Prevailing conditions ahead of tomorrow’s first of four NOME auctions to be staged in 2018 suggest prices will be lower than the level of 45.20 euros per MWh reached at the most recent session, last October.
The 400 MWh/h electricity amount to be offered tomorrow and certainty of sizeable quantities to be offered at ensuing sessions this year; the increased difficulty of exporting electricity due to a price drop in other European markets; as well as an overall acceptance by independent suppliers that continued price levels of around 45 euros per MEh would threaten their sustainability, are three key factors seen subduing bidding tomorrow.
On the other hand, however, all participants want to secure electricity amounts to cover current supply needs as well as possible increases. At previous auctions, certain major players did not acquire amounts reflecting their market presence. Also, a number of new players, such as the EPA gas supply companies seeking to also enter the retail electricity market, will require amounts. The impact of traders on tomorrow’s auction remains unclear. Restriction proposals concerning their export trading activities have been loosened while current loopholes enable traders without a single customer in the domestic market to participate in the NOME auctions.
Over the past few days, independent suppliers have been busy shaping their strategies for tomorrow’s auction.
A bidding war leading to increased price levels would severely limit the ability of independent suppliers to offer attractive electricity packages undercutting offers made by the main power utility PPC.
Since July, 2016, when PPC decided to offer punctual customers a 15 percent discount on electricity bills, independent players have been forced to offer similar packages, often beyond their limits. Independent players may face lower operating costs than PPC but their budgets include major outlays for sales network development and other investment costs.
A total of 1,711 MWH/h will be offered at the four NOME auctions planned for 2018. This amount includes a 594-MWh/h penalty quantity resulting from PPC’s failure to reduce its retail electricity market share to 75.24 percent by the end of 2017. The utility ended last year well over this level, registering an 85.34 percent market share.
The 1,711 MWH/h planned to be offered in 2018 represents 19 percent of the previous year’s total electricity consumption.
The first, second and third NOME auctions this year – scheduled for February 7, April 18 and June 18 – will each offer participants 400 MW/h, while a 511-MW/h electricity amount will be offered at the final session, scheduled for October 17.
The NOME auctions were introduced slightly over a year ago to offer independent suppliers access to PPC’s low-cost lignite and hydropower sources.