Nordic Day-Ahead Power Premium to Futures Reaches 1-Year High

Nordic day-ahead power prices were 11 percent higher this month than implied by futures markets at the end of June, the largest premium in a year.

Day-ahead prices averaged 28.52 euros ($38.22) a megawatt-hour in July on the Nord Pool Spot AS exchange in Oslo. Nordic power for month-ahead delivery closed at 25.70 euros on June 30 on Nasdaq OMX Group Inc.’s commodities exchange in the Norwegian capital city.

Rainfall this month was about 90 percent of the normal level, spurring reduced production of hydro power to conserve water in reservoirs for autumn, Patrik Aeberg, a trader at utility Din El, said yesterday by phone from Gothenburg, Sweden. As a result, spot prices were higher than expected, he said.

“There was less rain than forecast, which kept spot prices up,” Aeberg said.

July can be a particularly difficult month for estimating prices, according to Mattias Hellberg, a power portfolio manager at Shepherd Energy in Stockholm. Consumption tends to decline as people take vacations, leaving prices at risk of slumping if the weather turns wetter, he said by phone yesterday.

“Prices can fall very steeply, and the market usually leaves a margin for that,” Hellberg said.

Day-ahead prices were at a 14 percent premium last July. Next-day power averaged 13.70 euros a megawatt-hour in July 2012, the lowest monthly figure in 12 years, according to data from Nord Pool.

Forward prices also were helped this month by the highest availability rate in more than a decade for Nordic nuclear power as operators changed maintenance schedules. Availability averaged 81 percent, data compiled by Bloomberg show.

Nordic power for delivery in August traded at 31.20 euros a megawatt-hour at 2:43 p.m. Oslo time today, while the day-ahead contract settled at 31.04 euros.

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