Corin Dalby from major care home specialist Box Power reveals that the current energy market prices have nearly hit £4,000 per bed per year for care homes in the latest energy price update on the escalating cost-of-living crisis.
Key update on the energy market
As we enter the new norm of the post-invasion prices, many are now realising that to stay ahead of the game they can’t afford to risk securing energy all on one day, and that only by being nimble and being able to take advantage of multiple entry points for different seasons are they able to achieve the best value for money.
What is happening?
Following our 5 May update it would seem that again all the risks we highlighted have materialised, and this week’s news of the Nordstream gas pipeline only returning to 20% of its capacity has seen markets reach new all-time highs on Wednesday.
Previously a Oct 2022 renewal was looking in May at a massive £2,000 p/bed, but with today’s winter prices breaching new highs of 20p for gas and 60p for power, then this is meaning an annual cost increase to a horrendous £3,900 p/bed. (Typical annual usage in kWhs p/bed is 3,000 for power and 10,000 for gas.)
How could this impact supplier choice?
So again in this volatile market, the energy suppliers have removed themselves from the market. When they do return they will yet again no doubt be including even higher ‘risk premiums’ and will be loath to actively quote for new business; more businesses will fail the supplier credit levels (given the value is higher).
What is the Box Power advice today for CHP readers?
In this new high-priced world where energy costs are no longer just at a purchaser level, renewals and the advice they are given is being considered at the very highest board and investor levels.
For those still with renewal exposure, many realise they have missed the boat and so no longer have the appetite for long-term fully fixed prices at these inflated levels. Instead they are adopting a flexible buying agreement approach for their future power and gas, whereby they can have the flexibility to simply just take the risk off the table as needed (i.e. this winter Oct-Mar) or for short-term budget purposes. This still leaves the upside potential to buy the rest at lower entry points from next spring onwards, when the forward market picture becomes clearer and markets see a brighter future leading to a potentially calmer situation. This also applies to October 2023 renewals.
Box Power CIC is the UK’s only philanthropic, not-for-profit brokerage which advises, procures and manages over 55,000 beds in the care home sector across the very largest operators.