What are the differences between Energy Producers & Retailers/Suppliers?

With the current Cost of Living crisis pushing Wholesale Prices to record highs, it is extremely frustrating to read stories in the Media of record profits being made by Energy Companies, however it is important to note the difference between Producers and Retailers & Suppliers.

Producers are the first point for energy, whether it be the generation of Electricity through renewable measures, or the extraction of Crude Oil and Natural Gas. With the tradeable elements, such as Oil & Gas, companies do not simply produce these commodities, they employ a considerable number of traders, who buy & sell from other producers, with the aim of making a profit on fluctuations in a rising market.

Retailers & Suppliers are a separate entity from producers, and as such they are required to purchase Wholesale Energy at the going price as dictated, which in turn, means they are also struggling with rising costs.  Retailers & Suppliers are then forced to pass these costs onto Households & Businesses, alongside the ever-increasing Non-Commodity Costs as mandated by Distributors, Shippers and the Government.

Furthermore, Domestic Suppliers are running at almost record losses, due to Ofgem’s Energy Price Cap forcing prices to be at a set level, even in a rising market.

Why are Energy Producers recording Record Profits?

Producers are recording these gains, due to Supply and Demand. If a commodity is in high demand, prices rise, and in turn so do profits. Of course, this is not just the case for Energy, but also tradeable commodities including Crude Oil as well as in demand products across the Globe.

The overall global supply of energy has been heavily restricted following the sanctions placed on Russia, due to its invasion of Ukraine. With this being the case, it has significantly increased demand on producers across the World, and due to this, the overall costs are rising, in turn creating Record Profits for all.

It is important to note that with the implementation of the Government’s Temporary Targeted Energy Profits Levy (Windfall Tax), alongside commitments to Green Initiatives, producers net profits are significantly less than reported.

It should also be noted, as they also employ traders to buy and sell commodities produced by other companies, in a declining market, profits can easily turn into losses.

Is there anything Commercial Businesses can do to reduce their Energy Costs?

Currently, Wholesale Energy Prices are ever increasing, causing issues for businesses with current & future budgets. CostAdvice – Energy Specialists are here to help with our no obligation health check on all Commercial Energy Supplies.

Why is an energy health check important?

• Not all Commercial Energy Agreements are the same.
• Furthermore, not all businesses should be cahrged the same costs.
• Our No Obligation health-check looks deeper, than just your current charges and agreements.

We recently identified £10,000 of annual savings for a group of Museums, that were already being looked after by another Energy Consultant.

To proceed, or for further information, please contact Daniel Walker on 01246 252788 or send him an e-mail to daniel.walker@costadvice.co.uk, whereby he will be happy to help.