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European 2014 Power Contracts Decline as Emissions Permits Fall

Power contracts for 2014 delivery in Germany and France slid as December European Union emissions permits dropped, reducing production costs for some generators.

German 2014 power, a European benchmark, and the equivalent French contract both lost 0.6 percent, according to broker data compiled by Bloomberg. Carbon allowances for December declined as much as 4.4 percent.

German baseload power, for supplies delivered around the clock, fell as much as 25 cents to 42.30 euros ($56.34) a megawatt-hour, according to broker data compiled by Bloomberg. French year-ahead electricity fell 25 cents to 45.30 euros.

EU carbon permits for December slid as much as 24 cents to a 5.21 euros a metric ton on the ICE Futures Europe exchange in London. Power can track fuel and emissions prices, which affect the cost of production at plants that burn fossil fuels.

Power contracts for next-week delivery in Germany dropped 5.3 percent to 41.50 euros a megawatt-hour as of 10:28 a.m. Berlin time, while the equivalent French contract lost 4 percent to 47.50 euros, broker data show.

Low temperatures in Frankfurt are forecast to decline to minus 10 degrees Celsius (14 Fahrenheit) on Jan. 26 versus a 10- year seasonal average of zero degrees, according to CustomWeather Inc. data on Bloomberg. Minimum temperatures in Paris are expected to reach minus 10 degrees on Jan. 25, compared with a 10-year average of 4 degrees.

The German 2014 clean-dark spread, a measure of the profit utilities get from selling electricity after accounting for the cost of coal and emissions permits, fell as much as 4.1 percent to 7.28 euros a megawatt-hour, according to data compiled by Bloomberg. The 2014 clean-spark spread, for gas-fed generators, shrank 1 percent to a record minus 14.85 euros a megawatt-hour.

To contact the reporter on this story: Rachel Morison in London at rmorison@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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