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French regulated nuclear tariff acts as front-year electricity market support level

25 Jun 2013 17:04:20 | edem

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The French Calendar Year 2014 Baseload has attracted more buying interest since the price fell below the €42.00/MWh regulated tariff paid for EDF's nuclear generation, market sources told ICIS on Monday.

Figures indicate that the level at which the tariff is set acts as a de facto support level on the front year.

The ARENH tariff, or the regulated access to historical nuclear electricity, was introduced as a market liberalisation measure in July 2011, and is the price at which EDF is obliged to sell one quarter of its nuclear output to competing suppliers.

The tariff was set at €40.00/MWh for the latter half of 2011, and €42.00/MWh from January 2012 onwards.

The French front-year baseload settled below €42.00/MWh on seven days during May, and has since settled below this mark on all but three of the weekdays in June, ICIS data shows.

The contract was assessed at €41.85/MWh on Monday and has come under pressure in recent weeks from a negative macroeconomic outlook, a soft fuels complex and bearish moves on the French near curve, sources on the market said.

"Because we are not far from the price of the tariff, lots of smaller companies are coming to the market rather than buying nuclear at €42.00/MWh," a French trader said. This has boosted the Cal '14 Baseload traded volumes, one source said.

This was backed by trade data submitted to ICIS, which showed the average daily traded volume on front-year baseload rose from 329GWh in April to 359GWh in May to 390GWh in June.

Near curve

Traders also noted that problems with Belgium's Doel 3 and Tihange 2 nuclear reactors, of combined 2GW capacity, which were offline from August last year to early June this year because of safety concerns, led to greater buying interest for French power and higher traded volumes on the French near curve (see EDEM 5 June 2013).

Average daily traded volumes for French Peak and Baseload front-month contracts during the first quarter of this year, when the Belgian reactors were inactive, were almost 60% higher year on year at just under 440GWh.

In contrast, in the second quarter to date, average daily traded volumes for the French Peak and Baseload front-month contracts were 10% lower year on year at 215GWh, as the market expected the return of the Belgian reactors. Beatrice Mavroleon

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