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Joint U.K. Power Index May Boost Exchange Trading, APX Says
2010-12-22 10:02:38.598 GMT
By Catherine Airlie and Lars Paulsson
Dec. 22 (Bloomberg) -- U.K. power trading on exchanges may
be boosted were APX BV and N2EX to release a joint index,
according to APX's chief executive officer.
APX, which currently handles about 4 percent of physically
traded U.K. electricity, supports a joint index of its daily
auction with one organized by N2EX, a competing exchange run by
Nasdaq OMX Group Inc. and Nord Pool Spot AS, Bert den Ouden, the
Amsterdam-based bourse's CEO, said today in an e-mail.
Utilities including RWE AG and E.ON AG are trading more on
exchanges to reduce credit risk and heed regulatory calls for
more transparency. E.ON last week called for one reference
electricity price for the U.K. from the competing platforms. APX
plans to boost trades in its auction when it links to the Dutch
market. There have been no deals on APX since September 2009.
"In order to help market transparency and trading, a
consolidated index could be established from a volume-weighted
index of the APX-ENDEX and the N2EX auctions," den Ouden said.
Nasdaq and Nord Pool won a tender to establish an exchange-
based U.K. power futures market in 2008, beating off competition
from APX and the Leipzig-based European Energy Exchange. They
plan to determine futures prices using N2EX's daily auction as a
reference. N2EX didn't immediately reply to a telephone call and
an e-mail from Bloomberg requesting comment.
APX plans to offer market coupling between the U.K. and the
Netherlands on the 1,000-megawatt BritNed cable from April.
Market coupling involves the selling of electricity and capacity
in one deal.
Record Volume
Power trading on the APX exchange may rise to 10 percent of
physical volumes once the link is ready, den Ouden said. The
platform is the only provider of within-day electricity
contracts and traded a record 83.2 gigawatt-hours of U.K.
within-day and near-term electricity on Dec. 20, it said in an
e-mailed statement.
N2EX handled a record volume of 26.4 gigawatt-hours on its
day-ahead auction yesterday, Bloomberg data show.
European network operators may create a single price for
power across the U.K., central western Europe and the Nordic
region using quotes across all exchanges, den Ouden said.
"This new market coupling mechanism will produce a fully
consolidated U.K. day-ahead index automatically, because it
bundles the liquidity in the day-ahead auctions of all involved
exchanges, resulting in a single hourly price for the U.K.," he
said.
Methods to improve pricing signals from other power markets
may not benefit the U.K., European Energy Exchange AG CEO Hans-
Bernd Menzel said last week in London.
"It's not sufficient to use previous methods for the U.K.
market, it's not enough to use old copy-and-paste methods,"
Menzel said at a briefing with reporters. "There's too much 'I
do it better' comments from the current exchange providers," he
said. "They are just using old methods."
For Related News and Information:
Top Power Stories: PTOP <GO>
U.K. Power Prices: ELEU <GO>
--Editors: Rob Verdonck, Raj Rajendran
To contact the reporters on this story:
Catherine Airlie in London at +44-20-7073-3308 or
cairlie@bloomberg.net;
Lars Paulsson in London at +44-20-7673-2759 or
lpaulsson@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or
sev@bloomberg.net
