Bogdan Tudorache
Parliament and Government alike should not interfere with the national regulatory authority’s (NRA, ANRE – e.n.) powers in setting up a secondary legislation, shows the latest report of the European Federation of Energy Traders (EFET) issued today, consulted by Energynomics.
”Interference into NRA powers by defining key aspects of secondary legislation represents a significant regulatory risk with consequent disincentives for market participation, and significant detrimental impact on market liquidity, functioning and stability. Secondary legislation should be left to NRA within framework of public consultations, as prescribed by law, without such government interference”, shows the EFET report, ”Market inefficiencies in the member states of the EU (Central and Eastern Europe)” issued on October 29.
Another trading barrier is the annual supervision fee based on turnover, according to EFET, ”an unnecessary administrative requirement that charges market participants based on their transactions.”
Market participants should not be charged based on the transaction they make. This might create disincentives. Such fees influence artificially wholesale prices, also says EFET.
”Fees should not be charged to wholesale traders as they have the role of resellers. Harmonize the funding of NRAs. Fees by each NRA should be charged on G (generation – e.n.) and L (load – e.n.) of their jurisdiction, which is more predictable than the participation of traders and their purchasing and selling activities”, the report shows.
Also, Romania must change the market design, as it ”does not enable forward transactions on other platforms than OPCOM and thus limits hedging and OTC brokers are banned.”
Among other barriers, EFET mentions a high limitation of free bilateral contracts.
”Market design highly limits bilateral transactions outside OPCOM and is thus blocking non-standard physical/financial products (e.g. options). The Electricity and Gas Law prevents producers from selling outside the centralised market. Despite Regulation 943/2019 and ANRE Order 236/2019 (which enables trading on ‘non-regulated markets’), ANRE Order 65/2020 limits “long-term supply contracts” (which should be negotiable over-the-counter as per Art. 3.o) of Regulation 2019/943) to those with delivery duration longer than one year, thereby significantly limiting free bilateral contract negotiation (and effectively preserving the ‘ban on bilateral trading’),” EFET report says.
At the same time, market suffers from an artificial limitation of flexible products, due to restrictions on bilateral trading and the OPCOM PCCB-LE-Flex platform permitting only limited flexibility of traded products.
Therefore, EFET recommends a ”change of the market design by permitting higher flexibility in secondary regulation, and enabling bilateral trading in all products.”