Target model ‘dangerous without monitoring mechanism’

The launch of target model markets without a fully functional market monitoring mechanism from the very first day, if not sooner, threatens to undermine the entire effort, two industry associations, ESAI/HAIPP, the Hellenic Association of Independent Power Producers, and ESEPIE, the Hellenic Association of Electricity Trading & Supply Companies, have reiterated in warnings to RAE, the Regulatory Authority for Energy.

RAE is currently preparing a market monitoring mechanism, with support from a specialized consultant from abroad, for the target model markets, but the project is still a long way off, energypress sources have informed. RAE is believed to have received an initial draft of the monitoring mechanism plan now being processed in detail for a finalized version.

The market monitoring mechanism, needed to ensure healthy electricity market competition, will accumulate data from power grid operator IPTO and the Greek energy exchange to identify possible market manipulation practices.

The target model, aiming to harmonize Greece’s electricity market with wholesale electricity markets in the EU, faces a delay of a few weeks. Authorities identified pending issues in the lead-up to the previous launch date, scheduled for September 17.

Even the smallest of flaws in a market as limited in size and depth as the Greek market can prompt major financial consequences for participants, ESEPIE warned in its letter to RAE.

The implementation of an effective monitoring mechanism can prevent such setbacks and is essential for creating a climate of confidence in the new markets, the association stressed, adding the mechanism should have been applied during dry testing staged in the lead-up to the target model launch.

Supplier guarantees proposed by IPTO ‘needless, excessive’

Electricity suppliers have expressed reservations about a power grid operator IPTO report calling for the payment of guarantees by all parties registered with ESMIE, Greece’s electricity transmission system, to fulfill obligations, describing these guarantees as needless and excessive.

The operator’s report was put forth for consultation by RAE, the Regulatory Authority for Energy, prompting responses from ESEPIE, the Hellenic Association of Electricity Trading and Supply Companies, and three energy suppliers, the power utility PPC, Heron and Protergia.

The IPTO call for guarantees would excessively burden ESMIE members and create serious cashflow problems in the mid to long term, the association and suppliers noted in their responses.

Contrary to formulas used for IPTO and the Energy Exchange, a financial danger coefficient was not applied to the calculations determining the ESMIE member guarantees, the association and suppliers pointed out.

In addition, the IPTO report also calls for a monthly system-use charge imposed on suppliers to be doubled and paid in advance.

The report also proposes a revision to the formula determining penalties for delayed guarantee payments. ESEPIE described the IPTO proposal for a penalty charge of 1,000 euros per month as erroneous, instead offering its support for the current formula, increasing penalty payments for delays by 0.1 percent per day.

RAE has yet to take a position on the IPTO report’s proposals.

Flexibility surcharge improper, suppliers complain to Brussels

A CAT surcharge imposed on electricity suppliers to support the flexibility mechanism was adopted without proper consultation via a procedure that was not fully substantiated, ESEPIE, the Hellenic Association of Electricity Trading and Supply Companies, has charged in a letter forwarded to the European Commission’s Directorate-General for Competition and Directorate-General for Energy.

Consultation on the matter lacked a detailed study by power grid operator IPTO on current flexibility needs, the association protested in the letter, forwarded to the Brussels authorities just weeks ahead of the launch of target model markets in Greece.

The flexibility mechanism’s details are based on a study conducted years ago but current flexibility needs concerning production and demand have since changed drastically, the association noted.

A transitional mechanism is not needed given the current conditions in Greece’s energy market, especially if the pandemic-related drop in electricity demand is taken into consideration, ESEPIE noted. State aid or any other form of support for energy producers offering flexibility is unnecessary, the association stressed.

Suppliers have been asked to cover flexibility-related surcharges, beginning August 15, at a rate of approximately 3 euros per MWh. This is burdening their finances, especially in the mid-voltage market, where heightened competition has severely narrowed profit margins.

Flexibility CATs, it should be noted, do not impact independent, vertically integrated suppliers as the corporate groups they belong to collect the flexibility surcharge payments for their production.

Energy companies actually benefit from the surcharge if their retail electricity market shares are smaller than their shares of production. This is not the case for PPC, whose retail market share is considerably bigger than its share of electricity generation.

 

NOME auction postponement sought for export rules clarity

ESEPIE, the Hellenic Association of Electricity Trading & Supply Companies, has demanded clarification, during the current day, of vague NOME auction electricity amount export rules or a postponement of tomorrow’s scheduled session.

This demand by ESEPIE, representing traders and non-vertically integrated electricity suppliers, comes as an addition to an energy exchange proposal for the establishment of a mechanism that would introduce NOME-related electricity export disincentives. This latter proposal is now undergoing public consultation.

ESEPIE is pressuring RAE, the Regulatory Authority for Energy, for a clear-cut response as to whether and when the energy exchange’s export disincentives mechanism can be expected, and, in addition, if it would apply for futures products.

Many suppliers are exporting over 20 percent of electricity amounts  traded, while some are exporting as much as 80 percent.

Tomorrow’s NOME auction is planned to offer a total electricity amount of 683 MWh. Of this, 172 MWh has been added as a result of Greece’s failure to reach bailout-required targets in the retail electricity market, still dominated by the main power utility PPC.