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Turkish electricity pool prices spike ahead of exchange launch

29 Nov 2011 18:17:27 | edem

Electricity prices on Turkey's PMUM have reached a near three-month high just hours before the pool is expected to launch its fully-fledged bourse on 1 December. Traders link this both to supply disruptions to natural gas-fired generation, rising industrial demand and last minute trading ahead of the bourse launch.

The daily Baseload average for Wednesday is pegged at Turkish Lira (TL) 193.72/MWh (€77.77/MWh). The annual record was reached on 7 September when the daily medium price spiked at TL211.87, according to ICIS Heren data.

Significantly, hour 17-18 Ankara time on Wednesday reached a record TL550.00/MWh, a level that surpasses July prices, historically seen as the highest during the year.

The November average to date is TL146.17/MWh, TL50.00/MWh above last year's daily average on PMUM.

"There is so much demand on the market that we have been even able to sell at TL500.00/MWh," one participant said.

Gas supply disruption

The PMUM spikes have raised questions from participants. Some of them insist the prices are boosted by an increase in industrial consumption.

Others, however, say that ongoing supply issues on the Western Pipeline feeding natural gas to power plants on the European side of Turkey may be causing a tightness in the system.

Last week, thermal power plants operated by electricity incumbent EÜAŞ generated 3.7GW out of a total thermal installed capacity of 8.7GW, according to leaked EÜAŞ data seen by ICIS Heren, but not confirmed by the company itself.

There were suggestions that Ambarlı A and B power plants in western Turkey which have a total installed capacity of 1462MW could be either switched off or their production may be drastically reduced until March 2012. The plants have dual natural gas and fuel oil generation.

The average November price to date for fuel oil 1% FOB Barges ARA is pegged at $661.50 while the monthly average to date for fuel oil 3.5% FOB Barges ARA is $635.045, according to prices provided by ICIS.

It is thought that the natural gas generation is now switched off, while the fuel oil production is working at full throttle.

EÜAŞ could not be reached for comment.

Last-minute trading

Others explained that the spikes were a reflection of "last-minute" trading on PMUM as the pool launches its new exchange on 1 December.

From Thursday, the current transitional Day-ahead for planning platform on PMUM, the local exchange, will become a fully-fledged bourse, like the European Energy Exchange, according to a PMUM source.

Under the new arrangements, participants will have to adapt to a raft of changes ranging from a shift in the way bids are placed to the necessity to submit collateral guarantees by anyone interested in maintaining a presence on the exchange. This means that all players interested in remaining active on the bourse will be required to submit a collateral guarantee that would amount to a minimum TL200,000. AS

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