It has been 5 weeks since the result of the referendum was announced, giving the energy market plenty of time to react to the initial shock of the UK majority being in favour of leaving the EU.

So what exactly has this done to UK energy prices and what is likely to happen in the near future?

The short answer is – not as much as you might think.

Both gas and electricity wholesale prices are currently increasing at the same rate, with electricity being led by gas price increases.  After a steady start to 2016 prices started to increase on 18th April – long before the EU vote was announced.  The following months increases were unlikely to have been influenced by BREXIT as the poles suggested that a ‘remain’ vote would be inevitable.  Fast forward to the result on 23rd June and no spikes were seen in market prices.  Although many suppliers pulled their prices on news of the result, the upward trend has continued but with no real acceleration.
The main difference to be seen is in the prices on longer term agreements.  Through April, May and June there was very little difference in wholesale prices for 12, 24 and 36 month contracts.  Since the referendum however, the differences have become more apparent with a current gap of 0.14p/kWh between 12 and 36mth offers, compared to just 0.03p/kWh before the result on 23rd June.

So what is likely to happen in the coming months and years?

It may still be early days to call this; however there are some things we can be sure of.

The UK imports around 50% of its gas.  With the fall in Sterling, any future purchases are going to cost more unless the pound recovers.  With the majority of UK electricity still being produced through burning natural gas, this will have a knock-on effect with electricity prices.
The greatest influence on energy prices though will to be ‘uncertainty’.  As suppliers do not know what will happen in the next couple of years (even more so than usual), more risk is likely to be built into their prices, especially on the longer term offers.  We may find that 12 month agreements don’t increase an awful lot, but offers on longer term agreements are likely to be scarce.  With businesses likely to reduce the length of contacts they sign for in the future, it will be interesting to see what this does to the market.