Romanian regulator to maintain time-zone split across power trading platforms

Romanian energy regulator ANRE is set to maintain an existing but much-maligned model where its exchange-based and over-the-counter (OTC) trading platforms operate in two different time zones, according to statement released late on Thursday.

The decision comes despite the devastating impact the split has had so far on day-ahead liquidity on the OTC market.

As Romania prepared to join the 4M market coupling project, power exchange OPCOM shifted from using eastern European time (EET) to central European time (CET) in November last year, in line with other coupled exchanges.

But the OTC platform continued to operate on EET, as did other platforms run by OPCOM, creating trading issues for participants looking to use both the exchange and the OTC.

Liquidity on Day-ahead Baseload traded on the OTC platform plummeted to a minimum as a result of the shift.

Market participants said the simplest solution would be to shift all platforms to CET.

But, despite recognising the impact the time-zone split had on energy trading, the regulator said on Thursday that such a move would cost more than the current costs of managing positions.

New product

ANRE said it would instead propose the implementation of a new product that would accommodate the difference in time zones.

But this proposal will not emerge until some point next year, it said.

While it is not clear what product will be launched, the obvious course of action would be to launch a product, to be traded OTC, that would be the equivalent of the day-ahead product on the exchange. In effect a CET day-ahead contract.

The divergent time zones mean a participant can be caught out of balance if they trade day-ahead on the OTC platform and then attempt to clear their position on the exchange.

This is because hour 1 of the day-ahead product on the OTC platform is the equivalent of hour 24 of the previous day-ahead on the exchange. Therefore an imbalance for one hour occurs for which the participant needs to close the position in the intra-day or balancing market. But the OTC platform does not allow trading of non-standard products like an hourly interval.

The Day-ahead Peaks contract is unaffected.

Romania joined the 4M market coupling project on 19 November, alongside Hungary, Slovakia and the Czech Republic (see EDEM 18 November). sophie.udubasceanu@icis.com