Nordic March Power Falls Most in a Week as German Price Declines

Nordic electricity for next month fell the most in a week after the the price for power delivered tomorrow declined, along with German month-ahead prices.

The March contract fell 1.3 percent, the biggest drop since Jan. 31, to 37.45 euros ($50.79) a megawatt-hour as of 2:20 p.m. on Nasdaq OMX Group Inc.’s energy exchange in Oslo. The benchmark near-quarter contract dropped 0.6 percent to 36.10 euros.

Electricity for delivery around the clock tomorrow will cost 39.80 euros a megawatt-hour on average, following today’s auction on the Nord Pool Spot AS exchange in Oslo. That’s 3.1 percent lower than yesterday’s price for today, and also short of the financial contract for tomorrow on Nasdaq OMX, which closed at 42 euros. Forward contracts frequently track movements in prompt prices.

German power for baseload delivery next quarter traded 0.9 percent lower at 36.95 euros a megawatt-hour after sliding as much as 1.1 percent to 36.90 euros, according to broker data compiled by Bloomberg.

The benchmark Nordic near-quarter contract traded 3.62 euros above the cost for operating coal-fired plants, which was last measured at 32.48 euros a megawatt-hour for April through June, according to data compiled by Bloomberg. Generating costs at coal-fed plants act as a reference for Nordic power prices, which meets half of its power needs by running water through turbines and a fifth from nuclear reactors.

“The contract is trading above the cap, set by coal-fired power production costs, which obviously limits the upside,” Bixia AB, a Swedish power trading company, said today in an e-mailed report.