GERMANY: European power trading set to grow further

GERMANY: European power trading set to grow further - Enron.

10/25/2000
Reuters English News Service
(C) Reuters Limited 2000.

FRANKFURT, Oct 25 (Reuters) - The volume of electricity trades will continue
to expand in continental Europe, a senior Enron executive said on Wednesday.
"Portfolio shifts as well as high oil and dollar prices will continue to
boost the number of transactions," Gregor Baeumerich, Enron's head of
continental European power trading, told an IIR conference on energy trade.
"There are no natural limits to market growth."
According to Enron estimates, German, Austrian and Swiss power trades in 2000
will amount to a combined 1,500 terawatt hours (TWh) - versus actual
consumption of 975 TWh - of which Enron will account for around 375 TWh.
Although the underlying physical demand was not growing, the process of
market liberalisation had already caused a dramatic acceleration in trading
activities, said Baeumerich.
Enron's continental European turnover of 136,7 TWh in the third quarter of
2000 represented a 10-fold increase over the corresponding 1999 quarter.
The number of market participants - counting traders, exchanges and new
trading floors at established energy companies such as municipal utilities -
in that period had risen to 180 from 100 a year ago, according to Enron
estimates.
In future, the number of new entrants would offset those participants lost
due to the simultaneous concentration process, Enron believed.
Trade in transmission contracts for a variety of time periods were now
established both over the counter and at electricity exchanges in Germany,
the biggest market in its own right, Baeumerich said.
Next year should also see the emergence of power options.
But on Enron's wish list for improved German trading conditions were clear
rules on how to handle bottlenecks at border entrance points, he added.
Enron also wanted export and import fees to be waived and traders allowed to
apply for transmission schedules from grid operators after the currently
observed 1430 local time deadline.
Instead, Enron favours short-term trading with a one hour lead time - for
example in response to sudden weather changes which impact on electricity
needs.
Baeumerich also reported that usage of Enron's online trading platform for
power, gas, and coal, introduced a year ago, already accounted for 60 percent
of total worldwide turnover. In Europe, the figure was 50 percent.

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