On July 16, anonymous deal was concluded on the energy exchange for the supply of electricity in the last quarter of this year. It was done on the rarely used Continuous trading segment, where the names of sellers and buyers remain hidden.
In the case it is only known that 50 MW baseload for the fourth quarter of 2020 was traded at a price of 78.10 BGN / MWh, hence the total value of the transaction is 8.62 BGN million. Subsequently it became clear that the seller was Toplofikacia Sofia EAD, but the buyer remains unknown. The questionable part of the deal is the achieved price of 78.10 BGN / MWh, because it is much lower than the prices for the same day, for the same product (Q4 2020) achieved on the European Energy Exchange – Q4 Bulgaria 2020 = 95.74 BGN / MWh and on the Hungarian Derivative Energy Exchange – Q4 2020 = 95.99 BGN / MWh. The quotations on both exchanges are used as reference by the participants on the Bulgarian market and by the EWRC for determining the estimated market price in Bulgaria. As can be seen, there is a difference of about 17.6 BGN / MWh compared to the reference quotations and the concluded deal, which can be considered as lost profits for the seller in the amount of approx. 2 BGN million. The explanation of Toplofikatsiya Sofia for deal is: “Toplofikacia Sofia EAD achieved a price of 78.10 BGN / MWh. This is significantly higher price than the current one. The current electricity prices of the IBEX for the period 01 – 15 July show an average selling price of 69.74 BGN/MWh.
At the end of the year, experts` expectations for electricity prices are close to or lower than the current ones. Based on information disseminated by the WHO, as well as by local health authorities, it is very likely that the imposed strict epidemiological measures will be repeated and this will lead to a new decrease of electricity prices in the autumn. “
It is possible that the deal violates the ban on insider trading and the ban on market manipulation described in the European regulation REMIT, but this is within the competence of the Energy and Water Regulatory Commission (EWRC) to be determined. EWRC has already started an investigation on the case. If the seller wanted to get a fair market price it was logical to organize an auction on the “Auctions” screen. The screen provides an opportunity for buyers to compete with each other by placing price bids.
This is not the first time we have witnessed the use of the “Continuous trading” screen to legitimize controversial deals. They are usually carried out by the method of “Click trading”, thus bypassing offers from other participants. Questionable deals are concluded within a few seconds or minutes without enough time for the other participants to react. It is also convenient that the names of the companies are not published. Everything described so far is in contrary to the original idea of mandatory trading via the energy exchange, aimed at achieving equality and transparency in the electricity market.