Press release issued 27 March 2003
Industrial energy consumers have good reason to celebrate
the impact of the New Electricity Trading Arrangements (NETA) launched two
years ago.
Commenting, Jeremy Nicholson, EIUG's Director, said: "EIUG
supported reform of the original, flawed electricity pool, which was vulnerable
to manipulation by a handful of generators and resulted in unnecessarily high
prices to customers. The evidence shows NETA's sponsors, DTI and Ofgem, can be
pleased with their reforms."
As expected, NETA reforms have helped lower wholesale
prices, which are now close to those in continental markets. Energy-intensive
industries, which spend well over £1bn on electricity each year, are at
last benefiting from broadly competitive electricity prices. A number of
problems remain on the demand side and for small generators, which are being
addressed, but NETA nevertheless represents a significant net gain for
electricity buyers.
Electricity
Prices
(80MW Demand) |
UK |
France |
Germany |
Belgium |
| Q4 1999 (pre-NETA) |
3.25 |
2.15 |
2.34 |
2.31 |
| Q4 2002 (post-NETA) |
2.51 |
2.34 |
2.95 |
2.75 |
Data: Energy Advice Ltd. - all figures
in p/kWh (contracts as found, excluding taxes)
Notes:
- NETA reforms have helped reduce wholesale prices by
around 40%. Contract prices to industrial consumers have typically fallen by
around 25% as a result, although the benefit of this has been partly negated by
the impact of the government's Climate Change Levy.
- Contrary to popular belief, UK industrial energy prices
are not low by international standards. Contract prices for electricity are
currently broadly competitive with most EU competitor economies, though notably
above those in France.
- EIUG represents the energy intensive sectors that
produce essential materials like steel, aluminium, chemicals, paper, glass,
ceramics, etc., which compete in international markets and depend on secure,
competitive supplies to remain in business.
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