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07.05.2015 17:50
© freefotouk, flickr.com
Forcing the UK to trade all day-ahead electricity on exchanges, one of the Labour Party's pledges ahead of Thursday's general election, is viewed unfavorably by certain market participants, but any steps toward greater exchange-based trading may occur only after the competition watchdog completes its investigation into the wholesale energy market, industry participants say.
"At Nord Pool Spot we are not in favor of mandated trading arrangements," Richard Sarti, Nord Pool Spot's UK commercial director, said, as quoted by Platts.
"We feel the long term effect of such a move will be negative; bringing in additional risk and cost to market participants and ultimately the end consumer," Sarti said. Some 40% of the UK's day-ahead power consumption is already traded through Nordpool Spot's N2EX platform, he said.
The platform operates one of the two spot power exchanges in the UK.
Earlier this year, Labour's shadow energy minister Tom Greatrex said that he was "instinctively attracted to mandatory use of the existing exchanges" rather than creating a new "pool" infrastructure.
Echoing a similar sentiment, independent supplier First Utility on March 27 told the Competition and Markets Authority that: "Requiring generators to make all generated electricity available for trade through broker platforms and exchanges would, in our view, increase market transparency and competition to the benefit of downstream market participants and consumers."
The Labour Party in its manifesto pledged that the "Big Six" -- British Gas, EDF Energy, E.ON UK, RWE Npower, SSE and Scottish Power -- will be required to open up their books, and sell their electricity through an open exchange if the party comes to power.
Opposition leader Ed Miliband believes vertically integrated utilities have too much influence on the market. Labour has also proposed to freeze retail household energy prices till 2017.
The incumbent Conservatives have not focused on making any trading reforms on power but have plans to halt onshore wind subsidies. Tight opinion polls suggest there will be no clear winner, opening up space for insurgent parties.
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