas 6.5 ppkW with standing charges around £1 per day for both. As with any average, some customers will be paying less or more.

		Commodity Cost	Av Unit Rate	Av Standing/C
Electricity	03/07/2025	7.9p	24.2p	71p
	17/07/2025	8p	23.4p	73p
	31/07/2025	8p	24.7p	£1.15
Gas	03/07/2025	2.7p	6.6p	77p
	17/07/2025	3p	6.5p	94p
	31/07/2025	3p	6.3p	80p

As energy costs are expected to rise, due to the impending winter and the impact of other events, businesses with contracts set to renew through to April 2026 should consider the affordability of current renewal options.

Change of Tenancy Changes

Many will know of the recent implementation of the Retail Energy Code Company (RECCo) code on Changes of Occupancy. This provides advice to suppliers and customers on the type of documents that are used to evidence the change and the timescales that suppliers have, 10 days to either process the change or ask for additional information. Early feedback is mixed – there seems to be a levelling effect with some historically poor suppliers being responsive and processing the change within the timescale. While some better suppliers appear to have elected to start asking for more documents than they used to, this has dragged the process out.

Some suppliers appear to be making no effort to comply with the process.

Critically, what is absent is a requirement for suppliers to explain why they want some documents, especially those that are difficult or impossible to obtain. Worryingly, the Ombudsman typically takes the view that if it’s on the list, the supplier can ask.

The energy market continues to evolve, volatility is set to increase as are the challenges created by Ofgem and suppliers. More than ever, operators need a trusted partner to support them navigate these challenges.

Graph produced by Cornwall Insight in conjunction with Drax Energy Solutions, 31/07/2025