Gas price inaccuracies leading to misjudgments and losses

Pricing inaccuracies in the natural gas wholesale market are causing substantial losses for gas-fueled power station producers who are placing orders in the day-ahead market at price levels that do not reflect actual market conditions.

This is due to insufficient information being provided by DEPA, the Public Gas Corporation, to customers on details concerning the mix (lower-cost pipeline gas and LNG) of gas orders made for the month ahead.

As a result, the proportion of orders to be covered by lower-cost pipeline gas and higher-cost LNG remains unknown to electricity unit producers as a result of DEPA’s insufficient updates, which is causing pricing-policy problems. Electricity producers are essentially being left to make rough estimates of each month’s gas order costs when placing their offers in the day-ahead market.

This is having a detrimental effect on market competition. An energy exchange representing both the electricity and gas markets is needed if true market conditions and transparency are to prevail.