Encouraging correction of Inflated Short-Term Market Rates

Tuesday 22nd November 2016

UK power prices for December slumped £8.50/MWh, or 11%, on Monday, to £66.50/MWh, following a substantial sell-off on the French power market which saw December prices tumble as much 25% at one stage (before edging up slightly towards the end of the day). Unseasonably warm weather was cited by commentators as being behind the sharp falls, as it fueled a perception that December may not be as cold, and the market therefore not as tight, as previously thought. Some analysts said, however, that the crash-off was merely a long overdue correction of overinflated prices, and that although there had been no positive news on the ongoing French nuclear safety probe, the amount of plant in outage there was now converging towards seasonal norms. UK power prices in Q1’ 17 were also down a sharp £4/MWh, while prices further forward slipped by less than £1/MWh.

UK gas prices for the remainder of the winter also came under strong pressure, with December down 2.2 p/th, or 4.5%, and Q1 ’17 gas down 1.8 p/th, or 3.7% - their losses only outstripped by the Day-ahead market, which fell by 3 p/th, or over 6%, in the face of weaker consumption and improved supplies, including an uptick in imports through the Belgium-UK interconnector.

Will Bridge, Head of Procurement