UK Electricity Prices

Catalyst Commercial Services Ltd — Sat, 11 Oct 2008 11:02:58 +0000

British wholesale electricity prices have slumped over the last two days, after hitting record highs early this week on winter supply fears, but could bounce back if several power stations do not restart soon. Prolonged nuclear plant shutdowns and environmental controls on coal-fired units have aggravated concerns over the last few weeks about supplies this winter, driving November baseload to a record high of £150 a megawatt on Tuesday. While an oil-led decline in wholesale gas prices over the last few months should mean cheaper gas bills for British consumers next year, cheaper electricity bills seem less likely because of Britain’s power station problems. Power prices have tumbled for two days after British Energy postponed work planned for November at one of its coal-fired power plants until next year, sparking a sell-off in winter contracts despite uncertainty over the return of its ageing nuclear reactors. “Everyone is selling everything these days,” said one trader, adding that British Energy’s admission of likely further delays to two reactor restarts should be bullish for winter prices. November baseload prices fell to 120.25 pounds on Friday morning after diving on Thursday when grid operator National Grid raised its power supply forecast for next month by 483 MW, the amount of electricity that one unit at British Energy’s Eggborough power station can produce. For over a year British power prices had closely followed the gas market, which in turn tracked oil. But as the dark winter months draw closer and repairs at several nuclear power plants have dragged on, the power market has ignored an oil-led slide in gas prices in the last few weeks. “There’s a complete disconnection in the market,” said another power trader. “The biggest problem we have got is the step change at the start of November on the peak demand, when we have the clock change and it impacts the lighting load.” Until Friday, British Energy had repeatedly said that all four of its nuclear power reactors that have been closed for over a year would restart before the end of December. Although it still hopes to meet that target, the admission that repairs at two of those reactors could plod on into next year should provide price support for mid-winter contracts. But British Energy’s Dungeness B21 reactor, which has been shut since early July, is expected to reopen in the next few days and should help drive prices down further, at least for a while. “I don’t think it will take much out the price for very long because the tight forecast margin in November assumes this unit will be running and (the margin) is still very, very tight,” one power trader said.

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UK Electricity Prices

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