Thursday, 2 December 2010

Prompt electricity hits new 22-month high on cold weather

UK spot power prices surged to their highest level in 22 months Wednesday on
the back of a cold weather forecast and bullish UK gas prices, said traders.

At midday Wednesday, UK OTC power for next-day delivery was trading GBP15.50
above Tuesday's closing level at GBP70/MWh in base, with the peakload
contract GBP26 higher than Tuesday at GBP91.25/MWh. This is the contract's
highest level since January 8, 2009, Platts data show.

Block 5--the contract corresponding to the evening period when demand is the
highest--was heard trading at GBP125/MWh, according to a source.

On the N2EX wholesale power exchange, day-ahead base was also up more than
GBP15 day-on-day at GBP70.36/MWh.

"The weather is very cold and the nuclear plants are not running," a source
said. "There's certainly a risk premium factored into these prices...the
oil-fired plants haven't run for a long's a necessary safety net."

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