IPE New Electricity Trading Arrangements Tested

Ten leading power companies have successfully undertaken a two day simulation of the markets that are likely to emerge once the new electricity trading arrangements for England and Wales come into effect in autumn 2000. The simulation was organised by the IPE and PricewaterhouseCoopers and was designed to offer an insight into how the new trading arrangements could work in practice. The companies including PowerGen, ScottishPower. and British Energy took part in a series of exercises covering the short-term bilateral physical market (for the period up to 24 hours in the future) as well as over the counter forward transactions and exchange traded futures. Participants were able to practice meeting their short-term physical requirements as well as managing their price exposure in the longer term. Richard Ward, acting Chief Executive of the IPE said "the new electricity trading arrangements will mean dramatic changes in the way companies do business. There will be more uncertainty and more risk. The trading exercise we organised with PricewaterhouseCoopers has given power companies the chance to prepare for those changes"