A trading free for all

A trading free for all

Dear Sir

The new Secretary of State for Trade and Industry, Peter Mandelson MP, has inherited a challenging agenda of energy issues. How electricity should be produced and traded is at the top of the list. The Government`s Review of Energy Sources for Power Generation, which seeks to keep coal`s position in the fuel mix, proposed continued restraints on new gas fired power stations and placed great reliance on Offer`s Review of Electricity Trading.

That report, which was submitted to the Government in July, proposes the virtual abandonment of the Electricity Pool, in favour of trading through a futures market, a short-term bilateral contracts market and an on-the-day balancing market. Just how much this would help coal fired generation is debatable but, what is more debatable is whether the abandonment of a trading system which has worked successfully for eight years can be justified.

The Offer proposals attach little importance to system security and virtually no importance to the role that the Pool plays in setting a single, transparent reference price. Above all, they leave many fundamental questions unanswered, including whether the benefits would outweigh the costs. Electricity trading systems which take little account of physical delivery and system security are not customer friendly. There are clear signs that the Pool wants to ditch its cumbersome governance arrangements and hand power to an independent market organisation. The Secretary of State should welcome that initiative, but should treat more cautiously the proposal for a trading free-for-all.

David Porter

chief executive,

Association of Electricity Producers,

1st floor, 41 Whitelhall,

London SW1A 2BX.

Dear colleagues,

Many thanks for your letters – keep them coming in. This will be a regular section of the magazine to give you the opportunity to voice your opinion. So if there is anything that grabs your attention either in the industry or in the magazine, please send a letter – whether serious or light-hearted – to the editor.

You can send them to Junior Isles, managing editor:

E-mail to: pennwell@compuserve.com

Fax: (+44) 181 367 8004

Or you can write to:

Power Engineering International, Pennwell Publishing,

The Business Centre, 758-760 Great Cambridge Road, Enfield, Middlesex EN1 3RN. United Kingdom.

No posts to display