Utility RWE scaled back its hedging during the third quarter but had still hedged slightly more of its power compared to last year, it said in financial results on Thursday.

Europe’s biggest emitter had hedged >90% and >80% of its expected Y+1 and Y+2 baseload (nuclear and lignite) generation respectively by the end of Q3.

It had hedged >80% and <10% of its expected Y+1 and Y+2 ‘spread’ output (hard coal and gas).

These positions advanced RWE’s combined hedging position for those two years by some 30 percentage points over the last three months. The previous two quarters saw an increase of 50 and 40 percentage points respectively.

But the company’s overall hedging position was still more advanced than a year earlier, when it was >90% and >60% for baseload, >70% and <10% for spread.

RWE’s electricity sales were up 2.4% y/y over the first nine months at 154.9 TWh, but the company’s EBITDA fell 6.3% to €4.4 billion, which it blamed on a “price-induced shrinkage of margins in conventional electricity generation”.

RWE’s hedging rates are closely watched by market participants as the company’s CO2 output accounts for almost 10% of all emissions covered in the EU ETS.

As the main buyers of EUAs, the purchase patterns of major utilities can have a major bearing on price levels. They sell most of their electricity one-to-three years in advance, simultaneously buying the required carbon and fuel to lock in profit.

Despite RWE’s scaling back of carbon buying over the three months to Sept. 31, benchmark front-year EUAs rose 9.2% to €8.15, partially due to increased buying from utilities.

By Ben Garside – ben@carbon-pulse.com