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German power for 2008 rises as carbon permits, fuel prices gain

German electricity prices for 2008 rose for the third day in four as rising costs of carbon-emission allowances and fossil fuels boosted generation costs.

Baseload power for 2008 in Germany, Europe's biggest power market, climbed 75 cents, or 1.5%, to €50.10 ($65.76) a megawatt hour, according to prices from the broker GFI Group Inc. on Bloomberg at 2:43 p.m. Berlin time. Baseload power is electricity delivered around the clock. „Coal, gas, emissions, I don't see anything bearish,” said Chad Tschudi, a trader at CEZ AS in Prague by telephone today. „Prices should all be going higher.” Germany relies on fossil fuels, such as coal, oil and gas, for about 60% of its electricity. The April contract for Brent crude oil, which is a benchmark for other fossil fuel prices, rose for a third day as much as 82 cents to $61.44 a barrel on the ICE Futures exchange in London. Industrial users tend to buy most of their electricity in advance to protect against fluctuations in prices. Carbon-dioxide permits for December 2008 rose to their highest in more than two weeks. Contracts advanced 7.6% to €14.40 a metric ton on the European Climate Exchange in Amsterdam. Emission permits affect power production because they add to the cost of burning fossil fuels.

German power for March fell for the fifth day in six, shedding as much as or 2.3%, to €30.30 a megawatt-hour, according to prices from the broker. That's the lowest since the contract began trading on November 2 with GFI. Milder-than-average weather in northwestern Europe for much of the heating season, which began October 1, has cut demand for power and caused forward prices to fall. Germany's electricity prices so far this winter have averaged about €44 a megawatt-hour, compared with about €67 a megawatt-hour a year earlier, according to GFI. Mild winter weather means Europe's households and businesses will use less electricity for heat. Average temperatures in Germany will be 2 degrees Celsius above normal this week and reach 5 degrees higher than normal on February 28, analysts at Markedskraft Deutschland GmbH in Berlin said today in an e-mailed report. (Bloomberg)