British gas prices dived again on Monday as warmer weather cut forecast demand, while another nuclear power plant restart over the weekend helped drive down wholesale electricity prices. The price of gas for delivery on Monday plunged from 44 pence per therm at the end of last week to 39 pence, while the rest of the working week dropped four pence to 38.80 pence as demand for the heating and power generation fuel dived to well below normal for the time of year. Power prices also fell sharply, driven down by the restart of the Heysham 1-1 nuclear power reactor over the weekend, leaving only two of British Energy’s BGY.L 16 reactors still offline on Monday. “Power plant availability looks quite good,” one power market trader said, adding falling gas prices and demand were also behind the drop in wholesale electricity costs.

Baseload electricity for Tuesday fell to 39.25 pounds per meagwatt hour, compared with 44.50 pounds paid at the end of last week for Monday baseload contracts, while March power contracts fell to around 39 pounds from 42.00 pounds on Friday, as gas contracts for next month dived 5.5 pence to 38.75 pence, according to brokers. The National Grid website showed the national gas network was well supplied with fuel, in part because demand was forecast to be 27 million cubic metres below normal for the time of year on Monday, while demand is forecast to fall further still on Tuesday.

Forward gas prices also slid, following another fall in oil prices, with Summer 2009 contracts dropping 3.50 pence to 36.30 pence per therm and Winter 2009 similarly softer at 52.60 pence.

Oil prices climbed above $38 a barrel on Monday after the International Energy Agency (IEA) said there could be an oil market supply crunch from next year once global oil demand begins to recover. The IEA warning gave upward momentum to a market undermined by a raft of bearish economic data from Asia. Japan’s economy shrank in the last quarter by its most since the first oil crisis in 1974, hit by an unprecedented slump in exports, which is likely to lead to more calls for extra stimulus steps to fight the deepening recession. The impact of the recession is also being felt in South Korea, where January exports dropped by a record 33.8 percent from a year earlier, even worse than forecast. U.S. light crude oil futures for March delivery were up 65 cents at $38.16 a barrel by 1004 GMT in electronic trade, after gaining $3.53 on Friday. The New York Mercantile Exchange is closed for Presidents Day and will reopen on Tuesday. London Brent crude for April rose 29 cents to $45.10, maintaining a premium to U.S. oil due to high stock levels at the main U.S. storage hub in Cushing, Oklahoma. The IEA’s executive director, Nobuo Tanaka, told reporters on the sidelines of a conference in London he expected world oil demand to resume growth from next year, rising by about 1 million barrels per day (bpd) in 2010. “Currently the demand is very low due to the very bad economic situation,” Tanaka said. “But when the economy starts growing, recovery comes again in 2010 and then onward, we may have another serious supply crunch if capital investment is not coming,” Tanaka said. Analysts see most oil prices trapped within a fairly tight trading range for the time being. “We continue to maintain that crude prices will be trapped in a sideways band for the next several weeks,” brokers MF Global said in a note to clients. “Rallies above $50 look vulnerable, as given the deteriorating global macro backdrop, we do not think prices north of that level will be sustainable.” Oil’s jump on Friday was largely boosted by renewed optimism that a giant U.S. stimulus package could help pull the economy out of a 14-month recession, while the gains were further encouraged as traders booked profits by selling the spread between front and second month futures contracts. U.S. President Barack Obama on Saturday hailed congressional approval of the $787 billion economic stimulus bill as a major milestone in the country’s economic recovery and the White House said he would sign the legislation on Tuesday.

Oil prices have tumbled from their peak above $147 a barrel last year, as the economic downturn has spread to all regions of the world, cutting energy consumption. Analysts see downside risks for oil, as economies struggle through their worst recession in decades. U.S. economic data due to be released on Tuesday include manufacturing production in New York State and U.S. home builder sentiment for February.

EDF Energy became the latest UK energy supplier to lower its fuel bills, announcing it was trimming its UK electricity prices by nearly 9% per cent from March 31st. However, the cuts will only benefit consumers in the south, Wales and Scotland and not those in the Midlands or Northern England. The announcement, which will benefit around 2.3 million households, or around half of EDF’s 5.5 million total, has raised the pressure on Scottish Power and N-Power, the only two major UK energy suppliers who have still not yet cut their bills this year, to do so soon. Some standard rate electricity customers could see as much as a 12.5 percent fall in rates, the French-owned company said. The group’s gas prices have also been left on hold, despite steep falls in the wholesale price of gas in the past eight months. “In this time of extremely volatile energy markets, EDF Energy continues to ensure very competitive prices for our customers,” Eva Eisenschimmel, head of brand performance at EDF Energy, said in a statement. “In 2008, we passed on the lowest gas price rises of any of the major utility suppliers.”

British Gas, E.ON and Scottish and Southern Energy have all cut some of their prices already this year although critics say the cuts do not go far enough following a near halving in the wholesale price of energy since last summer. E.ON also left its gas prices frozen after hiking them by 41 per cent in 2008. The announcement came as N-Power agreed to repay £1.2 million to some 200,000 customers after a probe by regulator Ofgem. Ofgem said Npower agreed to “put things right” after the watchdog completed an investigation into changes to its gas tariffs in 2007. Ofgem said Npower’s approach to telling its customers about the changes meant some households whose consumption was low lost out financially.

The financial crisis has left many assets and sectors battered and bruised. The stock market is down by more than 30% over the past year. The global economy is on its knees but history suggests that equity markets will begin their recovery before GDP figures start to show strength again.

Investors who will gain the most will be those with either the nous or the brass neck to get in early. There are some fund managers that reckon that the fall in the oil price could open such an opportunity. The question is whether those investing in the sector now are jumping the gun?

Oil reached a peak of just under $150 a barrel last year, today it stands at jaround $40. The demand that pushed the price to record highs has slumped as many global economies have slowed. Some analysts are reticent to suggest how long the global recession will last, but when the stimulus injected by central banks begins to filter through the demand for oil will pick up.

Several already believe that investors should start to look at oil, they do not say the price has bottomed or a spike in the price is imminent, but they reckon that a floor cannot be too far away.

Demand for oil has collapsed because of the very weak economic conditions, and the price of oil has fallen as a result. Production is also falling – non-OPEC production peaked last year and is now on the decline.

This week, crude fell after the US Energy Information Administration revised down its 2009 global oil demand forecast by 400,000 barrels per day from its previous outlook, predicting demand will fall by 1.17 million bpd this year from 2008 levels. US crude stands at around $34 a barrel. London Brent stands at $45 a barrel.

But Killik, the stockbrokers sent a note to investors reckoning the “momentum is negative and crude is approaching oversold levels – short-term traders should go long at current levels with a tight stop loss’.

Mick Gilligan, an analyst at Killik says the price of oil is wrong in the medium term and says that his clients are buying exchange traded funds to benefit from the low price – particularly US oil which is lower than the price of Brent crude.

Chris Wheaton, Director, RCM, the specialist equity company of Allianz Global Investors, says: “Oil has been included in the January sales. Even if oil is only $50/barrel in 2010 it makes for a great investment opportunity right now. Low prices are encouraging more energy use – for example, gasoline demand in the US is now at the same level it was last year despite all the talk of a weak US economy. Sometime in 2009 or early 2010 we expect oil demand across the world to start to grow again.

“The credit crunch and uncertainty over oil prices are causing investment in new oil fields to be put on hold. However the big trends, such as rising energy use across emerging markets and natural declines in existing oil production won’t disappear and will continue to push oil prices higher. This means were certainly going to have $100/barrel oil again by 2013, and makes longer-term investments in energy at today’s prices look very attractive.”

Robin Batchelor manager of the Blackrock World Energy fund says that both oil and gas prices are trading below their marginal costs, which are unsustainable for any reasonable time frame – but he admits that economic woes do raise concerns on the demand side of the equation.

He says:”However, energy equities are trading at P/E multiples at a discount to the broader market and are generally supported by asset valuations. Almost all the companies in the portfolio are well-capitalised and generating cash. At some point in the relatively near future, we believe fundamental factors will regain their importance as investors again return to traditional valuation techniques.”

Gary Dugan, Chief Investment Officer, EMEA, Merrill Lynch GWM, reckons that for those who want to trade oil, we are very close to buying levels – anything below $35 is a buying opportunity.

He says: “When the oil price starts to move towards $30 a barrel it starts to cost more to extract oil than producers can get by selling it, so production facilities get shut down as they become uncommercial. We expect the annual production of oil to fall by as much as 5pc a year over the next five years, which should create a floor for the oil price. We believe that oil will bottom out at around $30, and will average between $40 and $45 over the course of 2009, subsequently rising to around $55-60.”

But before investors rush to get a piece of the action, there are some who are not so sure now is the time.

Ian Henderson, who manages the JPMorgan Natural Resources Fund, is not convinced that now is the ideal time to invest in oil related plays – mainly due to the uncertainty of the US, which he says will dictate sentiment. He continues to bet on gold which makes up the lionshare of his portfolio at this juncture.

“The long-term view remains in tact but there is so much global uncertainty. But there are dozens of cargo ships floating around refineries because demand for oil is weak -there is plenty of oil floating around – it could be that we will have to wait until that is through the system before the price rises,” he says. “However, many oil companies have strong balance sheets having been buoyed by the high price in the past which makes some oil stocks a useful hold for those looking for dividends – although so too do the likes of Vodafone and Glaxo.”

For investors wanting to take advantage of any future rises in the price of oil, there are a number of choices. You could invest directly in the shares of the oil majors and production and service companies. Other options include investing in funds that look at the oil sector (Guinness Global Energy, JPM Natural Resources, Investec Energy), or in an exchange-traded fund, which is an investment vehicle that holds assets such as stocks or bonds.

Oil shares do not move directly in line with the oil price because there are other factors at work such as management skill, debt and the costs of distribution. However, there is a correlation over the longer term and they are paying decent dividends.

Remember that oil stocks in the UK make up a significant chunk of the FTSE100 so any tracker fund or General UK Growth fund that does not veer too much away from the index will benefit from any pick up in demand for oil – and those bumper dividend payments.

Energy firm E.On has announced it is lowering its electricity prices by 9% for most of its customers. E.On says 4.1 million households will benefit from the reduction, which comes into effect on 31 March. It is not reducing its gas prices. E.On said it knew its customers were facing a difficult time and it continued to monitor the market. The move follows price cuts by competitors British Gas and Scottish & Southern Energy. British Gas is to cut its gas prices by 10%, effective from 19 February. Scottish & Southern will cut the price of electricity by 9% and gas by 4% from 30 March. A spokeswoman for E.On said it was not reducing the price of gas because it had “offered one of the lowest prices for gas throughout the winter months when our customers have needed to use more gas to heat their homes”. “Electricity usage is far more stable throughout the year and we feel our customers will benefit more from this decrease as we approach the warmer months,” she said.

BP’s British Innovator liquefied natural gas tanker was expected at the UK’s Isle of Grain import terminal, from Trinidad & Tobago, on February 21st, according to AISLive ship-tracking data on Reuters. The 138,000-cubic-metre tanker was last seen on Wednesday off the coast of Tobago, according to the data, and is expected to arrive in time for a berthing slot at Grain on Feb 22. BP owns capacity at the Isle of Grain terminal near London and has sent a steady stream of cargoes to the terminal since its recent expansion. The latest, BP’s British Trader, arrived there on Monday. A BP Trinidad & Tobago official said last month that the company has stepped up shipments of the super-cooled gas to the UK to take advantage of the higher prices there. BP and Sonatrach were the original capacity holders at the terminal when it opened in 2005, with France’s GDF Suez and Britain’s Centrica now also owning capacity.

Gazprom Marketing & Trading hopes to start supplying power to UK businesses and industrial customers within the next few months. The UK-based arm of Russia’s Gazprom, which currently supplies natural gas to UK commercial users, applied last week to energy regulator Ofgem for a UK electricity supply license. Ofgem is expected to give its consent by early May, when the company will enter into discussions with its customers and offer them an electricity deal. Gazprom M&T spokesman Philip Dewhurst said the company is already gearing up to sell power from its retail operations office in Manchester.

It is in the process of purchasing the IT system of former independent supplier BizzEnergy, which collapsed in November 2008, citing the financial constraints imposed by the credit crunch and an industry dominated by giants. “We’re looking to acquire BizzEnergy’s IT system, which will enable our traders to buy and sell power,” said Dewhurst. “It’s been our ambition to enter the power market for some time, and
we’re doing it organically,” Dewhurst added. Dewhurst said the company currently employed a team of around 30 retail specialists up in Manchester, but would be looking to add power specialists to the team shortly. “We’ll get the license first, then start marketing to our customers. We hope to start supplying power in the next few months,” Dewhurst said. Supplying electricity to business customers marks a change of strategy
for the company, which currently only operates in the UK’s wholesale, rather
than the retail, power market. The company, which is headquartered in Kingston-upon-Thames, Surrey, has grown rapidly over the past two years in the UK commercial gas market and now boasts 14,000 customers in UK and Ireland, around a 4% market share.

It entered the UK business supply gas market in 2006, when it bought a small supplier called Pennine Natural Gas and has been growing its business organically since then. Gazprom has long declared its intention to enter European power markets. The company already has signed memorandums of understanding for joint ventures to build two new natural gas-fired combined cycle turbine plants in Germany. It does not have any electricity generation in the UK.

British gas prices remained weak on Wednesday, helped by mild weather which trimmed heating fuel demand and Russian supply reaching Europe via Ukraine for the first time in two weeks. Gas for Thursday was down 2.10 pence at 53 pence per therm, while February shed 0.75 pence to 52.50 pence and the 2009 second quarter inched down 0.45 pence to 43.30 pence. which should displace some demand,” said a trader. “There’s plenty of gas around, with lots of Norwegian selling. More LNG is due to hit UK in February. Weather is looking a bit milder.” Russian gas started to reach some countries in Europe on Tuesday, though pipeline operators said it could be Wednesday before supplies arrive other parts of Europe. With the crisis over, the market refocused on the slowdown in the global economy, which is eating into demand for energy, while the temperature climbed following a two-week cold spell at the turn of the year.

Asked about future, the gas trader said: “February may struggle to go much lower than this…But the summer could go to 30 pence easily. The world economy is not in the best of shape. There’s lots of gas floating at the moment.” The National Grid website showed the system was long by late morning, with Norway pumping the fuel at a speed of around 70 million cubic metres per day via Langeled and Rough storage facilities adding more than 40 million.

In the power market, electricity prices were also weak, despite 13 power generating units being offline, including seven nuclear units. Baseload electricity for Thursday stood at around 51 pounds per megawatt hour, down from around 52 pounds late on Monday. March fell 0.90 pound to 50.10 pound and the 2009 summer was little changed at about 43 pounds.

British Gas owner Centrica bucked a falling market yesterday, jumping 11p to 284.75p on renewed talk of a possible bid from Russian group Gazprom. The tale seems to have started after Gazprom held an investor day and mentioned it was interested in the UK market. But the Russian group subsequently denied it was in talks “with shareholders or the management of Centrica about an acquisition of the company”. It added: “Whenever we are back in London, shares in Centrica recover. We are going to publish the timetable of our visits to make it more predictable.”

Millions of utility bills are set to fall after four energy suppliers pledged to follow cuts by British Gas and Southern Electric. Bosses from the foreign-owned suppliers E.On, RWE, npower, EDF and Scottish Power were embarrassed into declaring they will cut charges after MPs demanded to know why they have delayed following the British-owned companies’ lead. E.On retail director Jim Macdonald told the energy select committee today the chances of an imminent cut are “increasing rather than decreasing”. Martin Lawrence, supply director of EDF, said the firm is ‘actively looking’ at cuts. Nick Horler, chief executive of Scottish Power, said: “We are likely to move soon.”

British Gas slashed its own prices for gas by 10 per cent this month – now foreign-owned firms are likely to follow Guy Johnson, director at npower, said it is cutting ‘social tariffs’ to vulnerable customers. The attack came from the boss of one of the two major British-owned power suppliers during tense exchanges with MPs who are investigating sky high bills.

British Gas has announced a 10per cent price cut on gas, while Scottish & Southern Energy (SSE) is cutting electricity by 9per cent and gas by 4per cent.

Today SSE’s combative chief executive, Ian Marchant, said he could not understand why these foreign firms have not announced price cuts. ‘One of the questions that occurs to me is why it is the two British quoted companies that have announced (price cuts) first and the four Continental Europeans that haven’t,’ he said. ‘I don’t know whether that is significant, but it is an interesting question.’ He added: ‘I am sitting here torn. I hope they don’t reduce prices because that means I can win customers. But that is not the answer for UK plc.

‘So I hope they get off their backsides and do something in the next few weeks.’
Average household gas bills rose by 50per cent in 2008 and electricity by around a third. The net effect was to add around £400 a year to the cost of heat and light. Ian Marchant has attacked foreign-owned firms for not cutting prices The wholesale price of gas and electricity has fallen by 40per cent since the peak last summer. However, UK customers are paying record tariffs.

Mr Marchant said it is his hope that the entire industry will cut bills at least once in the next few weeks, with a further reduction later this year. The SSE chief also attacked the foreign power giants for operating secretive accounting systems that make it very difficult to see how much profit they are making in the UK, and how much tax they are paying here. Both British Gas and SSE publish information on their profit margins. However, some of the foreign firms do not even declare a UK profit figure. The British Gas chief executive, Phil Bentley, also took up the attack on the foreign rivals. He pointed out that German, French and Spanish firms have been able to buy UK suppliers, power stations and storage. However, British firms cannot do the same in these other countries.
He complained that some foreign firms had been exporting UK gas to Europe throughout the winter via an Interconnector pipeline under the English Channel, despite high demand here.

‘In the last 120 days, the interconnector has been exporting gas from the UK into Europe for 100 of those,’ he complained. The net effect is to keep wholesale prices in the UK higher than necessary. MPs on the Energy & Climate Change Committee, chaired by former Government minister, Elliot Morley, challenged company chiefs from the foreign firms to cut their prices. Senior executives from the firms indicated there would be announcements ‘soon’. However, that did not satisfy the committee and one MP suggested the clamour to hit the industry with a windfall tax is likely to grow unless there is action.

Labour MP, Dr Des Turner, said: ‘The public has the perception, rightly on wrongly, that companies are squirrelling away unjustifiable levels of profit…There is a great deal of public support for a windfall tax.

‘Given that you are so coy about protecting your bottom line and unwilling to tell us why it is you can’t reduce prices now, rather than some optimistic time in the future, can you give an honest rebuttal of the call for a windfall tax?’

The firms insisted profits are vital to help pay for new power stations, including nuclear and wind farms, to ensure the lights stay on. Eon commercial director, Jim McDonald said while wholesale prices are down compared to last summer, they remain 75per cent above the figure in February 2007.

‘We will do our best to reduce our prices as soon as we can do,’ he said. Guy Johnson of Npower said UK gas prices were the cheapest in the EU, while electricity prices were the among the lowest. He said the company is spending millions subsidising home insulation for customers and ensuring those in need are moved to cheaper social tariffs. Chief executive of Scottish Power, Nick Horler, said the firm is likely to cut prices soon.
While Martin Lawrence of EDF said: ‘We are actively looking at prices and expect to move our prices soon.’

The price of oil today is roughly half of what Opec wants it to be and the cartel is prepared to make further cuts in production, according to its secretary-general. Abdalla El-Badri told the Financial Times that if oil prices did not rise from current levels before Opec’s March 15 meeting, the cartel would “not hesitate to take further action” by cutting production among member states. Any such move would add to the cumulative cuts of 4.2m barrels per day that Opec has instituted in two rounds since September. Mr El-Badri and Mohamed al Hamli, minister of energy for the UAE, said in speeches to an energy conference in London on Monday that a “reasonable” oil price was between $60 and $80 per barrel. “We must recognise that if the price environment does not change now, we will face much worse problems in the future,” Mr El-Badri said, sharpening warnings he has made over the past month.

The comments led to a slight rise in oil prices on Monday, with US crude for March delivery trading at about $40 per barrel and Brent crude climbing to almost $47.

With oil prices at today’s “extremely low levels”, he warned, companies would find no incentive to explore for and develop new fields, thereby laying the seeds of a supply crunch when the world economy recovered.

Oil prices had already fallen so close to production costs, he added, that 35 of 150 upstream oil projects under development had been postponed, with more expected to follow.

One energy executive doubted whether Opec – which accounts for about 40 per cent of the world’s oil production – could unilaterally push prices to the $60-$80 band this year. The effect of recent cuts were hard to measure so far, he said, adding that the pace of economic deterioration among member states was occurring so fast that concerted action was more difficult than ever.

But 80 per cent of Opec’s 4.2m b/d reduction had already been achieved, Mr El-Badri said. At next month’s meeting in Vienna, the cartel would determine whether member countries had achieved the remaining 20 per cent of targeted cuts.

Last year’s oil-price climb above $140 per barrel had much less to do with physical demand than futures speculation, Mr El-Badri said, as he called on governments to tighten regulation of oil futures markets.

In an attempt to help in the minimization of global warming process, Google will provide an iGoogle secure gadget that will help people to reduce the electricity consumption. The gadget is called Google PowerMeter and currently it reached the prototype stage and is tested by Googlers, before an official launch. The GooglePowerMeter uses the data provided by the smart meters, which are advanced energy meters. The actual number of installed smart meters is about 40 million, but it is estimated that this number will reach a higher value because there is planned the implementation of another 100 million in the next years. http://www.youtube.com/watch?v=6Dx38hzRWDQ

Scottish and Southern Energy is reported to be in £11 billion takeover talks with a state-owned Swedish power giant.

The firm, which is the UK’s second biggest power company, is understood to be holding talks with Vattenfall, according to the Mail on Sunday. The move follows years of speculation linking the two groups, but the talks are thought to be at an early stage, and any takeover is understood to be depend on the outcome of an auction of Dutch energy firm Nuon. Vattenfall is currently bidding for Nuon, Holland’s second biggest energy company, and the Scottish and Southern Energy talks are reported to be a fall-back position if it is unsuccessful. Stockholm-based Vattenfall is one of the leading energy producers in northern Europe and it is has a huge cash fund for acquisitions. It is understood to have wanted to move into the UK market for some time. A Scottish and Southern Energy spokeswoman declined to comment on the speculation. No-one from Vattenfall could be contacted. On Friday Scottish and Southern Energy became the second UK energy firm to announce price cuts for its customers, following an earlier move by British Gas.

The group, which has nine million domestic customers, said it was reducing average electricity prices by 9% and gas prices by 4% from March 30, due to lower wholesale energy prices. It also said it was on course to deliver a “modest” increase in adjusted pre-tax profits on the £1.23 billion it made in the year to March 2008. The firm made £302.6 million in the six months to September 30, but expected to make the bulk of its profits in the second half of the financial year as the price hikes and higher winter demand took effect. It also plans a rise of at least 9.1% in its full-year dividend.

Scottish and Southern Energy said Friday it will cut retail prices for electricity by 9% and for gas by 4% from March 30th, citing lower wholesale energy prices.

SSE is the second U.K. supplier to cut its retail electricity and gas prices this year.

The company also said that it was on track to deliver the financial and operational goals for the period to March 31 set out in its last report. “The falls in wholesale energy prices, which started between July and October 2008, have been maintained and mean SSE is able to deliver its first cut in domestic energy prices since March 2007,” it said in an interim management statement. SSE said that the number of energy customers it has reached 9 million for the first time, up from 8.3 million previously.

New licence conditions for the supply of electricity and gas will be introduced on April 6th this year. These new conditions are an essential building block in the Government’s carbon reduction programme for the UK. Under these changes, all Profile Class 5-8 electricity meters, and all metered gas consuming over 732,000 kWh a year, must be replaced by smart meters. The new metering standards for all Profile Class 5-8 meters will be CoP10 for whole current and CoP5 for CT meters. Customers have until 2014 to change their meters, but any smart meter installed as from the New Year must comply with this new metering code of practice.

Does this affect you? To find out if your meters need to be changed, take a look at your electricity bill. This will contain an ‘S’ number that tells you which electricity Profile Class you are in. According to BERR/DECC, the new meters must ‘store measured electricity consumption data for multiple time periods; and at least half hourly’ and they must ‘provide remote access to such data by the licensee’. BERR/DECC also state that ‘timely’ access to the data from the meter must be given to the customer. Government guidance is that ‘timely’ should be day + 1.

But, just because suppliers will now have to give you access to your meter data, it doesn’t mean they should let you have it for free. The Office of Government Commerce (OGC) is advising the public sector not to sign up to a supplier contract where metering is conditional on the agreement. They believe this ‘limits competition and the ability to negotiate energy contracts in the future’.

Continuity of data is fundamental to achieving carbon savings. So, the best route is to go appoint an independent provider of metering and data services. This will allow you to change supplier without being bound by any metering and data service, and without losing any of your meter data during the supplier change over.

The Government believes proprietary metering systems are not good for market choice. Therefore, BERR/DECC are calling for open systems, so that any data collector can collect from any metering system – just like in the half hourly market. The benefit of having open systems is that it will greatly improve consumer choice.

Mandatory smart metering by 2014 will affect around 170,000 electricity meters and 40,000 gas meters in the UK. If this includes your organisation, then it’s in your interest to switch to smart metering sooner rather than later, because the half hourly meter data you will have access to will enable you to see exactly where and when energy waste is occurring. It’s only when you have this detailed information that you can start to introduce effective measures to eliminate waste and reduce carbon emissions.

Will you be caught in the Carbon Reduction Commitment? Currently, there are 110,000 meters in the half hourly market. The requirement for mandatory smart metering in electricity Profile Classes 5-8 and annual gas usage of 732,000 kWh or over means a tripling in the number of half hourly meters by 2014. Any organisation which has introduced half hourly metering and which uses more than 6,000 megawatt hours a year (or around £1/2m at today’s prices) will now be caught in the net of the Carbon Reduction Commitment (CRC). So, if you thought your organisation was going to slip under the radar of the CRC, you may need to revisit this assumption.

As a reminder, the CRC is a mandatory carbon trading scheme that will be introduced in 2010. Its aim is to cut carbon emission by 1.2 million tonnes in the UK by 2020. You can find out more on DECC’s website: www.decc.gov.uk

The CRC will be a bonus and penalty scheme, with organisations in the top half of the ‘league table’ being paid a bonus. So, it’s not all bad news: with your smart metering system in place, you will be able to eliminate energy waste – which puts you in a much stronger position to win regular CRC bonuses.

Save up to 12% on your energy bills: If you think smart metering will increase your costs, reconsider. Smart metering has reduced in price significantly over the last twelve months and the difference between the cost of monthly manual reads and the cost of obtaining remote reads and online half hourly data has narrowed dramatically.

According to the Carbon Trust, introducing smart metering can actually save you money. Last year, they undertook smart metering trials and the results showed that smart metering, when combined with consumption data and energy-saving advice, gave potential average savings of 12% a year.

To sum up, if you are in electricity Profile Class 5-8 or you consume over 732,000 kWh of gas a year, your current meters must be replaced by smart meters by 2014. This is mandatory, so you will be obliged to invest in this. However, it is in your interest to do so, as there are significant energy savings to be made with smart metering. And the savings you make will all go towards meeting the UK’s carbon emission targets. All in all, smart metering gives you an outstanding return on your investment.