Are you up to speed with the Carbon Reduction Commitment?

If your organisation has been caught in the CRC net, you’re probably only too aware of how demanding the whole scheme is turning out to be. To simplify things, we’ve summarised the key action points you have to take between now and 2012 and put them into a handy timetable that you can download here.

There are penalties if you fail to comply and incentives for taking early action, so make sure your organisation is ready and fully prepared. From a metering perspective, here are the headlines:

• You are on the CRC radar if you have one or more half hourly settled meters.
• The 1st qualifying criteria for CRC is if an organisation consumes 6,000 MWh or more of electricity from half hourly metered electricity supplies during the qualifying year (2008).  This is typically equivalent to an annual electricity bill of between £500,000 and £1million, depending upon the tariff.
• The 2nd qualifying perdiod and criteria for CRC is if an organisation consumes 3,000 MWh or more of electricity from half hourly metered electricity supplies during the next qualifying year (2012).
• The CRC will only capture AMR (remotely read) meters which are the main meters measuring the quantity of electricity supplied to a premises, not sub-meters or clip-on devices.
• A half hourly electricity meter includes:
• all electricity consumed through meters settled in the HH market [Mandatory half hourly meters]
• all electricity consumed though profile class 5-8 meters [Mandatory half hourly meters]
  all electricity consumed through AMR profile class 3-4 meters [Voluntary half hourly meters]
• If the energy consumed through half hourly electricity meters is 6000MWh or more, then at least 90% of your total footprint emissions must be regulated by the CRC (or by the EU Emissions Trading Scheme or Climate Change Agreement). All your emissions from core sources must be included. Core sources include electricity half hourly meters together with:
• all daily-read gas meters
• all gas consumed through AMR meters
• all non-daily metered gas consumption of more than 73,200 kWh per annum

As an incentive to install AMR meters, and in recognition for good energy management undertaken prior to the start of the scheme, there is a mechanism called the Early Action Metric which rewards participants who install voluntary half hourly electricity and gas AMR by 31st March 2010.

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Three leading smart meter manufacturers – Iskraemco, Itron and Landis+Gyr – have completed a testing phase that proves each firm’s smart meters are fully interoperable with meters built by the other two companies. The move is a major development in the smart meter market, and stands to answer a call from the major utilities to provide universal definitions and communications standards.

Interfaces on the three companies’ smart meters allow customers to mix and match different suppliers and should boost the development of smart grid applications in the UK.

 The scope covers a full end-to-end solution, from the Home Area Network to the Wide Area Network and the interface to utilities existing IT infrastructure.

Iskraemeco, Itron and Landis+Gyr believe that the initiative paves the way towards the deployment of smart metering in line with the recently passed EU electricity market Directive, which dictates that 80% of EU households must be fitted with smart meters by 2020.

“The development of these interface specifications is important to the utility industry because it will allow for true smart meter interoperability and enable customers to invest with confidence” said Oliver Iltisberger, senior vice president Energy Management Units for Landis+Gyr.

“Up to now we were mainly engaged in defining standards. This additional effort is necessary to convert these standards into truly interoperable products.”

To accelerate the objective, the companies have each started prototyping their application interface development in compliance with interoperable device interface specifications (IDIS) to be completed by the end of this year. This will facilitate the creation of a true plug-and-play environment for the future.

British prompt business gas prices recovered on Tuesday from a three-year low reached on Monday which traders said had been overdone, while prompt power prices firmed slightly on higher coal, gas and oil.  The planned re-opening of the Interconnector pipeline on Wednesday, which will allow surplus gas to be sold outside of Britain, has been a major factor in the price recovery, traders said.

“Within day prices fell drastically yesterday because the system was very long and Transco had to sell. The lowest they sold at was 3.5 pence per therm. But there had to be a reaction back up, it was oversold,” one gas trader said.

The closure of the Interconnector pipeline until Wednesday, Sept. 23 and the end of maintenance at Norway’s Ormen Lange gas field and Britain’s Theddlethorpe gas terminal added to the perception of a gas glut on Monday, traders said.

“The system is in balance this morning so gas prices are up a bit,” the gas trader added.

day-ahead gas prices were trading at around 20.75 pence per therm, up about 8 pence from Monday’s close and up slightly from Tuesday’s opening at 19.00 pence. Within day gas prices were trading at around 12.10 pence per therm at 1500, up just over 5 pence from Monday’s close but down from Tuesday morning’s opening levels of around 16.5 pence per therm.

Day ahead prices closed on Monday at 19.00 pence per therm and were trading on Tuesday morning at 21 pence.

October gas prices were up around 0.5 pence on Monday’s close and further down the curve forward prices had risen about 0.25 pence.

Baseload electricity for Wednesday stood at 31.40 pounds for day ahead contracts, down from a morning high of 32.50. October was trading at 34.35 pounds.

“Oil has firmed up a bit, coal is slightly stronger and gas is a touch firmer so the power has moved up a little with them,” one power trader said.

Smart metering specialist Bglobal has picked up its second blue chip contract in the space of two days.  Hot on the heels of a deal to provide the UK retail arm of Russian energy company Gazprom with smart metering services, Bglobal has signed a deal with Superdrug, the UK’s second-largest beauty and health retailer, to install smart meters at all of its UK stores, totalling over 900 sites. The installation programme is planned to commence by the end of September 2009. The new meters will allow Superdrug to precisely monitor its energy usage.

‘We have been working very closely with Superdrug over the past six months to plan the installation programme, which will take place in phases, in order to ensure minimal disruption to its business operations. This new contract reflects the major acceleration we have seen in the UK market of our clients implementing solutions that reduce energy consumption, driven by initiatives such as the Government’s CRC programme,’ chief executive Anthony Barnes said.

Shares of Bglobal were up 9.75 pence at 46.25 pence at 0719 GMT on the London Stock Exchange.

The ‘Big Six’ energy giants will defy growing public anger and the demands of the energy regulator by refusing to cut gas prices at least until the spring, despite the fact that the UK is sitting on a glut of cheap wholesale gas.  The price collapsed last week to 34p a therm, whereas this time last year it was £1.  Alistair Buchanan, chief executive of industry watchdog Ofgem, has said continued high prices do not appear justified and plans to ‘name and shame’ the companies that refuse to adjust their tariffs to changing wholesale prices.

Alistair Buchanan, chief executive of Ofgem, has plans to ‘name and shame’ the companies that refuse to adjust their tariffs. Last month, he wrote to all the companies, demanding that they explain why they were not cutting prices while the cost of wholesale gas was falling. He is expected to publish the industry’s response before the end of the month and will set out his plans for action. Buchanan is under pressure to get tough because the industry is perceived to have successfully undermined his role as a consumer champion.

However, he has only limited powers, including another referral to the Competition Commission, which only last year cleared the Big Six – British Gas, npower, Scottish Power, Scottish & Southern, EDF and Eon – of anticompetitive behaviour.

In their replies, the energy companies are expected to argue that the gas consumers are buying today was bought by the energy companies up to two years ago when wholesale prices were much higher.

They will also stress that the ‘non-gas’ elements of gas prices, including items such as transport costs and government environmental measures, have gone up by 44 per cent.

But last Friday one energy company, first:utility announced that its online tariff would be cut by 14.5 per cent and explained it was reacting to the fall in wholesale prices. Despite recession and the huge oversupply of gas, households are still paying an average bill of £1,200 a year.

According to energy price expert ICIS Heren, a major factor behind the surplus is that higher UK prices mean that giant liquefied natural gas tankers now dock at Britain’s state-of-the-art terminals with increasing frequency.

Fifteen per cent of UK gas now is supplied by LNG tankers compared with virtually nothing last year.

A spokesman for the Energy Retailers’ Association said: ‘We have seen energy prices falling for the vast majority of customers this year.

‘Despite these falls, the wholesale market still remains volatile and a challenge for energy suppliers coming up to the winter.

‘Customers have been protected from the massive rises in wholesale prices last year, wholesale price rises that were not fully passed on at the time, this at a time when companies are investing billions of pounds in new generation capacity to ensure an essential, reliable and safe energy supply to their customers.

With the UK facing an energy crisis, how do you think we should best tackle it? Now you can have your say on energy company E.ON’s new website. which aims to provide a summary of the energy challenge facing the UK. It features forums and video clips featuring experts and industry leaders discussing affordability, carbon dioxide reduction and renewables. Now E.ON wants customers and consumers to get involved in the debate by posting a video, or uploading your own comments to their website – hosted by YouTube. On a clip posted on the site, Paul Golby CEO of E.ON UK said the company hoped to tackle today’s most pressing energy issues. He said the UK is currently facing “Not an energy dilemma, but an energy tri-lemma.” As part of the energy challenge, the UK has to work out how to balance the need for low carbon energy, reliable sources, and affordable prices.

Director of energy regulation at E.ON UK Sara Vaughn said that E.ON was passionate about energy efficiency.” She said that E.ON doesn’t just want to invest in gas- they are looking at all types of fuels, including nuclear and fossil. But E.ON bosses don’t just want industry experts to join the debate. Mr Golby said: “We’re inviting you to join in and share the debate. Ask the questions that are most important to you.”

British wholesale gas prices are likely to stay low through winter due to arrivals of LNG cargoes, putting pressure on utilities companies to reduce retail energy prices.  Despite the recent decline, UK gas prices are still well above US prices, which makes Britain the most attractive destination for an increasing volume of the super-cooled gas produced around the world, analysts say. “There’s certainly scope for (retail) price reduction,” said Niall Trimble, managing director at the Energy Contract Company Ltd. “A lot of LNG will come here. Even though our prices have fallen, U.S. prices have fallen further.

On Monday last week, UK day-ahead gas prices hit lows not seen since April 2007, weighed by the global surplus in gas, which has hindered a price recovery for the fuel, despite a 75 percent rebound in oil prices since December.

With more spare LNG available, U.S. Henry-Hub gas prices have replaced higher European oil-linked prices as the floor for Britain at least for the time being, the analysts said.

U.S. benchmark Henry Hub gas in Louisiana on Monday sank to $2.42 per mmbtu, its lowest level since late February 2002, with little upside expected, due to the struggling economy and storage levels on track to hit all-time highs by winter.

Britain’s four LNG import terminals are seen already pretty much booked out through winter, including three new terminals that came into operation this year.

“There’s very healthy energy supplies,” said John Ferris, head of risk management at Energy Information Centre. “We can certainly see low prices persisting in winter and greater ability to cope with any short-term issue through winter.”

Day ahead contracts were around 20 pence per therm ($3.27 per mmbtu) on Tuesday after slipping towards 16 pence last week.

They were down by a third from above 30 pence at end-March and down by nearly two thirds from around 55 pence one year ago.

While day ahead prices hovered between 20 and 25 pence since early July, major utilities have not cut retail prices since March, except for E.ON UK which cut prices in July for the first time this year after 2008 price hikes.

“I would imagine margins are pretty good at the moment. So there is a scope in the autumn to reduce prices a bit,” said Graham Freedman, senior analyst for European Gas & Power service at Wood Mackenzie.

No major utilities would comment on whether or not they would cut retail prices this autumn.

Analysts said demand for business gas prices from the industry showed some signs of a pickup, though it was unlikely to match levels seen a year ago during the winter between October and March.

The Times reported on Monday Corus was preparing to restart some of its idled capacity, such as a hot rolling mill in South Wales, mothballed in January.

“We have not necessarily expected to see steel production increasing in the UK so soon…Probably over the next month companies will come back,” Ferris said. “But the real drive for winter is the weather.”

Freedman agreed, adding: “We had a pretty cold winter last year…This masked some falls in demand in the industrial sector. It’s pretty difficult to judge at the moment.”

After an unusually cold winter last year, even an average winter would lead to a drop in heating demand, which accounts for up to two thirds of total consumption in the cold season.

In a rare move for summer, Britain in August imported gas from Continental Europe, which has had to buy more gas than it needed because of long-term contracts with Russia.

“What we’ve seen for the summer is that there’s been so much gas around,” said Ferris. “Demand is so low, and because Continental utilities…have to pay for more gas than they need.”

Last month, Centrica, one of the major utilities, also said it was shutting production at Morecambe Bay gas fields as it could buy gas cheaper in the market.

With low gas prices pushing up spark spread — or margins for burning gas — well above dark spread, utilities have run gas-fired power stations as much as possible over the past several months, instead of coal.

Yet the analysts said this was unlikely to raise gas demand for power generations because they were also running near full-capacity last year when several nuclear plants were closed.

“We haven’t seen a huge increase in gas demand for power generation,” Ferris said.

“We’ve seen a big reliance on gas-fired electricity generations over the last 2-3 years, with British Energy having all the problem of nuclear outages.”

Asked about the price level, Trimble said: “As for the winter, current price for the winter of 37 pence may be a little bit too low…I suspect it might come up a little bit perhaps to around 40 pence.”

But the summer next year was over-priced, he added.

“It is showing currently 37 pence. It’s been 25 all summer,” he said. “Why would it be 50 percent higher? The oversupply is probably worse by then, primarily because of LNG.”

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