Increases in non-commodity (NC) costs are also significantly impacting energy prices, with transmission (TNUoS) having the largest share, as the Government rewires the UK.
Market Update
U.S. and Israeli military action aimed at degrading Iran’s military capabilities looks set to continue for several weeks. Iran has limited options in the absence of military support from other nations. However, destroying Iran’s military capability and ongoing assassinations will not deliver regime change.
The Strait of Hormuz is currently closed. This has contributed to gas prices rising by 24% since Friday. Electricity has risen by 17%.
Europe and the UK’s gas reserves are at 30%. In the absence of Gulf gas, the UK and Europe will need to get more reserves from America to mitigate the risk of reserves falling too far.
The continuing risk of a “Beast from the East” in the coming weeks, due to a Sudden Stratospheric Warming event over the Arctic, now poses a greater risk to reserves.
Business Energy Costs
Commodity costs have risen sharply, but suppliers have not yet updated their contract offers to reflect this. Suppliers’ revised contract prices appear to have risen by 2% on average to date.
| Commodity Cost | Av Unit Rate | Av Standing/Ch | ||
|---|---|---|---|---|
| Electricity | 02/02/2026 | 7.6p | 24.2p | £1.62 |
| 13/02/2026 | 7.6p | 23p | £3.86 | |
| 02/03/2026 | 8.1p | 23.1p | £1.52 | |
| Gas | 02/02/2026 | 2.6p | 5.7p | £1.31 |
| 13/02/2026 | 2.6p | 6p | £1.15 | |
| 02/03/2026 | 3.1p | 5.5p | £1.98 |
Increasing non-commodity costs scheduled for 1 April will significantly raise electricity costs. This includes those already in a “fixed” contract, as the supplier will “pass through” these added costs.
So, both existing customers and those agreeing electricity contracts in the coming months will face increases. The increase is based on a 2.5ppkW added to costs, transmission (TNUoS) being the biggest factor, as the UK “rewires” the grid.
The impact is estimated by Ofgem to be 7 – 11% on business energy costs. In terms of hospitality, the Network System Operator (NESO) forecasts:
- Small Pub/Retail £1,150+ for sites using <41,000 kWh. The daily rate has risen by approximately £3.15 per day
- Mid-Size Pub/Restaurant - £1,550+ for sites using 41,000 – 100,000 kWh. The daily rate increase averages £4.25 per day
- Large Managed House - £2,800 to £3,400+. These sites face a daily standing charge increase of £7.60 to £9.30 per day
The impact on each business will also be influenced by its existing supplier. Some of whom will have already included some or all these costs.
It’s important to understand the extent to which your rates are fixed or variable. Given that costs will continue to rise, it’s important to know which contracts expressly allow suppliers to pass on a range of non-commodity increases.
In view of the volatility of the commodity costs. Operators are recommended to either fix now, particularly on any existing offers. Or, be prepared to wait for 4–8 weeks to give the opportunity for the Middle East to move beyond its current military action phase.
Larger businesses operating flexible purchase contracts are recommended to wait until prices return to around target levels, unless they are still short for the summer 2026 season, and should purchase now.
Nationwide Energy offers the support you need to make your next energy contract transition smoother, deal with supplier issues, or review your energy consumption.
Contact Nationwide Energy:
Tel: 02476 328995
Email: info@nationwide-energy.co.uk
