The cost of gas and power “surged” in March as record low temperatures drew heavily on the nation’s natural gas reserves.
Power prices climbed 26% from February and 48% from March 2012, suggests new analysis released by Platts. The market analysts put the price rise down to the nation’s heavy reliance on natural gas for power generation and domestic heat.
Jillian Ambrose, Platts European power editor said: “While the UK is running coal-fired power plants hard, natural gas-fired plants remain the marginal unit that determines the power price. We see a close correlation between the price of natural gas and electricity in the UK, more so than in other European markets where diversity is provided by interconnection of coal, hydropower, nuclear and renewables.”
The average day-ahead price of UK natural gas in March was 86.51 pence per therm (p/therm), compared with 68.86 p/therm in February and 58.46 p/therm in March 2012.
A week ago there was almost panic as wholesale gas prices shot up when a pipeline closed down, prompting ministers to reassure the public the UK still had plenty of gas.