The first pricing period will be for the March 05 contract.
Since the liberalisation of the UK power market in 2001, market participants have sought an appropriate index on which to base large bilateral physical deals. The clear methodology and price transparency of this index, coupled with the IPE’s RIE status, and the financial security of a cleared product, delivers a robust solution to the industry. This addition to the suite of IPE indices follows the launch of the IPE NBP Natural Gas Index, now widely referenced as a benchmark for indexed natural gas transactions.
The IPE UK Electricity Index is calculated as a rolling average of the front month settlement price for each trading day, with the final index being that calculated on the expiry day of the front month.
The first major deal to be based on this index was reported yesterday. Accord Energy, the wholesale trading arm of Centrica plc and EDF Trading concluded a transaction approaching 1/2GW of March baseload electricity, demonstrating their commitment to supporting products that will increase liquidity in the UK power market. IPE Member broker, Spectron Energy Services Ltd, brought together Accord Energy and EDF Trading as the parties to the trade.
Richard Ward, IPE Chief Executive said: "This initial transaction is an encouraging signal of both the market's desire to trade an index and the confidence it has placed in the IPE to provide a reliable reference price."
