A hightened level of overall activity is being observed throughout the local electricity market’s entire spectrum, from the main power utility PPC, independent producers, retail suppliers, to importers.
At PPC, the company is offering lower-priced lignite to the wholesale market in what could be interpreted as an example of a new policy being pursued by the utility to reduce production costs and, by extension, retail prices.
Apart from the main power utility, pricing policy revisions also seem to be taking place in other market trading areas. For example, electricity importers, who, in the past, even provided zero-level offers for a certain mumber of hours at night, have changed their approach. They are now providing offers throughout the night. Last Sunday, for example, the marginal price was at 18 euros per MWh for one hour during a time zone when the marginal price would have been zero in the past. This is occurring because the overall margins in bilateral energy trade are being pressured, prompting traders to raise their offers in search of even the smallest of margins, even during time zones they would have not considered for such practices in the past.
At the same time, independent producers are expected to operate amid an environment of low price levels and no mechanism ensuring capacity or cost recovery. As a result, no privately run stations have operated over the past few days. The turbines of independent producers have remained switched off. It remains unknown how long the market can endure functioning in such a fashion, especially when serious delays are being encountered for the adoption of a new CAT system.
It should be noted that the market is operating favorably for suppliers. Greater leeway is emerging for more appealing pricing policies. Of course, the market’s current state is extremely volatile and companies do not appear prepared to take risks with more aggressive moves. This, however, could change if a bailout agreement includes NOME-type auctions. In this case, independent suppliers may begin capturing considerable market shares.