Drax pays £10m to mix biomass with coal

"It is important to note that the current price issues are based on specific short-term factors," said Ian Parrett, marketing manager of power broker Inenco. "While concerns remain for supply margins in future years, it is expected that the situation will ease in the new year. This is supported by prices for 2009 contracts, which have eased in the last few days as the market waits for direction from the US bail-out negotiations."

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Fall in use of power highlights downturn

Michael Abbott, the deputy managing director of Inenco, said: "There had been serious concerns over supply being tight. But all of a sudden in the past few weeks we have started to see margins of spare capacity improve. And that is because demand is falling."

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Fear of power blackouts dismissed

"The National Grid's forecast has such a low surplus in November, if there is a sudden spell of cold weather, or an unplanned power outage, we could easily see blackouts," said Michael Allen, an energy trader at Inenco.

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U.K. Faces Power Shortage as Reactor Repairs Cut Spare Capacity

Any more unexpected outages or unforeseen cold-snaps could lead to warnings of insufficient supplies, if not actual interruptions,'' said Michael Allen, a gas and power analyst at Inenco Group Ltd., which provides advice to companies on energy prices. Supply margins are particularly tight for some weeks in November, he said.

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