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UTILITY WEEK | 12Th - 18Th DEcEmbEr 2014 | 29 Markets & Trading Tricks of the trade Jillian Ambrose "It's as if the regulator has scant regard for tradition" "Twas the night before Christ- mas and all through the land, Ofgem kept market rules firmly in hand…" It's true: Christmas Eve will be a little less jolly for the UK electricity market this year, because Ofgem has turned Grinch by insisting that its mandatory liquidity win- dows must still take place on 24 December. The windows – through which the biggest of the UK's power market are required to a way of creeping into the rest of the evening as the post-close "procedural stuff " mounts. And it's not just the traders. Icis may well have flagged up Ofgem's unpopular decision with similar levels of outrage in their hearts. For price reporters, a lot of the real work of the day happens aer trading ends and the deluge of market data used to support closing prices assess- ments floods in. Someone's not getting a Christmas card this year. trade twice a day, every work- ing day – have proved divisive at the best of times. But when Ofgem confirmed earlier this year that Christmas would be no different, market reporters at Icis jumped at the chance to report the market's discontent at not being able to knock off at lunch time. It's almost as if the regulator has scant regard for Christmas tradition. Granted, with the second market window closing at 16.30 you probably couldn't argue that Ofgem is the regulator that stole Christmas. Not the whole thing anyway. But if you're the guy who drew the short straw this year, that 16.30 close will find This week Wholesale prices rise as temperatures fall Tight supply and rising demand drive energy prices up – but they are still lower than last year The price of gas and power on the UK wholesale energy markets showed steady increases in November as colder weather continued to drive demand higher while lower wind output and nuclear outages kept supply margins tight. The price of electricity and gas for near-term delivery rose 6 per cent and 9 per cent, respectively, last month com- pared with average October prices, according to market analysts at Platts. The price reporting agency said that reduced wind power output and constrained nuclear output helped to bolster prices as the UK increased its use of more expen- sive gas plant to meet rising temperature-led demand. However, average electricity prices were still 8 per cent lower in November than in the same month last year, in large part because the cost of wholesale gas is 20 per cent below where it was last November. UK gas storage levels have been significantly healthier this year aer a mild 2013/14 winter, resulting in persistently lower pricing levels despite concern over Russian gas supply disruptions earlier this year. Platts analyst Alex Froley said the heavy year-on- year losses were also due to a combination of bearish market factors which have permeated the energy market complex. "On an annual basis the market is responding to a weakening in the wider energy sector, with Brent crude having plummeted in the second half of this year, from $110/barrel in June to $71 at the end of November," Froley said. JA ELEcTrIcITY Ferrybridge unit back in early 2015 SSE will return to service by early 2015 the second of two coal-fired generation units dam- aged earlier this year in a blaze. The generator will return the 490MW Ferrybridge unit earlier than expected at a reduced rate of 400MW, but the additional capacity is expected to help ease the UK's constrained supply margins predicted this winter. The Ferrybridge plant sustained significant damage in late July this year as a result of a fire, cutting two generating units from service. At the same time a flurry of outages at EDF Energy's nuclear fleet caused expected winter supply margins to halve from what was forecast in July this year. SSE said it was able to return the plant to service aer the Environment Agency agreed that it could run without its flue gas desulphurisation (FGD) kit. The Environment Agency, which enforces compliance with emissions legislation, said the plant could run provided the emissions limits set out in the station's permit were unchanged and that Unit 4 could only be operated in conjunction with Unit 3. If SSE breaches the terms of this agreement, it will be forced to remove the unit from service. The UK's tightening supply margins also received a boost following news from EDF Energy that its nuclear units would return in early winter at slightly reduced capacity, and news that Eggborough coal-fired power plant will run 500MW more capacity than initially expected. ELEcTrIcITY Ofgem approves Belgium link plan Ofgem has approved the financ- ing and regulatory regime for Project Nemo, an interconnector between the UK and Belgium that will be the first to be built under the regulators's cap and floor regime. Ofgem set the annual revenue floor for Nemo at £50.4 million over its 25-year life. The annual revenue cap has been set at £80 million. These levels will be adjusted aer a final assessment of costs post-construction. On completion in 2019, Nemo will add 1GW to the UK's electricity capacity. The 130km, £500 million interconnector will connect Zeebrugge in Belgium to Richborough in Kent. The cap and floor regime was developed by Ofgem in partner- ship with CREG, its Belgian counterpart, to encourage investment in interconnectors at good value for customers. The regime is designed to protect developers from the full financial risks of the project by implementing a floor. Prices making up some lost ground