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U.K. Power Jumps to Two-Year High as Natural Gas, Carbon Gain
2010-12-06 13:23:23.426 GMT
By Catherine Airlie
Dec. 6 (Bloomberg) -- U.K. power for next-day delivery rose
to its highest level in almost two years as natural gas and
carbon emissions permits gained, making electricity generation
more costly.
Baseload power for tomorrow climbed as much as 14 pounds,
or 23 percent, to 76 pounds ($119) a megawatt-hour, from 62
pounds on Dec. 3 for delivery today, according to broker data
compiled by Bloomberg. That's its highest level since Jan. 7.
Baseload is delivered around the clock. The contract was at 75
pounds as of 12:40 p.m. in London.
About 80 percent of Britain's electricity comes from coal
and natural-gas fired power stations and some utilities can
switch between the fuels depending on prices. Higher gas costs
can encourage generators to switch to coal, which requires about
twice as many emissions permits as gas.
National Grid Plc forecast gas use may increase to 440
million cubic meters in the 24 hours through 6 a.m. tomorrow,
about 87 million more than normal for this time of year, data on
its website show. The nation's pipes will hold 364 million cubic
meters at that time, 13 million more than at the start of today.
Natural gas for delivery today rose as much as 2.75 pence,
or 4.5 percent, to 64 pence a therm. The contract was at 61.5
pence as of 1:13 p.m. London time. The fuel is used to heat
about 80 percent of the U.K.'s homes and businesses.
Emissions permits for delivery this month advanced 16
cents, or 1.1 percent, to 14.91 euros a metric ton on London's
Ice Futures Europe.
'Arctic Weather'
Freezing weather and snow across Britain are boosting
demand for energy. Temperatures are forecast to return to normal
for this time of year by the end of this week, Jim Dale, senior
risk meteorologist at British Weather Services in High Wycombe,
England, said by e-mail. December may be the coldest in more
than thirty years, according to Dale.
"We are expecting a return to Arctic weather including
blizzards and deep frosts from around Dec. 17," he said.
U.K. power for January slid 25 pence to 52.25 pounds, after
earlier advancing as much as 1.50 pounds, to 54 pounds a
megawatt-hour. Next-month gas gained 1 percent to 60.4 pence a
therm, according to Bloomberg data compiled with prices from
brokers including ICAP Plc, GFI Group Inc. and Spectron Group
Ltd.
For Related News and Information:
U.K. gas prices: UGAS <GO>
Stories on the U.K. gas market: TNI UK GASMARKET <GO>
--Editors: Rob Verdonck, Raj Rajendran
To contact the editor responsible for this story:
Stephen Voss at +44 207 7073 3520 or
sev@bloomberg.net
