PJSC DONBASENERGO'S STATEMENT ON THE MARKET'S LARGE-SCALE ABUSE CASES WHICH RESULTED IN UNJUSTIFIED CUT IN THE ELECTRICITY PRICE
Donbassenergo, Kyiv, Ukraine,
Fri, Feb 21, 2020
In recent days, the issue of the electricity market abuses with the intention of lowering electricity prices in the day-ahead market has been debated widely amid the core community and the media close to it. Some of the discussions on this issue aim to vest responsibility for large-scale abuse cases identified in heat generation.
While the field-specific community is discussing the involvement of heat power generation in manoeuvres, unscrupulous market players keep on submitting indents for the knowingly overestimated amounts of electricity, which are neither confirmed by the actual purchase volumes nor operating capacity of equipment, willing to sell them on the day-ahead markets. These sellers earn live money from the market operator for the quantities of "air" sold, and their open trade item will then be closed in the balancing market at a price 30% lower than the day-ahead market price at the same hour, which further disbalances the power system.
PJSC Donbasenergo states that holding heat generation accountable for market manoeuvres is untenable, and recalls that since September 2019 the company has repeatedly raised the issue of the imperfection of the Market Rules and Day-Ahead/Intraday Markets Rules presently in effect, and openly offered real levers aimed at preventing such market manoeuvres.
For today, heat generation carries major losses, because the marketeable price is at a level of variable expenses (fuel factor of production processes), and in case of unloading of thermal power plants these losses become catastrophic for failing to cover specific conditionally constant expenses which are growing as the generation decreases. The main Company's asset, Sloviansk TPP, is currently unable to buy coal and carry out current repair programs, jeopardizing the prospect of keepping handy equipment up and running for timely seasonal peak coverage in the Ukrainian Unified Energy System.
On February 14, 2020 the NERC website reported about the meeting held relevant to the abovementioned electric energy market manoeuvres. As follows from the Regulator's press release, "the meeting reviewed detailed results of the day-ahead market and intraday market operations for January and the first decade of February 2020 and stated that some companies significantly lower the level of the declared prices when selling electricity and significantly exceed the volumes declared at night hours, which is a market abuse indicator. At the same time, there is no confirmation that these bids show the same actual physical/imported volumes of electric energy." This message suggests that the Regulator has identified market participants who sold "air" in various segments over the period of concern.