Spot market upper, lower limits would distort target model, EVIKEN warns

Industrial sector officials have warned that an Energy Exchange proposal for upper and lower limits in the spot market’s day-ahead and intraday markets, forwarded for consultation by RAE, the Regulatory Authority for Energy, would lead to target model distortions.

The target model is aiming for market coupling, or harmonization of EU wholesale markets, in order to unify energy markets.

Though RAE acknowledges bailout terms do not permit the imposition of any upper or lower limits for offers and prices in these markets, the authority has put forward upper and lower limit proposals noting a need for a smooth transition towards the target model without any extreme price fluctuations.

EVIKEN, the Association of Industrial Energy Consumers, has responded by forwarding a letter that argues such price limits would neither comply with existing terms nor prices determined by decisions at ACER, Europe’s Agency for the Cooperation of Energy Regulators.

The proposal would lead to severe market distortions by limiting the free setting of market prices and also delay the Greek market’s coupling with the Italian and Bulgarian markets, EVIKEN stressed in its letter.