Business Energy Market Update: August 2025

Wholesale energy prices rose across the board this month with the largest gains being seen on deliveries for this year, especially August which saw a 10% gain. Gas prices followed a similar trend although the short term gains were softer in comparison. Concerns over further US sanctions on Russia should a ceasefire agreement not be reached with Ukraine have made the markets a little nervous and elsewhere the apparent difficulties in separate ceasefire negotiations between Israel and Hamas have renewed fears of a potential blockade in the Straits of Hormuz, a major shipping route for oil exports.

I have been following OFGEM’s review of standing charges on and off over the last year and this month has seen a fresh update. On 24th July OFGEM released a statement to say they have been unhappy with the pace at which suppliers have been rolling out zero standing charge tariffs and that currently consumer expectations are not being met in this area.

To speed up the rate at which suppliers issue such tariffs, OFGEM is considering altering the terms of a supplier’s licence to make it mandatory that at least one such tariff should be made available to every domestic customer at all times. Whilst I welcome any attempt by OFGEM to make the energy market fairer, there is concern that such an intervention will simply compel suppliers to over-inflate the unit rate instead.

We have recently started to see some commercial tariffs offering zero standing charges re-enter the market but so far suppliers have been incredibly cautious in dipping their toes so to speak and such deals are only available to businesses who are currently exceeding arbitrary thresholds set differently by each supplier. Whilst this obviously makes the tariffs less attractive, they may still make a good fit for some users but the higher unit rates often mean a conventional tariff is better.

At the end of July, OFGEM announced the Cost Allocation and Recovery Review (CAR), a major new review of how costs are allocated throughout the whole energy system. In 2023 OFGEM’s TCR came into effect which altered the way costs for distribution and transmission were recovered from the end user, principally through increases to standing charges, and this latest review is slated to explore new ways to recover the costs associated with upgrading and greening the grid. At the same time, it will also look at the changing ways in which energy is purchased and consumed as a result of increased electric car and heat pump use and also, the increasing uptake of time of use tariffs.

It is hard to see this as anything but another costly and complicated intervention by the regulator but perhaps this time the changes it may bring will offer some relief to businesses fed up with paying some of the highest energy prices in Europe.

Interestingly, OFGEM’s previous ‘big review’ TCR, reduced the incentive for businesses to load shift away from peak consumption periods whereas this latest intervention mentions the need to explore alternative pricing models that support such changes in energy usage. In addition, the negative effect of TCR on small businesses and domestic customers has been clear from the start and in an apparent about face, OFGEM have stated one of the goals of CAR will be to “ensure increased fixed costs don’t disproportionately affect vulnerable and low income consumers”, only time will tell quite what is meant by this though!

On a lighter note Hollywood a lister, Samuel L Jackson has teamed up with Vattenfall, the Swedish renewable energy giant. In a recently released YouTube video Jackson can be seen using his trademark foul language to promote the positive side of offshore wind farms and most bizarrely, Seaweed Crisps made from plants exclusively grown at the firms own sites! Take a look, but mind the bad language!

As ever, our team of friendly experts are on hand to answer any of your questions and find the best energy and utility deals for your business so please get in touch on our usual channels if we can help.