A drop in UK power prices since the launch of the new electricity trading arrangements (Neta) has caught many generators by surprise. It has now come to the point where generation companies may have to close plants or even sell them at a loss.

Since Neta started on March 27, 2001, wholesale electricity prices in the UK have fallen by up to 40%, with prices set to drop to £13.50 ($19.70) per megawatt hour (MWh) in the UK summer (see figure). With power prices so low, many generators are