New electricity market goes live

Significant savings in wholesale electricity prices are resulting from the new system of electricity markets in England and Wales, which began operation today, according to Energy Minister Peter Hain.

Along with other market reforms, NETA - the New Electricity Trading Arrangements - could help to reduce wholesale electricity costs by Up to 30% in real terms compared with 1998 and could be worth £2 billion a year.

Although NETA went live at midnight, it has already given crucial support for organisations negotiating better deals for their electricity supplies.

'The previous Pool arrangement was deeply flawed - it was effectively a means of generators setting a wholesale price which suppliers and large consumers had little choice but to accept. It was no better than a generators' club,' said Mr Hain, speaking with Ofgem Chief Executive Callum McCarthy at St Thomas'Hospital in London. 'In contrast, NETA is a genuine market in which, for the first time, generators have to seek out customers, giving the electricity suppliers and large customers real choice.'

'It is already having an impact on market prices, along with earlier reforms of the electricity market,' added Mr Hain. 'We are seeing forward contracts now representing 30% cuts in real terms compared with wholesale prices in 1998 when the Government started the reform process. This well exceeds forecasts at the time of 10% cuts.'