Italy / Austria: PSV low; Austrian market jumps
The Italian market did not fulfill expectations and remained illiquid. It has been also extremely bearish, with the few reported deals closing at a discount to the Austrian market. July ‘09 traded in a range of €13.25—13.45/MWh at the PSV but a border deal indicated value might be falling below that in the last week of the month.
With the integrated code for the retail market published by the Italian regulator on 8 June, bigger and smaller operators have started making offers to municipalities and industry. Offers from the biggest operators seem to have worsened the situation. “As forecast, Eni has offered a discount to the CCI formula [the component of the retail price],” said a trader. “But it has been able to enter with a very low price, at least €1/MWh less than the price proposed by the energy regulator.” There was consensus that the discount was at least this low.
According to shippers, even in the regulated market, clients are becoming increasingly aware of the advantage of a liberalised market and this has ignited a fight amongst suppliers for the lowest price. This has influenced the PSV, and probably still will in the coming weeks: “Prices will probably go further down but activity will not increase,” said a trader.
Nonetheless, the regulated market price imposed by the regulator was high enough for Italian shippers to make a margin. The Eni Gas Release 2007 formula for Gas Year 2009 still ranges between €23.50-23.80/MWh. The CCI formula for the same period has a premium of about €0.70/MWh.
Austria’s Baumgarten became the most expensive market in Europe, with a premium of €3.30/MWh both on Day-ahead and July over the German EGT during the last week of June. According to some traders, the Russia-Ukraine gas crisis is the reason for the premium. “Austria imports almost all the gas from Russia, and is arguably one of the markets more sensitive to any change in the Russian gas capacity,” said a trader.
July rose by around €1/MWh, in the last week of June to trade at €14/MWh. The increase was caused by overbooking of transport capacity between Germany and Austria. “Some people had problems fulfilling their contracts in Baumgarten, so they started importing from Germany,” a trader said.
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