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Telephone 01293 651218 Email contact@energyandcarbonmanagement.com Website www.energyandcarbonmanagement.comEnergy and Carbon Management Limited Longley House, International Drive, Crawley, West Sussex, RH10 6AQ © 2012 Energy and Carbon Management Limited

Energy Newsletter / May 2012Page 1 of 2Welcome to Energy & Carbon

Management’s Newsletter MARKET BRIEFThe electricity and gas prices have continued their recent down turn to the levels last seen towards the end of 2011, and prior to that last experienced in April ’10 for electricity and March ’11 for gas.

The UK’s recent warm, settled weather has seen generation suffer with the generation being measured at near to zero. The UK’s peak demand has only risen very slightly week-on-week following an increase in national air conditioning usage.

Oil prices have traded lower recently due to reports suggesting that Spain will use public debt to supports its troubled banks. Attention has also been pulled back to the continuing Iranian situation, where officials of the Islamic Republic have refused access to the Parchin Nuclear site. The West believes that it is here that the Iranians are developing their nuclear weaponry.

Positive news has filtered through Greece, where reports suggest the pro-bailout conservative party have grown in popularity.

ANNUAL REVIEWThe annual review shows Electricity, Gas and Oil prices each lower than they were a year ago. Electricity is at nearly 14% lower, Gas at just under 7% and Oil at nearly 10%.

The continued economic woe in the Eurozone being the main driver to the falling prices

MONTHLY REVIEWFor the second month in succession the monthly prices of all three commodities have continued to fall in the month-on- month comparison.

The pricing of each commodity currently sits in a downward trend although there has been some revision of the recent lows experienced last week due to the revision of UK temperatures for the month of June. These reverses could have been more severe had it not been for the flexibility of the UK supply network.

OTHER MARKET NEWSEnergy bill expected to favour nuclear and gas over renewablesThe Government’s draft energy bill will replace current subsidies with a complex new support system that may favour larger suppliers. The energy bill is likely to favour fossil-fuel sources like gas, for which power stations can be built quickly and cheaply.

PRICES COMPAREd TO THIS TIME LAST YEAR

GASELECTRICITY

ANNUAL REVIEW

Electricity (£ MW) £56.975 £49.025

Gas (ppTh) 68.325p 63.625p

Oil ($ Brl) $100.59 $90.66

27/05

/11

28/05

/12

OIL

-6.878%-13.953% -9.871%

PRICES COMPAREd TO THIS TIME LAST MONTH

GASELECTRICITY

MONTHLY REVIEW

Electricity (£ MW) £50.68 £49.025

Gas (ppTh) 65.475p 63.625p

Oil ($ Brl) $104.93 $90.66

27/04

/12

28/05

/12

OIL

-2.825%-3.265% -13.599%

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Nuclear reactor reprieve puts the UK Energy Plan in doubtBritain’s ageing nuclear reactors, which were due to close in the next decade, have been offered a life line, and are set to remain open in a plan approved by the industry’s regulator.

In a move that could have far-reaching implications for the government’s energy policy, the Office for Nuclear Regulation is working with the country’s main nuclear operator EDF, to extend the life of its eight nuclear power stations in the UK as long as they pass stringent safety tests.

The two organisations are also discussing other improvements to EDF’s plants, including monitoring systems and dealing with the reactors’ ageing.

EDF said it has yet to make a formal decision, but the first power stations which could be submitted for another periodic safety review (PSR) to remain open beyond their planned closure were Hinkley B in Somerset and Hunterston B in Ayrshire, both of which were due to shut down in approximately 2016.

The company has said it wants to extend the life of seven of its plants for an average of seven years, a figure it has already raised from five years and which could increase again if EDF decided it was commercially viable to keep them open longer. Its other plant, Sizewell B in Suffolk, is expected to remain open until 2035.

Plans to keep the nuclear plants open will encourage critics of the government’s energy policy, which calls for expensive new nuclear reactors to meet short- to medium-term demand while renewable energy such as wind, solar and tidal power are improved so they can be deployed on a mass scale.

Gas rebranded as green energy by EUEnergy from Gas power stations has been rebranded as a green, low-carbon source of power by a €80bn European Union programme, in a triumph for the fossil fuel industry over renewable forms of power.

Billions of euros of funds that are supposedly being allocated to research and development into renewables such as solar and wave power are likely to be redirected into subsidising the development of the well-established fossil fuel.

The International Energy Agency predicted a “golden age for gas” with global production of “unconventional” sources of gas (notably shale gas extracted by hydraulic fracturing or ‘fracking’) tripling by 2035.

The resulting drop in gas prices could derail the development of renewable energy in its tracks unless government step in.

Energy Newsletter / May 2012Page 2 of 2