Record Power Prices in Europe, Consumers May Pay the Price
April 10th, 2008Via: Bloomberg:
Power prices rose to records across Europe, potentially increasing costs for consumers and industry on the continent as economic growth slows.
Power for 2009 in Germany, Europe’s biggest electricity market, climbed to a record 65.50 euros ($105) a megawatt hour, gaining 1.2 percent, according to broker GFI Group Inc. The contract traded at 65.25 euros at 3:35 p.m. Berlin time. French, Dutch and U.K. contracts also rose to records.
European electricity prices are in the third year of a rally as the price of oil is surging and after the introduction of the European Union’s emissions-trading program. The increased costs for the continent’s 306 million people and industry may dent an economy that’s being threatened by a possible U.S. recession and add to inflation pressures.
“Commercial and industrial users will definitely have to pay these prices, and the broader public too,” said Per Lekander, a utilities analyst at UBS AG in London today. “It’s short-term pain and long-term gain for the utilities.”
The European Central Bank today kept interest rates at a six-year high to quell inflation, even as the euro’s gain and a credit squeeze threaten to choke growth. The International Monetary Fund yesterday said Europe’s economy will expand at the slowest pace in five years. The ECB is reluctant to follow its U.S. and U.K. counterparts in cutting interest rates as the fastest inflation in 16 years stokes demands for wage increases.
