Energy price reporters launch transparency index

Energy price reporting agency Icis has launched a new wholesale power market price index which it says will bring greater transparency to the market.

The Icis Power Index (IPI) tracks prices across the two most traded seasonal contracts which are used to trade electricity for the coming year. At the moment these contracts are Winter 2014/15 and Summer 2015 but these roll over twice a year as the new season begins.

“Energy markets have come under increased scrutiny, and the aim of Icis is to provide a clear wholesale price reference, so that debate can centre instead around the real policy issues,” the agency said.

The IPI will be freely available and produced every working day, taking into account the daily closing price of wholesale power for delivery over the coming year which is then weighted according to volume and demand.

Icis’ head of power markets, Zoe Double, told Utility Week that the index could serve as a reference within the ongoing concern over market prices by removing confusion over which price is used to indicate the value of the market.

“When a politician stands up and says prices have moved one way, another politician on the other side of the house can say the opposite – and they’re both right, depending on which contracts they use and over which time frame,” she said.

Icis produces daily assessments for 40 different delivery periods in the UK power market alone; including contracts for next day delivery, next month delivery and long-term traded power.

Although the UK power market typically sees a greater number of trades on power for near-term delivery these tend to be smaller in volume while longer-term traded power contracts have fewer trades but make up around 80 per cent of the market in terms of volume.

“The index reflects what is really going on in the market on any given day,” Icis said.