Romania starts talks on return of bilateral power trading outside OPCOM

Romania could see the return of bilateral power trading after the country’s parliament started discussions over the lifting of a four-year ban on trade outside of market operator OPCOM.

Iulian Iancu, chairman of the commission for industries and services within the lower house of the Romanian parliament, told ICIS on Monday that parliamentary discussions on adjusting the law had started.

However, there is no time-frame on when these talks may reach any kind of conclusion.

“The commission’s point of view will be voted on at the end of the debate,” Iancu said. He could not specify when this was likely to be.

In an emailed statement on Monday, the country’s electricity supplier association AFEER, said it was submitting proposals for changes in the law.

The group was calling for the scrapping of the ban on bilateral trading outside OPCOM, as well as a number of other adjustments.

The shock decision to ban all trading of electricity outside of OPCOM came in 2012, forcing all trading activity onto the exchange and crippling liquidity in the market until the operator launched its own over-the-counter (OTC) platform in March 2014 (see EDEM 18 September 2012).

The ban was implemented after giant hydro producer Hidroelectrica struck a number of disadvantageous deals with traders labelled “smart guys” by market participants at the time. The transactions drove Hidroelectrica into insolvency in 2012.

Behaviour shift

AFEER’s head Ion Lungu said the OPCOM-linked mechanism was discriminatory against producers and suppliers in the country because they were exposed to higher risk when adjusting their commercial positions in comparison to participants in other regional markets.

Lungu also said the impact of the law had extended, and it had affected trading behaviour on the wholesale market. Trading activity had shifted from long- to short-term, he said.

“This [shift in trading behaviour] leads to the distortion of the reference price on the wholesale market, which has negative consequences for offering an accurate price for electricity supplied to end-users,” he said.

Market participants welcomed the news on Monday. Traders have been lobbying for the scrapping of the ban on trading outside OPCOM ever since the bill first came into force.

AFEER also raised concerns over another aspect of the bill under which domestic producers are forced to offer their entire production on the wholesale market in Romania. Because they are not allowed to export some of their production, they lose out on profits from directly selling to neighbouring countries, AFEER said.

Precedent

In December, giant Romanian power producer Hidroelectrica won a lawsuit against energy regulator ANRE over rights to sell electricity in neighbouring countries on foreign trading platforms (see EDEM 3 December 2015).

In 2015 the generator sold electricity for export into Hungary on the TFS broker platform. According to energy regulator ANRE, this went against the producers’ obligation to only sell electricity on platforms operated by OPCOM and the regulator proceeded to fine the producer.

Hidroelectrica successfully challenged the regulator’s right to issue the fine. The verdict was a first and, if upheld, the precedent will essentially pave the way for other producers to export.

But ANRE has continued to insist that its interpretation stands, meaning that all available electricity must be offered on OPCOM’s platforms.

The court’s decision was appealed, and no new information on the matter has emerged since. sophie.udubasceanu@icis.com