Amendments to the Electricity Trading Rules (ETR) adopted in December banned the merging of balancing groups on the free electricity market. The main reason why the majority of market participants opposed such a ban at the time was that it would lead to an increase in balancing energy costs and a corresponding increase in the final price of electricity. The negative impact of the decision became obvious as early as January 2022, when some of the suppliers and coordinators of balancing groups informed their customers – producers and end users – that the cost of balancing services will be increase as of February 1, 2022.
Prior to the adoption of the amendments in the Electricity trading rules, the Bulgarian MEP Radan Kanev officially asked the President of the European Parliament whether the changes in the ETR will negatively affect the market and lead to price increase. The answer to the questions posed by the EC came in early February:
*Unofficial translation from Bulgarian
“The principle that all market participants are responsible for the imbalances they incur in the system can be applied individually or by contractually delegating their responsibility to a party designated by them as balancing responsible party. The Commission is in contact with the Bulgarian energy regulator to obtain all relevant information on the issue.
As a general principle, market rules facilitate the development of sustainable, low-carbon generation as well as generation and demand that can respond quickly to market signals. Netting the imbalances does not have a negative impact on the security of the system, but allows for beneficial interactions and thus facilitates the development of renewable energy sources.
Wholesale electricity prices are determined by supply and demand, and changes in the way imbalances are calculated do not have a direct impact on wholesale prices. However, if it makes balancing more expensive (e.g. by reducing competition in the balancing market) and would either lead to market exit of participants or make market entry less attractive, this could have an impact on the wholesale price of electricity.”
This opinion was sent by EU Commissioner for Energy Kadri Simson. Although the EC does not give an unambiguous answer to the questions posed, the letter clearly emphasizes that all market participants have the right to freely delegate the balancing responsibility to other entity designated by them, which is actually restricted in the new ETR. In addition, the EC admits that the amendments in ETR could lead to higher electricity prices.
