The Scottish Power buyout by Ibedrola of Spain is likely to go to the EC for competition review. In reality this is no great surprise as most utility players are submitted as a matter of course, but it is unlikely that the deal will not go through on competition grounds. The new company will still be significantly smaller than E.ON and a little bit smaller than RWE. It will continue to dwarf its neighbour SSE.

The cost of transmitting electricity is going to rise, NGC have been awarded money by OFGEM for updating transmission wires. They are likely to spend £5bn over the next five years. To customers this will mean a rise in transmission of 8% in 2007/8 and a further RPI +2% for the remaining 4 years. This may seem quite substantial but we must remember that transmission accounts for approximately 15% of overall costs. The recent falls in wholesale power prices 65% of overall costs are in the region of 60% so in theory there will still be a fall in overall power prices.

The market this morning has continued to fall, with day ahead trading at £29 and with more gas coming into the system that any storage fears have been completely allayed it is clear that the market is still potentially overpriced. We could easily see some pressure on nights and Summer 07. Furthermore the peak baseload ratio is narrowing again and the spark spread is falling, oh and so are emissions and oil! This market is cosmopolitan it has brown traders, black traders and grizzly traders but one thing is clear they are all bears!