Ofgem claims big price falls for Neta

10 April 2002
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11 April 2002 | David Arminas

Energy buyers have reaped the rewards of the New Electricity Trading Arrangements (Neta) in its first year, according to a new report.

Buyers in large to medium-sized companies in particular have made big savings, according to Neta - One Year On, from energy regulator Ofgem.

It says prices have fallen by up to 40 per cent because there are more generators.

Neta began last March. It replaced the electricity pool, which set wholesale prices for England and Wales centrally, with an open market where electricity is traded as a commodity.

Around 98 per cent of electricity is now sold as a commodity, the report notes. But it points to a continuing problem for small generators, including companies that have invested in combined heat and power (CHP) plant, in selling their electricity.

The low price for electricity has meant it costs more to generate CHP electricity than they get for selling it, said Martin Rawlings, deputy chairman of the CIPS energy committee. Many CHP plants are now run at low capacity or not at all, he added.

The government is considering an arrangement for CHP owners to consolidate their production to sell electricity as a single producer.

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