Italian energy firms deny breach of power market competition rules

Two major Italian energy companies had by Friday both rejected claims that their power plants breached competition rules between March and June of this year to cash in on “excessively high prices”.

Italian competition regulator AGCM said on Thursday it had opened an investigation into energy groups Enel and Sorgenia involving their power plants in the Brindisi area, in the country’s south.

The investigation will focus on the plants’ activities in Italy’s day-ahead, intra-day and ancillary services markets between 27 March-15 June, when wholesale electricity prices in the area rose sharply.

Enel and Sorgenia’s plants allegedly engineered the prices when selling electricity to transmission system operator (TSO) Terna for balancing services in the area, which is one of Italy’s main grid bottlenecks. These prices would have been achieved by withdrawing production from the spot markets, forcing the TSO to buy from those plants at higher prices in the MSD ancillary services market for balancing purposes, AGCM said.

“Therefore, both [Enel’s production arm] Enel Produzione and Sorgenia would have found themselves in the position of essential providers in certain hours of the period under review – [a] position from which they seem to have taken advantage of to impose excessive prices on Terna,” AGCM said.

According to estimates by energy regulator AEEGSI costs incurred by Terna on the MSD market in the area were €320m higher year on year in the first half of 2016.

Rejected

But both Enel and Sorgenia have rejected the claims of wrongdoing.

A Sorgenia spokeswoman said on Friday the company had acted in line with existing rules and was ready to cooperate with the regulator.

And Enel echoed this sentiment in a statement: “Enel believes that it acted legitimately, in full compliance with regulation regarding competition,” Italy’s power incumbent said, offering its cooperation to AGCM.

The Italian competition watchdog was notified by the energy regulator when it opened its own investigation in the summer (see EDEM 27 June 2016 and 5 August 2016).

The energy regulator at the time also notified the Agency for the Cooperation of Energy Regulators, as the behaviour under investigation, if confirmed, would constitute market manipulation under the EU regulation on wholesale energy market integrity and transparency.

The situation at the time prompted AEEGSI to rush in a new methodology to calculate imbalance costs (see EDEM 29 July 2016).

Recently, AEEGSI’s president Guido Bortoni told ICIS the regulator will not resort to retroactive measures to make up for Terna’s extra costs, with sources close to the matter confirming that the regulator is pushing for voluntary bilateral agreements between market participants and the TSO (see EDEM 4 October 2016). riccardo.patrian@icis.com