IPE Electricity Working Group Prepares For NETA

Important steps were taken yesterday in drawing up futures and physical contract specifications for the markets that will exist under the new electricity trading arrangements (NETA) due to begin in October 2000. The IPE plans to launch futures contracts for electricity in the second quarter of next year. The new markets were discussed at an industry working group organised by the IPE. The meeting was well attended by a cross section of the industry, with approximately 30 individuals from 20 companies taking part. There was much support for the concept of contracts on the day and up to a year ahead, with the possibility of longer dated contracts at a later stage. The strong view was that these markets should be launched as soon as possible, to give the industry the opportunity to manage the transition to NETA and gain experience of the systems and products that will be available. A number of detailed issues were raised which require further consultation and research by the IPE. These include the possibility of introducing cash settled contracts before NETA is launched. The IPE agreed to take these issues forward and call another industry meeting early in the new year. Nick Aldridge, head of product development and research at the IPE said "it was good to see such a well attended meeting with so much support for electricity contracts. We feel that the industry itself is in the best position to define its own needs and our approach at the IPE is to facilitate this process rather than to impose a contract specification on market participants. It is clear that there is more work to do, but we made real progress yesterday in defining the opportunities, problems and issues at stake".