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ScottishPower pledges 30% of generation to UK Day-ahead electricity auction

18 Jan 2012 18:03:46 | edem

ScottishPower on Wednesday became the third of the UK's "Big Six" utilities to commit to placing volumes of its generated electricity on to the N2EX exchange Day-ahead auction.

The company aims to place at least 30% of its generated volume on the Day-ahead auction by 1 March.

Earlier this month, E.ON announced its commitment to place at least 30% of its generation on the exchange and last October SSE announced it would commit 100% by the end of March (see EDEM 12 October 2011).

ScottishPower billed its move as a means of boosting overall market liquidity while helping smaller suppliers to trade on the wholesale market.

The company's energy retail and generation chief executive, Neil Clitheroe, said: "We hope that the N2EX exchange will offer small market participants the option to enter into wholesale power trades in a manner that suits their individual requirements".

Political move

In its announcement, ScottishPower specifically mentioned British energy regulator Ofgem's desire to see the "Big Six" suppliers auction 10-20% of their electricity generation to facilitate new entrants into the market.

Ofgem has repeatedly said that improving wholesale liquidity is one means of encouraging new entrants into the market, which is dominated by the big six suppliers (see EDEM 26 July 2011).

However, speaking to the government's cross-party energy and climate change committee, Ofgem officials said the regulator was considering forcing utilities to auction more than 20%, adding that it was also eyeing long- and short-term contracts for mandatory auction (see EDEM 15 November 2011).

At the time of SSE's volume commitment, Ofgem's senior markets partner, Andrew Wright, said the move by the utility - the only one to commit volumes to the exchange at the time - would not head off the regulator's own mandatory auction. "We could be waiting up to three years to see how it works," he said.

Several UK power traders have suggested that, with the retail arms of the big six under increasing pressure on electricity prices, the three utilities' volume commitments are partly to curry political favour. FOR

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