The National Energy and Utilities Regulatory Commission (NEURC), Market Operator SE, and Guaranteed Buyer SE in their latest statements confirmed the fact of large-scale manipulations in the “day ahead market,” to which the company DTEK Energy has been paying attention since last autumn.
According to the NEURC, there are manipulations on the market initiated by individual traders. The mechanism of these abusive practices comes down to the offer/bid of non-existent volumes of electricity for sale at the “day ahead market” which leads to a reduction in prices and the inability of producers to sell their electricity in this market segment. At the second stage, the same market participants finalize their offers/bids with electricity from the balancing market where, as a result of recent changes in the Market Rules, the price is lower than the price at the “day ahead market.” Thus, producers sell electricity at a loss in the balancing market, and unconscientious traders exploit regulatory gaps to generate surplus profits by selling “air.”
In addition to losses incurred by conscientious market participants, primarily domestic electricity producers, these manipulations led to dire consequences for the Guaranteed Buyer SE, which the state-owned enterprise reported on February 10.
The result of numerous appeals was a warning from the NEURC (as of January 31, 2020) to unscrupulous market participants with a reminder of the inadmissibility of “taking actions that are prohibited by the Rules of Conduct.”
However, the general recognition of the problem is not enough to solve it, and the warning, as the last trading sessions demonstrated, does not influence the behavior of unconscientious market players.
DTEK Energy calls on:
The NEURC to begin an investigation into the facts of understatement of the “day ahead market” price with the subsequent finalization of offers/bids with a resource from the balancing market. Bring to justice all those involved in the manipulation.
The NEURC to amend, as soon as practicable, the Market Rules, developed to stop distortion of market mechanisms, restore the role of the balancing electricity market.
Market Operator SE to publish the list of market participants which set minimum hourly electricity sales prices in offers/bids for the sale of electricity at the “day ahead market” in January and February 2020.
NEC Ukrenergo, transmission system operator to publish information on hourly and daily purchases of electricity in the balancing market by all traders and suppliers for the period of January through February 2020
DTEK Energy considers the definition of manipulation as fraud and is considering the possibility of protecting its rights by contacting law enforcement agencies and the court. At the same time, the company is ready to provide all the information available, facilitate the investigation as well as the development of amendments to the Market Rules in accordance with European practice.