Monthly Archives: September 2010

UK gas prices ease after rally as supplies improve


British gas prices eased on Thursday morning after rallying earlier in the
week on erratic Norwegian supply and strong demand for export to continental

Gas for delivery on Thursday traded around 48.55 pence at 1100 GMT, about
0.40 pence lower than the price paid for within-day gas late on Wednesday,
as slightly stronger supply from Norway and healthy flows from liquefied
natural gas terminals helped meet demand.

UK gas prices generally rose for
the first three days of the week, but most prices were softer on Thursday
morning. “It’s probably just been a bit over cooked last couple of days,”
one trader said, adding that the market was waiting to see how much gas is
pumped into Britain during October — the start of the six month winter

October gas contracts traded up half a penny to 46.50 pence ($7.37 per
mmbtu), but prices for Winter 2010 contracts and beyond all fell.

After a bumpy start to the week, supplies via Norway’s Langeled pipeline
were relatively stable overnight and crept up to around 20 million cubic
metres by midday, according to data from National Grid.

Supplies were boosted by Britain’s Rough gas storage facility overnight but
strong flows from both the South Hook and Isle of Grain LNG terminals,
combined with pipeline flows, helped meet demand after Rough stopped pumping
out gas from under the North Sea.


Bodies that miss CRC deadline ‘will not be named and shamed’


The Environment Agency has said it will not ‘name and shame’ organisations
that fail to sign up to its Carbon Reduction Commitment emissions trading
scheme in time for tomorrow’s deadline.
The announcement came after the Treasury today became the last central
government department to sign up to the CRC on the final day of
registration. All Whitehall ministries were required to take part under the
terms of the scheme.

The CRC, set up by the Department for Energy and Climate Change and run by
the Environment Agency, is expected to involve around 5,000 large
organisations from the private, voluntary and public sectors.

An Environment Agency spokeswoman told Public Finance this afternoon: ‘We
will not be naming and shaming people – we want to work with businesses and
public sector organisations. ‘If they have not registered yet, we will be finding out why, but we will
not be putting their names into the public domain.’


U.K. Utilities Earn on Power Users, Lose on Gas


U.K. utilities will make a profit on electricity clients and lost money
supplying gas, according to NERA Economic Consulting. The overall profit for the year starting Aug. 25 on each electricity user
will be 31 pounds ($49), NERA said today in e- mailed report written on
behalf of Energy-UK, which represents energy suppliers. The annual losses
will be 32 pounds for each gas customer and 31 pounds for customers using
both fuels. The figures are lower than last quarter, NERA said. “I find it hard to believe that net margins are negative given recent
results on residential supply divisions,” David Hunter, international
business manager at McKinnon & Clarke, an energy
broker based in Fife, Scotland,
said by telephone today. In a separate report, U.K. energy regulator Ofgem lowered its estimates for
utility profits for customers using both electricity and gas. The quarterly
report on retail markets was published on its website today.


U.K. Natural Gas Advances on Continental Demand; Power Gains – Bloomberg


U.K. forward natural gas prices
rose on signs that continued demand from the European continent
for the fuel may keep the British market undersupplied through
at least November. Electricity prices in Britain also advanced.

Gas for delivery next month rose as much as 0.90 pence, or
2 percent, to 46.60 pence a therm, according to Bloomberg data
compiled by Bloomberg. That’s equal to $7.37 a million British
thermal units. A therm is 100,000 Btus.

Demand for fuel in Europe through the Interconnector
pipeline from the U.K. to Belgium will “remain strong” at the
same time as storage operators are reluctant to withdraw until
January, potentially making the U.K. gas market undersupplied
until December, Deutsche Bank AG analysts Michael Hsueh and Mark
Lewis said yesterday in an e-mailed report.

Sustained Qatari liquefied natural gas imports, Norwegian
imports and the start of withdrawals from Centrica Plc.’s Rough
gas store will boost supplies in the first quarter of next year,
they said.

“While upside risks remain in the fourth quarter, we
believe there is significant downside in the first quarter,”
the analysts said.

Gas also gained as crude oil advanced, following reports of
an increase in Chinese manufacturing and a decline in U.S.
supplies that bolstered speculation fuel demand in the world’s
two biggest energy consumers will rise. Brent crude for November
settlement gained as much as 1.1 percent to $79.59 a barrel on
the London-based ICE Futures Europe exchange.

Most gas sold by producers such as OAO Gazprom and Statoil
ASA in mainland Europe is linked to the price of oil. These
costs feed into Britain through physical links to the U.K.
market via pipelines from Belgium and the Netherlands.

U.K. electricity prices tracked the higher natural gas
market. Next-month power prices rose to their highest since July
16, advancing as much as 1.3 percent to 43.30 pounds a megawatt
hour. Bloomberg tracks over-the-counter prices by brokers
including Spectron Group Ltd. and ICAP Plc.

To contact the reporter on this story:
Lars Paulsson in London at

To contact the editor responsible for this story:
Stephen Voss at


New Government Scheme to Aid Small Businesses Become Greener


In a bid to help small and middle sized businesses improve their energy
efficiency the Government is preparing a multi-billion pound fund that will
help more than 4m businesses across the land to become “greener”.

Small Businesses Become Greener
The main idea behind this scheme is to finance loans to small and middle
sized businesses so they can replace energy hungry equipment with more
energy efficient ones improving their overall business
energy efficiency. The loans will then be repaid from the savings made
in their energy bills.

Entitled “The Green Deal for Business” the scheme is a joint venture between
the private and public sector. White hall representatives are discussing
with high street banks and business energy providers such as British Gas how
to generate the funds and administer it.


UK Day-ahead power prices gains 75p despite higher wind forecast


UK prompt power prices increased for the fourth day in a row Wednesday on
the back of higher UK gas prices ,
despite a higher wind forecast for Thursday, said traders.

UK OTC baseload power for next-day delivery gained 75 pence to close at
GBP45.25/MWh by 1200 London time, the fourth consecutive increase in the
contract’s price.

The peakload contract was assessed above the GBP50/MWh level for the first
time since July 19–at GBP50.10/MWh–up GBP1.60 on the day.

On the N2EX wholesale power exchange, the day-ahead auction cleared in line
with OTC at GBP45.25/MWh in base, up GBP1.05.

“Margins are still very tight, in the region of 5 to 8 GW…prices can be
quite spiky [intra-day], especially if you lose one unit,” a trader said.
“The higher wind is not really impacting the prompt.”

UK prompt gas prices strengthened further Wednesday, building on gains made
over Tuesday’s session.

At around 1200 UK time Wednesday the within-day gas price was 46.75
pence/therm and the day-ahead gas price was 47.40 p/th. Both were up from
Tuesday evening’s closing day-ahead price of 45.90 p/th.

Maximum wind output will reach 1.1 GW Thursday, up 0.8 GW, according to
National Grid. But traders said this would mostly impact the intra-day power
market. Peak supply margins will be 9 GW Wednesday, indicating that the
system will be more comfortable than earlier in the week.


Energy secretary aims to create 250,000 “green” jobs in the UK


This week on the blog I wrote about how EDF Energy are planning to build
four new nuclear power stations in the UK, which would create electricity
and thousands of trades jobs. Now Energy secretary Chris Huhne has announced
that he plans to create 250,000 “green jobs” for retrofitting homes to make
them more energy efficient.

Under the government’s Green Deal, which is set to introduced by the end of
2010, 26 million homes across the UK would be modernised to make them more
energy efficient. Private companies would pay for the insulation of the
houses and then the home-owners would pay them back from the energy savings
that result from the retrofittings.

Huhne has said the Green Deal will be a “revelation” and although the plans
are ambitious, it would help to get Britain ready for a low-carbon future.
He said:


British Gas ‘to hammer small firms’ with poor credit records


British Gas has been urged to ‘go back to the drawing board’ over plans to
introduce pre-payment meters for small businesses amid fears that the move
could choke cash flow and lead to failures.

British Gas has been urged to ‘go back to the drawing board’ over plans to
introduce pre-payment meters for small businesses amid fears that the move
could choke cash flow and lead to failures.

Financial Mail has learnt that British Gas is working on plans to install
the meters in the premises of small firms with poor credit records. The
energy giant is running trials and expects to start installing meters more
widely within a year.

But Stephen Alambritis of the Federation of Small Businesses said the need
for pre-payments could adversely affect cash flow for small firms.

Insolvency rates were not as high as in previous recessions, he added, and
the risk of huge defaults was unlikely.

Rivals npower and Scottish & Southern said they had no plans for similar
meters, adding that bad debt levels had remained constant this year.

British Gas, which has 500,000 small business customers, claimed the
pre-payment meters might help firms with poor credit histories to get power
supplies more quickly and cheaply.


Britain’s offshore windpower costs twice as much as coal and gas generated electricity


Off shore wind farms cost twice as much to produce electricity as gas and
coal powered stations and will need subsidies for at least 20 years, a major
report warns.
Britain’s so-called “dash for wind” means that it is now the biggest off
shore generator – producing as much as the rest of the world put together. But costs of building the farms have doubled due to spiralling prices for
steel and the drop in the value of the pound. The running costs are also increasing. The report found that costs have risen for all kinds of generation but off
shore wind farms remain by far the most expensive – 90 per cent more than
fossil fuel generators and 50 per cent more than nuclear. The news is bound to lead to question over the government’s policy of using
wind power to meet its target to generate around a third of its electricity
from renewables by 2020. But the authors of the report at the UK Energy Research Centre (UKERC), a
government think tank, said they remained “cautiously optimistic” that wind
can play a significant contribution to the zero carbon energy production for
Britain. “We think that there are grounds for cautious optimism,” said Dr Robert
Gross, of Imperial College London, who headed the report. “Yes it is more expensive than gas and coal and is unlikely to reach parity
for at least 20 years but we still think it is a worthwhile energy producer.

“All alternatives such as nuclear and carbon capture are bound to have
teething problems too.” With the opening of Thanet wind farm in the North Sea last week Britain
became the biggest offshore wind generator in the world.