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“Jump to transparency – it won’t always be optional”
It’s an odd thing to accuse a trader of profiteering.
Much like accusing a lawyer of always looking for a loophole, or a salesman of putting a positive spin on a product, the criticism cuts straight to the point of the profession.
Traders exist to turn a profit, mitigate losses and otherwise optimise a firm’s financial position within a given market. The job is to make money. And it’s a job that is only becoming more difficult as conventional generation profits shrink almost as quickly as capacity margins.
But traders have another problem to contend with this winter – the political fallout if they prove to be too good at their jobs.
The Energy and Climate Change Committee is understood to have asked Ofgem to investigate the now infamous events of 4 November when Calon Energy used a capacity crunch to earn £2,500/MWh from a plant that just hours earlier had begun winding down generation.
With the political risk of a power outage looming, it’s not what politicians want to see. But the real question should be: is anyone breaking the rules?
Early analysis of the events seem to suggest that Calon was operating well within the current rules. Viewed objectively, Calon took a calculated punt on securing much-needed profit to prop up its operations in an otherwise unprofitable environment.
Can you blame a trader for doing the job, and doing it well? Maybe not. But then you can’t blame a politician for wanting to be seen to be holding the market to account either.
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