German Power Market to Shrink; First Time Since Enron

From Bloomberg:

The power market in Germany, Europe’s biggest, probably will shrink for the first time since Enron Corp. failed in 2001 as utilities reduce risks and fewer banks trade energy, raising concerns about exaggerated prices.

E.ON AG, the nation’s biggest utility, has one financial company among its top trading partners, down from four a year ago, after Lehman Brothers Holdings Inc. collapsed in September and UBS AG exited the commodities business in October. Stockholm-based Vattenfall AB, the Nordic region’s largest utility, cut its list to three banks from six.

German power trading may contract 17 percent this year from 2008’s record, forecasts Kai Seela, head of power and emissions at Vattenfall. The decline may reduce competition among traders, meaning energy users from ThyssenKrupp AG to Daimler AG may struggle to get the best offers and lowest power costs, even after wholesale prices fell 45 percent from July’s peak....MORE