Users suspect rip-off in electricity pool prices

Large electricity users are putting pressure on the industry regulator to find out why pool prices rose significantly last year despite falling fuel costs. Don McGarrigle, who chairs the electricity group on the Major Energy Users’ Council, said generators’ bid prices had risen 19% in in the past year, leading to an overall increase of […]

Large electricity users are putting pressure on the industry regulator to find out why pool prices rose significantly last year despite falling fuel costs.

Don McGarrigle, who chairs the electricity group on the Major Energy Users’ Council, said generators’ bid prices had risen 19% in in the past year, leading to an overall increase of 4%, while both capacity payments and uplift charges fell dramatically.

‘Generators’ bid prices have accounted for the total increase year-on-year, and I can’t see how that can be reconciled with current fuel-price movements,’ he said.

A spokeswoman at Offer said the regulator had written to the big generators in January and was still analysing the responses.

‘There have been a few anomalies,’ she said. ‘This is obviously what we’ve asked the companies to explain.’

McGarrigle said MEUC members suspected the generators were keeping prices high ahead of completion of the Government’s review of the pool trading arrangement later this year.

‘You can’t help feeling that prices are being pushed up to effect reductions when the review is complete,’ said McGarrigle.

Lisa Watson, senior economist at the Energy Intensive Users’ Group, said industrial users were being ‘ripped off by the current pool pricing system’.

She said the average pool price in the UK was $40.5 per megawatt hour, compared with $12.5 in Australia, $26 in New Zealand and $17.9 in Norway.