Update

Power Trading

	Power Trading Update

The Power Trading Committee has been meeting on a frequent basis for the purpose of developing its programme of work for 2006. Its current priority is to look at the various options for halting and reversing the decline in market liquidity evident in the UK power market. Initial thoughts and a potential market mechanism design have been communicated to all PTF members as well as key non-PTF members and Associations such as the AEP and EIUG. Follow up will take place on this mail out during February with a meeting for all interested parties due to take place on 23 March in London (venue to be confirmed). The meeting in March will establish a Steering Group drawn from all sectors having an interest in wholesale UK Power Trading which will be tasked with developing and implementing the chosen new market mechanism.

An additional priority is the holding of a workshop on the state of the UK energy market for members of both the House of Lords and House of Commons at a briefing session currently scheduled to be held between 4pm and 6.30pm on 6th March in the House of Commons. It is being hosted by the Associate Parliamentary Group on Wholesale Financial Markets and Services (for which the FOA provides the Secretariat) and will include speakers from across the spectrum of interested parties, including exchanges, environmentalists, end-users as well as banks and energy dealers.

	Power Trading Update cont...

In addition, the PTC will be working on the following areas:

• Holding a “roundtable” for brokerage houses and investment banks to ascertain exactly why they are reluctant to participate in energy markets (other than the oil market).

• Meeting with user groups to ascertain the full spectrum of their concerns regarding the energy markets and the extent to which their concerns are factually supported.

• Reviewing the viability of converging trading and settlement procedures in the gas and power markets.

• Developing a series of educational seminars on the use of energy derivatives to manage risk with a particular focus on industrial and commercial energy consumers.