At the end of last year, the Energy and water regulatory commission (EWRC) proposed an amendment to the operational rules of the Independent Bulgarian Energy Exchange (IBEX). It envisages that IBEX will be able to temporarily suspend the operation of a trading screen on the Bilateral contracts market. According to the EWRC, the main reasons for considering such a new rule are the low liquidity on the Continuous trading screen and the suspicious transactions concluded on it. We remind you that such suspicious transactions take place also on the other screen – Auction, part of the same segment.
Two of the three organizations that submitted written positions to the regulator oppose the changes. These are the Association of Traders with Electricity in Bulgaria (ATEB) and the National Electricity Company (NEK). Below we publish some of NEK’s arguments against the changes:
“NEK points out that as a producer of electricity it is legally obliged to sell electricity produced from its own power plants only through the trading platforms of IBEX. With the new PEOR[1] and the introduction of standardized products of ETS-BC (electronic trading system – bilateral contracts) the possibilities of producers to sell flexible products with hourly deviations with a long-term delivery periods are significantly limited. According to NEK, the suspension of the screens on bilateral contracts market for an indefinite period by the operator “in the absence of liquidity or for any other reason”, which are not explicitly stated in PEOR, is unacceptable and creates a risk that Bulgarian electricity producers will not be able to offer for sale and to sell long-term products on the electricity market in the country. In addition, IBEX is the only license holder with rights to organized power exchange market in Republic of Bulgaria and by law is obliged to administer DAM, IDM and bilateral contracts market and to operate according to the following principles set out in Art. 2 of PEOR:
- electricity trading through an open, transparent, non-discriminatory and anonymous mechanism;
- formation of reference prices for all traded standardized products;
- concluding transactions in an easy, fast and secure way. “
ATEB’s position is similar, as the organization does not really see any benefits from temporarily suspending a trading screen. The Association notes that the changes in the PEOR should rather be aimed at increasing the control of the EWRC over the rules (instructions), tariffs, products and contracts of IBEX. Therefore, ATEB proposes EWRC to address the existing problems in the operation of IBEX and to intervene in the determination of the IBEX Tariffs, the Specification of Traded Products and other controversial documents that compromise security and normal operation of the market.
Despite the objections received, it appears that the regulator will accept the initial texts allowing IBEX to temporarily suspend trading screens.
Source: Energy and Water Regulatory Commission
[1] Power Exchange Operational Rules
