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German 2011 Power Little Changed After Reaching Two-Month High

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Dec. 2 (Bloomberg) -- German electricity for delivery next year was stable after earlier rising to its highest price in more than two months as coal costs advanced, potentially making electricity generation more expensive.

Baseload power for 2011 was unchanged at 49.95 euros ($65.84) a megawatt-hour, according to broker data compiled by Bloomberg at 5:21 p.m. Berlin time. It traded earlier as high as 50.30 euros Baseload is delivered around the clock.

“The price increase was mainly driven by higher coal prices,” UBS AG analyst Per Lekander in Paris said today in a note to clients.

Hard coal, which in 2009 accounted for 18 percent of Germany’s power generation, rose to its highest close this year after gaining 5.9 percent in the past week. Coal for 2011 delivery to Amsterdam, Rotterdam or Antwerp traded as high as $111.50 a metric ton today, rising 1.1 percent. Germany also gets electricity from lignite, or brown coal, nuclear plants and wind and solar power.

Utilities including E.ON AG and RWE AG, Germany’s two biggest, will make a profit of 2.09 euros a megawatt hour by burning the fuel at power plants to generate electricity, taking the cost of the fuel and carbon emissions into account. The so-called clean dark spread, based on 2011 prices, closed yesterday at 2.14 euros, according to Bloomberg calculations.

“While spreads did not move significantly, the higher power price is considered good news for nuclear, hydro and RWE’s lignite generation profits,” UBS’s Lekander said.

Bloomberg tracks power prices from brokers including GFI Group Inc., ICAP Plc and Spectron Group Ltd. and Tradition.

To contact the reporter on this story: Lars Paulsson in London at lpaulsson@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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