The U.K. Department of Trade and Industry (DTI) has published plans for reforming Britain's electric power market to cut prices to consumers.
DTI and the government's Office of Electricity Regulation (Offer) produced outline plans for reform but said they had to work out how the new market will work and who will regulate it.
Reform approach
Energy and Industry Minister John Battle called for nominations for a development and implementation steering group that is intended to ensure the new trading arrangements are "robust and delivered in a timely way."
While Battle gave no idea of when the reforms are to be completed, he said that they would be designed to help ensure diverse, secure, and sustainable energy at competitive prices.
DTI said that electric power customers had complained about the current Electricity Pool pricing arrangement, which sets the price at which utilities and industrial customers buy power from the generators.
The proposed pricing scheme would be based on computerized trading, including immediate-delivery, futures, and derivatives contract options to enable large-scale electric power users to control their prices.
Effects on gas power
Wood Mackenzie Consultants Ltd., Edinburgh, said that the effect of the new policy will be to put a significant medium-term dent in the growth of gas-fired power generation.
"The immediate short term is unaffected," said Wood Mackenzie, as the 6,000 MW of new capacity that is either being commissioned or under construction will be allowed to proceed. Beyond this, a further 3,000 MW of planned capacity has full consent and is also very likely to proceed.
"However, a further 2,000 MW of projects that had received partial planning consent, representing more than 70 bcf of (annual) gas demand, are likely to be blocked. Other projects without even partial consent have virtually no chance of going ahead."
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