Northern Mini Forum

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Gunnar LundbergChair of the EURELECTRIC WG
Wholesale Markets TradingVice Chair of the
Markets Committee
Northern Mini Forum Copenhagen, 27 June 2006

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Market Transparency

• Conclusions from the 12th Florence Forum
• EURELECTRIC agreed to provide a list of
  information that it considers market agents need
  to have in order to trade efficiently, where
  possible in co-ordination with traders, power
  exchanges and customers, with the aim to provide
  this list by November 2005.

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Prerequisites for a European wholesale market

• Liquid day-ahead and forward markets and open
  balancing and intra-day markets with trustworthy
  prices
• Sufficient number of market participants in the
  day-ahead and forward markets on both demand and
  supply side
• Transparent access to common sets of market
  information
• Coordinated and market-based mechanisms to manage
  congestion
• Set of sufficiently harmonized market frameworks
  to allow cross-border trading on all markets
• Develop interconnection where economically
  feasible

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Benefits of Market Transparency

• Promote market liquidity and enhance market
  efficiency
• To effectively risk-manage their positions and
  cater for demand and supply uncertainties
• To take make or buy generation decisions
• Facilitate new entry
• Engender market confidence
• Facilitate regulatory oversight

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Market Transparency Key Principles

• Relevant data should
• Be available to all
• Be authoritative
• Be based as far as possible on common
  standardised definitions and formats
• Be issued at the same time in a regional market
• Be easily accessible
• Be based on best estimates in good faith
• Provide sufficient degree of confidence

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Market transparency the need to make a
balanced assessment

• costs the cost of collecting not yet available
  data has to be proportional to the benefits
• level of details the degree of details should be
  determined by the range of data relevant to price
  formation
• confidentiality market participants must be able
  to operate without revealing commercially
  sensitive information

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EURELECTRIC approach towards market transparency
is embedded in its Road Map to a European
Electricity Market
Integration at European level
Pan-European market
2007-12
Coordination between regions
2005-10
Development within regions
2005-09
Continued liberalisation of national markets
2005-07
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Market Transparency Transmission and Access to
Interconnectors

• Year-, Month-, Week- and Day-ahead forecast of
  available commercial capacity on borders
• Planned maintenance of borderlines
• Unplanned line outages
• Legacy contracts and reservations for legacy
  contracts
• Remaining available commercial capacity for
  day-ahead and intra-day allocation
• Total nominated capacity per hour
• Realised physical flows on borders per hour
• Long-term evolution forecast of the transmission
  infrastructure, etc.

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Market Transparency Generation

• Installed generation capacity by fuel type (ex
  ante)
• Available generation capacity
• Ex ante information to be made available
  following a 2-phase-approach
• Actual hourly aggregated generation by fuel type
  (ex post)
• Unplanned loss of generation capacity
• Ex post information by fuel type on price area
  level 2-phase-approach
• Water levels in hydro reservoirs
• Further information on projected maintenance,
  mothballing, etc.

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Market Transparency Load

• Year-, Week- and Day-ahead aggregated forecast of
  load
• Actual system load in MW/h

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Market Transparency Balancing and reserve power

• Price and volumes for balancing power
• Aggregated capacity margin supply-demand
• System balancing status
• Actual use of secondary and tertiary reserve

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Market Transparency Wholesale market

• Prices and volumes on power exchanges or for OTC
  standard contracts by brokers in the
• Day-ahead markets
• Intra-day markets
• Forward and derivatives markets

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Market transparency HOW TO CREATE A LEVEL
PLAYING FIELD?
2 ways can be envisaged Implementation via
Europe-wide Regulation Pros a tested route,
will avoid potential for market
distortions Cons lengthy process, risk to align
it to the country with the lower pace of
development Implementation via regional
cooperation Pros tailored and pragmatic
approach, quicker process Cons untried
approach on European scale, greater trade
distortions may result in absence of appropriate
guidance
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Market transparency Way forward I

• Provide a list of data for benchmarking existing
  market transparency arrangements in order to
• Harmonise transparency requirements within
  regions
• Progress towards harmonisation between regions
• ? Use upcoming regional Mini-Fora to create
  momentum for levelling up transparency standards
  in the regions (provided that all categories of
  market players are represented)

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Market transparency Way forward II

• Regional approach for market transparency
  requires
• Putting in place the necessary governance
  arrangements
• Using the Mini-Fora as the natural vehicle for
  development
• Follow level up benchmark in the regions
• Genuine cooperation between all stakeholders and
  in particular the regulators
• ERGEG proposal for market transparency in public
  consultation ? EURELECTRIC input
• Different approaches relatively close in majority
  of issues

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Thank you for your attention.
Representing the European Electricity Industry