Ofgem to detail UK power liquidity measures this year
London, 19 October (Argus) — UK energy regulator Ofgem will announce by the end of the year its plan of action to boost wholesale power market liquidity.
Liquidity on the forward curve continued to fall short of the regulator's target levels, Ofgem said today in a package of proposals aimed at boosting competition in the retail market.
“Things are moving in the right direction but more is needed to meet Ofgem's liquidity objectives,” the regulator said. “The big six [utilities] have made some progress in the near-term market, with at least 30pc of output sold through day-ahead auctions. However, further progress is needed in relation to longer-term products.”
Ofgem's core proposal is the introduction of mandatory auctioning of 25pc of generation by the big six — SSE, ScottishPower, Eon, RWE, Centrica and EDF Energy. The regulator had previously signalled it would decide whether or not to pursue mandatory auctioning “before the winter”.
UK energy secretary Ed Davey yesterday welcomed Ofgem's drive to increase liquidity, but hinted that the government could also act if the regulator's measures failed to deliver. “We are looking at backstop powers in the energy bill to promote liquidity,” Davey said.
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