Many German companies were yesterday raided by the EC who were looking for information to use in their anti-trust case. There is no doubt that if you are a German utility you might think that the authorities have it for you. Firstly, the anti-trust case, secondly the attempts by the government to snaffle any emissions length you have. Even though RWE have admitted that they had to buy 8m tonnes of CO2 allowances for 2005.

Perhaps the question which many will ask, is why is it that when the power price rises so does the emissions price. They are correlated in the way in which if emissions rises so does power but not necessarily the other way round. If one thinks that if power rises, this is not always because there is an increase in demand, furthermore, if there is an increase in demand, this should see a marginal effect on emissions prices one more gas plant buying 5% (max!) amounts of emissions units. It shows that perhaps this is where the anti-trust suit may find some detail and some purposely built flaws in models to generally inflate prices. Of course at this stage all we know is that they have raided the offices, and in reality actually finding the proverbial smoking gun may prove to be substantially more difficult.