Bloomberg News

Nord Pool, Epex Spot Plan Joint London-Based Power Platform

September 28, 2011

(Adds Intraday, Day-Ahead Markets in third Paragraph.)

Sept. 28 (Bloomberg) -- Nord Pool Spot AS and Epex Spot SE, Europe’s two biggest electricity exchanges for near-term delivery, plan to start a power-trading platform as the European Union seeks a single market for the bloc.

The two exchange companies signed a letter of intent to start the as-yet unnamed venture next year and base it in London, the two chief executive officers of the companies, Mikael Lundin of Nord Pool Spot and Jean Francois Conil-Lacoste at Epex Spot, said today at a press briefing in London.

The European Union plans to establish pan-European power and gas markets by 2014, hoping to use power plants and networks more efficiently to cut costs for consumers and traders. The first step for Nord Pool and Epex will be to establish the legal entity and start building the joint trading platform for day- ahead and intraday markets, aiming to have it operational in three years, the chiefs said.

“Spot power exchanges are playing a key role together with the transmission system operators, and we are setting the pace,” Conil-Lacoste said at the briefing. The EU’s timeline is “extremely challenging,” he said.

The two companies will contribute equally to the new venture, and open an office in London, Lundin said. Nord Pool and Epex will keep their staff in their current offices. The heads wouldn’t say how much capital they are investing.

Epex Spot was created in 2009 when European Energy Exchange AG and Powernext SA of France merged their power trading businesses. The day-ahead markets also cover Austria and Switzerland.

‘Blueprint for Europe’

Nord Pool Spot AS was formed in 2002 and offers trading in the Nordic market. Nord Pool also owns the N2EX power exchange in the U.K. together with Nasdaq OMX Group Inc.’s commodities unit.

“Maybe we’ll see one northwest European spot power exchange one day and this could definitely be the blueprint for Europe,” Conil-Lacoste said. “The steps we are taking now are not a contradiction with such an event.” He didn’t rule out a full merger of the two firms, adding there are no such plans today.

The 50-50 joint venture may also provide services to other exchange companies in the future, Conil-Lacoste said.

Traders at utilities, banks and industrial consumers bought and sold 310 terawatt-hours of electricity on Nord Pool Spot last year, while Epex’s turnover was 279 terawatt-hours.

Nord Pool and Epex will have a turnover of more than 600 terawatt-hours this year, representing more than 90 percent of the spot power trading at exchanges in northwest Europe and probably more than 50 percent in Europe as a whole, Conil- Lacoste said by e-mail.

--Editors: Rob Verdonck, Alessandro Vitelli

To contact the reporters on this story: Lars Paulsson in London at lpaulsson@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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