Delay to reserve payment cut boosts Polish Q4 ‘14 Peaks

Cuts to payments for producing electricity as reserves during peak hours in Poland will not come into force in September as previously planned. And the delay is pushing the Q4 ‘14 Peaks price higher at the wholesale electricity market, Polish traders have told ICIS.

On 1 August, Polish transmission system operator PSE announced proposals to slash payments that generators get for producing power during peak hours.

The plan was to cut the existing amount from Zl 37.13 (€8.87)/MWh to Zl 17.03/MWh for the four months from 1 September to 31 December this year.

But the proposals will not be implemented from September after the country’s biggest energy companies hit out against the plan earlier this month.

This means companies will be more likely to retain capacity within the reserve scheme, outside of the standard market, so boosting the wholesale price.

Polish regulator URE told ICIS it might take up to 30 days for final approval but has not yet confirmed the exact date for implementation.

When PSE initially proposed payment changes, the price of Q4 ‘14 Peaks, which covers roughly three quarters of the period that the potential change would impact, dropped 3.9% to Zl 210.00/MWh at the end of last week.

But on Wednesday Polish market sources said it was unlikely the payments would decrease in September. As a result, the contract rose to Zl 213.00/MWh when ICIS assessed it on Thursday. Karolina Zagrodna