Centrica and EDF are at the table – now UK ministers must strike a fair electricity price

theguardian.com:

Centrica and EDF, the duo behind the UK’s current fleet of nuclear power stations, have read the political breezes, sensed the popular mood and come to the correct conclusion: they’re up for a negotiation with government to cap the price of electricity.

So they should be, of course. Even if the size of windfall profits being collected by generators is currently unclear, nobody doubts the fact of outsized returns when current forward-selling contracts fall away. The wholesale price of electricity, absurdly, is tied to the price of gas, creating nonsensical outcomes in those corners of the generation market where input prices are virtually unchanged.

One could, perhaps, be slightly nervous that Centrica and EDF have volunteered for duty so speedily. The companies aren’t charities and they’ll be looking for something for themselves – namely medium or long-term guarantees on prices. That worry, though, is really an argument for transparency when the deal-making begins. At this stage, willingness to come to the table is what matters. It’s up to ministers, if they’re really dead-set against new windfall taxes, to thrash out decent terms to protect the public purse.

So where are the other corporate volunteers? Drax, as a biomass-based business, tends to be overlooked in the focus on nuclear, wind and solar generators, but it is in exactly the same lucky economic boat. Burning wood pellets to generate power is a lucrative business if you’re being paid as if you’re a gas generator. Witness the jump in Drax’s profits, and two-thirds improvement in the share price, since wholesale energy started to climb last autumn.

Since Drax is also the beneficiary of stupendous support under current arrangements (thinktank Ember calculates that