Energy market summary

September - December 2010

Prices remained high yet movement relatively stable as the summer period drew to a close, with only moderate spikes during the September to October months. However, the unanticipated cold snap saw a sharp increase in prices towards the end of November, and this overall ascent continued through to the end of the year.

Comments from the last 3 months

A - The underlying gas and coal markets offered little impetus or direction to the curve, and this in turn manifested itself with steady power prices and thin trading.

B - The closing November period saw volatility return to the energy markets, with the entire power curve rallying as gas prices climbed aggressively on forecasts of lower temperatures. Consequently, December saw strong temperature-based demand and prices continued to soar amid the harsh weather.

C - A period of milder conditions and the ability of the gas and power systems to cope with the recent cold snap and corresponding high demand were reflected by a notable decrease in prices. Nonetheless, the curve ascended strongly once again, in line with rising gas and coal markets and below-freezing temperature forecasts.