Contango news

Source: Clive Furness
Date: May 18, 2012
Author: Clive Furness

Ofgem Mandatory Market Auctions

Ofgem conducting consultation that if it goes ahead will destroy the UK wholesale power market

Ofgem Consultation

Ofgem are consulting with the market on implementing a mandatory auction in UK wholesale power - requiring the big 6 generators to auction up to 25% of their generation up to 2.5 years ahead. Ofgem maintain that the driver behind this move is to generate better liquidity in the UK market and allow fair access for independent suppliers. This is a naive and dangerous premise. No account is taken of the acceptability of the counter parties from a credit standpoint or how forcing the auction of such a large portion of generation will force large generators to withhold volume. Contrary to what they believe, if Ofgem are allowed to do this, the UK power market will cease to exist and liquidity will contract sharply. Contango Markets has produced a response to Ofgem that we are happy to share with interested parties

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