March 13, 2018 / 9:10 AM / a year ago

RWE, E.ON hedged power sales below market but see bottoming out

ESSEN, Germany, March 13 (Reuters) - German utilities RWE and E.ON have sold much of their power generation over the next two years at prices below current wholesale market levels but said on Tuesday that generation margins were on the mend.

RWE said its adjusted operating profit rose to 3.65 billion euros ($4.50 billion) in 2017 from 3.08 billion euros in 2016, after agreeing a landmark deal to break up its Innogy business and split its assets with rival E.ON to become Europe’s third-largest renewables player.

* While German calendar year 2019 baseload power in the wholesale market closed on Monday at 34.75 euros per megawatt hour RWE has hedged more than 90 percent of its 2019 German power volumes at 28 euros

* 2020 power stood at 34.3 euros on Monday, Thomson Reuters data showed, above the 31 euros RWE has sold more than 70 percent of its 2020 output at

* “Conventional generation sees a low point in 2018 but from 2019, it should become better,” RWE Chief Executive Rolf Martin Schmitz said in a video interview published on RWE’s website

* Energy traders track hedging ratios and prices to assess the size of future volumes already tied up with counterparties such as traders, banks and consumers, and the value of forward production

* The RWE hedges apply to nuclear and brown coal-generated electricity produced in its core German market

* RWE also produces electricity in hard coal and gas-fired power stations across EU countries

* E.ON in slides presented with its 2017 results said it had sold the bulk of its 2018 output at 27 euros/MWh and 66 percent of 2019 at 28 euros

* E.ON had achieved 2017 prices at 32 euros, and 37 euros 2016.

* E.ON’s operates three nuclear power stations in Germany, Brokdorf, Isar 2 and Grohnde, that were bundled in the Preussen Elektra unit and stayed with E.ON while other conventional energy plants were spun off into the Uniper offshoot

* Uniper last week also issued hedges for its hydroelectric plants ($1 = 0.8110 euros) (Reporting by Vera Eckert; Editing by Dasha Afanasieva)

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