| © ICIS HEREN - Romania, Hungary and Bulgaria could integrate |
| 2010-12-01 |
| Romania and Hungary have renewed talks about a potential market coupling - a move that could boost liquidity in the region, a source from Romanian regulator ANRE told ICIS Heren on the sidelines of a conference in Prague on Wednesday (1st December). The announcement comes just a day after Bucharest signed a memorandum of understanding with Bulgaria, paving the way for a similar market integration between the two countries (see EDEM 30 November 2010). An integrated central and east European market would not only bring more activity to regional trading floors, but also create a more flexible trading framework. This would bring the industry a step closer to Brussels` vision of a single EU power market. Coupling challenges But traders polled by ICIS Heren identified a number of problems with the current proposals. "Firstly, it is still unclear how the three countries see this coupling. Will there be a coupling of the Day-ahead markets only, or are we talking forward contracts, too?" one trader active on the Romanian market wondered. "If the Hungarians had been serious about this, they would not have set up their own Day-ahead exchange [HUPX]." Romanian power exchange Opcom is the most liquid platform in the region, boasting more than 100 registered members. It operates physical and financial power contracts, and offers a trading platform for emission certificates. The exchange could provide a liquid platform to Bulgaria, which does not have such a facility, and has been mulling either launching one or operating under the Opcom umbrella. Although the Romanian market could set itself up as a trading lynchpin, market participants active in the country find themselves saddled with a €7.00/MWh export tax, also known as an extraction and administration fee. To compound matters, the Romanian regulator is reportedly pondering the introduction of an additional cogeneration levy, which could bring the overall tax to an average €9.00/MWh from 1 January 2011 (see EDEM 25 November 2010). ANRE never confirmed or denied the rumours, but Romanian sources close to decision-makers insist the levy would be enforced from next year. Bulgaria is in a similar position, levying an estimated €10.70/MWh tax, and does not seem inclined to scrap an existing source of income (see EDEM 10 June 2010). Both Romania and Bulgaria have historically insisted the fees are necessary to cover domestic costs. "People just keep talking about market coupling - but, really, I`ll believe it when I see it. Romania and Hungary first started talking about coupling their markets five years ago. Five years on, still nothing," another Romanian trader said. ANRE, however, told ICIS Heren that the two markets could be integrated within the next two years. (THE ICIS HEREN REPORTS - EDCM 14.333 / 1 December 2010) |
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