Pricing Bulletin
Along with the weather, Carbon and Oil prices were the main market
drivers of the last week with prices reducing. The market opened
Tuesday
on thin liquidity following the bank holiday, with contracts further
out
than Summer 08 on the forward curve, seeing very little activity. Volatile flows with Langeled pipeline and planned maintenance at the
Vesterled pipeline failed to increase prices as supply fears eased
during the week.
Oil prices reduced following announcements by Unions in Nigeria,
suspending strike action that threatened further disruption to
Nigerian
Exports. There was an amended forecast from the Met Office stating
that
the summer will not be as hot as anticipated, and with recent heavy
rainfall in Europe boosting Hydro-Power Capacity, it all helped ease
supply fears and add further downward pressure to the markets. The
prompt prices were also seen to be falling as the weather became
progressively warmer each day and plant returned on line in the form
of
British Energy's Hinckley B and Heysham reactors.
Pricing Summary - July Starts
Elec: Jul - costs shown are £/MWh baseload electricity
- Jul 2007 £36.00 a decrease of 33% on the same time the previous year
- Jul 2006 £54.13 an increase of 29% on the same time the previous year
- Jul 2005 £42.10 an increase of 66% on the same time the previous year
- Jul 2004 £25.36 an increase of 43% on the same time the previous year
- Jul 2003 £17.78 an increase of 12% on the same time the previous year
- Jul 2002 £15.85
Gas: Jul - costs shown are pence/therm core gas
- Jul 2007 34.92ppt a decrease of 50% on the same time the previous year
- Jul 2006 70.35ppt an increase of 45% on the same time the previous
year
- Jul 2005 48.53ppt an increase of 61% on the same time the previous
year
- Jul 2004 30.22ppt an increase of 44% on the same time the previous
year
- Jul 2003 20.93ppt an increase of 13% on the same time the previous
year
- Jul 2002 18.44ppt
Elsewhere, a worrying report was recently issued by PB Power, which
stated that the market price for electricity was now too low to
encourage investment in new capacity. It was reported that the price
for forward contracts was now:
- Below the cost of electricity from the new coal-fired combined cycle
plants.
- About the same as the new nuclear prices
- Only just ahead of new-build coal-fired electricity plants
The heavy and concerning strap line to the report was that prices had
to
rise again, and significantly, if generators were to invest in new
capacity.
However, it is worth noting that the report mentioned £30 / MWh as
being
the break even, but other reports have mentioned £20 / MWH, and off
the
record one ge
nerator stated £17 / MWh.
It was also reported elsewhere that as gas prices had risen,
generation
had been switched to coal and this had hit the levels of emissions, as
coal-fired plants emit nearly twice as much carbon dioxide as
gas-fired
generation. This had forced the power companies into buying extra
allowances to keep within the quota set by the European Union's
Emissions Trading Scheme.
Provided by ECA Group. Please visit www.eca-group.co.uk for information on their advisory service.
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