Buletinul AGIR nr. 3/2012 ● iunie-august 1
OPCOM’S ROLE OPCOM’S ROLE OPCOM’S ROLE OPCOM’S ROLE
IN THE WHOLESALE ELEIN THE WHOLESALE ELEIN THE WHOLESALE ELEIN THE WHOLESALE ELECTRICITY MARKETCTRICITY MARKETCTRICITY MARKETCTRICITY MARKET
Rodica POPA, Cristina SETRAN, Victor IONESCU
REZUMAT. REZUMAT. REZUMAT. REZUMAT. Creat pentru a administra piata angro de energie electrica in conformitate cu legislatia primara si secundara in Creat pentru a administra piata angro de energie electrica in conformitate cu legislatia primara si secundara in Creat pentru a administra piata angro de energie electrica in conformitate cu legislatia primara si secundara in Creat pentru a administra piata angro de energie electrica in conformitate cu legislatia primara si secundara in vigoare, operatorul pietei a intravigoare, operatorul pietei a intravigoare, operatorul pietei a intravigoare, operatorul pietei a intrat in 2011 in cel det in 2011 in cel det in 2011 in cel det in 2011 in cel de----al doilea deceniu de activitate urmarind ca de fiecare data asumarea al doilea deceniu de activitate urmarind ca de fiecare data asumarea al doilea deceniu de activitate urmarind ca de fiecare data asumarea al doilea deceniu de activitate urmarind ca de fiecare data asumarea eficienta a rolului sau sub toate aspectele, pornind de la facilitarea tranzactionarii pe diferite orizonturi de timp prin preficienta a rolului sau sub toate aspectele, pornind de la facilitarea tranzactionarii pe diferite orizonturi de timp prin preficienta a rolului sau sub toate aspectele, pornind de la facilitarea tranzactionarii pe diferite orizonturi de timp prin preficienta a rolului sau sub toate aspectele, pornind de la facilitarea tranzactionarii pe diferite orizonturi de timp prin produse oduse oduse oduse bursiere lichide in vederea ajustaribursiere lichide in vederea ajustaribursiere lichide in vederea ajustaribursiere lichide in vederea ajustarii eficiente a portofoliilor, stabilirea unui pret de referinta solid si a semnalelor de pret i eficiente a portofoliilor, stabilirea unui pret de referinta solid si a semnalelor de pret i eficiente a portofoliilor, stabilirea unui pret de referinta solid si a semnalelor de pret i eficiente a portofoliilor, stabilirea unui pret de referinta solid si a semnalelor de pret pentru tranzactionarea la termen a energiei electrice, asumarea rolului de contraparte, asigurarea integritatii si pentru tranzactionarea la termen a energiei electrice, asumarea rolului de contraparte, asigurarea integritatii si pentru tranzactionarea la termen a energiei electrice, asumarea rolului de contraparte, asigurarea integritatii si pentru tranzactionarea la termen a energiei electrice, asumarea rolului de contraparte, asigurarea integritatii si transparentei pietelor administrate. transparentei pietelor administrate. transparentei pietelor administrate. transparentei pietelor administrate. CuvinteCuvinteCuvinteCuvinte cheie:cheie:cheie:cheie: energie electrica, piata angro, produse tranzactionate, decontare ABSTRACTABSTRACTABSTRACTABSTRACT: : : : Designed to Designed to Designed to Designed to administeradministeradministeradminister the wholesale electricity market in accordance with primary and secondary legislation the wholesale electricity market in accordance with primary and secondary legislation the wholesale electricity market in accordance with primary and secondary legislation the wholesale electricity market in accordance with primary and secondary legislation in force, the market in force, the market in force, the market in force, the market operator entered operator entered operator entered operator entered in 2011 in the second dein 2011 in the second dein 2011 in the second dein 2011 in the second decade of cade of cade of cade of this this this this activityactivityactivityactivity, aiming to continue to , aiming to continue to , aiming to continue to , aiming to continue to performperformperformperform its its its its rolerolerolerole in in in in an an an an effectiveeffectiveeffectiveeffective mannermannermannermanner, , , , begining with the responsibility to begining with the responsibility to begining with the responsibility to begining with the responsibility to facilitate facilitate facilitate facilitate the the the the trading on different time horizons by liquid products trading on different time horizons by liquid products trading on different time horizons by liquid products trading on different time horizons by liquid products made available to made available to made available to made available to all all all all participantparticipantparticipantparticipantssss for for for for their their their their portfolioportfolioportfolioportfolio managementmanagementmanagementmanagement purposepurposepurposepurpose, establishing a solid reference price and price , establishing a solid reference price and price , establishing a solid reference price and price , establishing a solid reference price and price signals for electricity signals for electricity signals for electricity signals for electricity traded on term markettraded on term markettraded on term markettraded on term market, acting as a counterparty, , acting as a counterparty, , acting as a counterparty, , acting as a counterparty, assuring the assuring the assuring the assuring the market integrity and transparency of market integrity and transparency of market integrity and transparency of market integrity and transparency of the administered marketsthe administered marketsthe administered marketsthe administered markets. . . . Keywords:Keywords:Keywords:Keywords: electricity, wholesale market, traded products, settlement
1. INTRODUCTION
The Romanian Power Market Operator ”Opcom” was
established through Government Decision No.
627/13.07.2000 regarding the reorganization of the
Electricity National Company CONEL, that was
published in the Oficial Gazette No. 357/31.07.2000,
being entrusted with the mission to sustain the market
liberalization process, being the main tool for the
implementation and strenghtening of the competitive
market for electricity by ensuring the needed
framework for transparent trading places to be
provided towards the licensed market participants.
Along with the primary legislation, the definition of
OPCOM current role have contributed the designed
regulatory framework and the National Regulatory
Authority for Energy secondary legislation to define
the specific activities: setting of the electricity price
and provision of optimal framework for its trading,
by providing conditions of transparency, anonymity
and uniformity. Over time, trading mechanisms have
been modernized and become more secure by
launching new instruments, through acting as a
counterparty by OPCOM, providing facilities for
trading environmental instruments.
OPCOM activity is focused on services for
centralized electricity markets organization and
management, on services for organization and
management of dedicated market for electricity
associated instruments (certificates) and settlement
services, as per the responsibilities asigned by ANRE
through the Commercial Code and in force
regulations, through the license granted by the
competent authority, as well as through the
responsibilities established by Ministry of Economy’s
orders and regulations.
2. PRODUCTS MADE AVAILABLE TO MARKET PARTICIPANTS
Markets operated by OPCOM are offering to market
participants the opportunity for trading electricity for
immediate and forward delivery, the time horizon
covered by the products available to participants
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starting from the very long term (term contract) to
very short term (spot contract).
Fig. 1 Time horizon covered by products traded
inside OPCOM
2.1. Centralized market for bilateral contracts
for electricity (CMBC)
Centralized market for bilateral contracts for
electricity (commercialy launched on 01.12.2005)
enable participants trading electricity through public
auctions, based on tailor made offers/bids, defined by
market participants for delivery periods longer than a
month and unlimited as maximum delivery period.
All working days during the year are trading days.
Market participants are able to express interest in
buying and / or sale of electricity by the offer to
purchase at a maximum price or by minimum price
offers for sale whose characteristics in terms of
quantity offered, delivery period, the start date of
delivery and tender session opening price, are
proposed by the initiators of auction sessions. The
initiators also propose as well, together with the
offer, the contract to be signed in case of bid/offer
awarding.
Trading mechanism is based on the electronic
auctioning through open call auction.
0
2.000
4.000
6.000
8.000
10.000
12.000
2006 2007 2008 2009 2010 2011*
TWh
%
All time high 4 TWh(excepting 2006)
All time high 7% (excepting 2006)
from domestic consumption
Fig. 2 Term contracting. Volume and share
development 2006 – 2011
2.4
12.1
15.8
22.6
7.8
8.6 9.7
Fig. 3 Term contracting (CMBC). Yearly Average
Price 2006 – 2012
Attendance at the auction is allowed to market
participants that are posting tender guarantee in favor
of SC OPCOM SA, which are having a validity
period that is long enough to secure the contract
signing and submition to the SC OPCOM SA in
order to verify compliance of the signed contract with
the proposed contract proposed by the initiator of the
auction session, published together with the offer.
Management of the tender guarantees is performed
by SC OPCOM SA.
2.2. Centralized market for bilateral contracts
with continuous negociation - forward (CMBC-
CN)
This market (commercially launched on 15.03.2007)
provide to the market participants the possibility to
trade electricity through electronic auction sessions
organized on the electronic trading platform of SC
OPCOM SA, based on simple quantity-price
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bids/offers for standard instruments listed by SC
OPCOM SA, for standard delivery time longer than
one week (week, month, quarter, year and multiples
of these periods). Permanently are made available to
market participants 12 types of standard tools for 29
different delivery periods. All working days during
the year are trading days.
Market participants are able to express their interest
in buying and / or sale of electricity through offer to
buy or sell standardized in terms of offered quantity,
in term of delivery period lenght, delivery start date.
The principles applied for standardization are
approved by ANRE for this trading method.
Sessions’ initiators are the ones proposing the
auction session opening price. This price may be
negotiated during the continuous auction session.
Participants at the trading session are permanently
provided through the trading system screens with all
the information on quantities and prices offered for
sale, or for buying power, updated in real time.
The trading mechanism is based on electronic trading
through a combined mechanism of open call auction
state of the instruments and continuous trading state.
Fig. 4 Term contracting (CMBC-CN). Yearly
Average Price 2007 - 2011
The contract signed after auction session closing in
according with the trades concluded on the electronic
platform, is fully complying with the standard
contract approvaed by ANRE as Annex to the Order
No. 6/18.02.2011.
Attendance at the auction is allowed to market
participants that are posting tender guarantee in favor
of SC OPCOM SA, which are having a validity
period that is long enough to secure the standard
contract signing and submition to the SC OPCOM
SA in order to verify compliance of the signed
contract with the standard contract approved by
ANRE. Management of the tender guarantees is
performed by SC OPCOM SA.
2.3. Day Ahead Market (DAM)
The Day Ahead Market for electricity (commercialy
launched on 30.06.2005) is offering to the wholesale
market participants the possibility to balance their
own portfolio with the delivery obligation with one
day in advance than the delivery day, as well as the
possibility to benefit from the market opportunities
closet o the delivery moment. The participation in
this market is permited to all license owners
registered as market participants to DAM (producers,
suppliers and network operators).
The activity in this market administrated by OPCOM
is deployed on each calendar day an dis ensuring the
framework for the conclusion of firm transactions for
the hourly delivery of the electricity in each of the 24
intervals of the next day.
The trading mechanism is based on the closed
auction principles, the trading price (market closing
price) is the one reflecting the crossing point between
the agregated sell and buy curves that are established
for each of 24 hourly intervals of the next day.
Fig. 5 Spot price and volume. Yearly average 2005 -
2011
OPCOM is fulfilling starting with 2008 the
counterparty role for the electricity trades concluded
on DAM, this mechanism being aimed to ensure not
only a liquid but also safe trading activity.
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
2005 2006 2007 2008 2009 2010 2011*
TWh
%
All time high 4 TWh
All time high 7% from domestic consumption
Fig. 6 Volume and share development 2005 - 2011
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For each DAM participant, based on the trades
concluded, OPCOM is setting the related physical
notifications which are put at the disposal of the
Transmission System Operator as well as to
Balancing Responsible Parties (BRP) to which the
market participants are registered.
2.4. Adjustment market
Adjustment market (commercialy launched on
25.07.2011) is representing a component of the
electricity wholesale market on which are concluded
firm hourly trades for electricity to be delivered next
day, the gates opening time for this market being
after the moment when the trades for electricity
concluded on Day Ahead Market were confirmed.
0
50
100
150
200
250
300
350
DAM prices IDM prices
DAM-IDM average prices correlation[Lei/MWh]
Fig. 7 DAM-Adjustment Market – Average prices
correlation 2011
a The activity in this market is deployed on each
calendar day an is offering the possiblity that trades
for hourly delivery on each of the 24 hourly intervals
of the next day to be concluded.
By deploying daily trading operations between the
moment when the DAM session closing and until
half of hour before the gates closing for physicla
notifications submission, the adjustment market is
offering not only to the participants the possibility for
a suplimentary adjustment of the contractual
positions but also to the Transmission System
Operator a tool for diminishing the needs for
balancing power and in this way for ensure safe
operating and quality conditions of the national
energy system.
Trading mechanism is based on the electronic trading
through open call auction, respectively the hourly
offers are ranked in order to be matched. The
matching rules are: buy price higher or equal with the
sell price, sell price lower or equal with the buy price.
All the sell orders that are fulfilling the matching
conditions are matcehd and are concluding trades at
the related buy orders price.
Similar with its role in the Day-Ahead market,
OPCOM acts as counterparty in transactions set in
the adjustment market, the participants benefits being
evident: guaranteed payments, reduced number of
bills, anonymity ensured also in settlement not only
in trading process.
For each participant on the adjustment market, based
on the trades concluded, OPCOM is setting the
related physical notifications which are put at the
disposal of the Transmission System Operator as well
as to Balancing Responsible Parties (BRP) to which
the adjustment market participants are registered.
The adjustment market represents the first stage of
intraday market development that in its final phase of
implementation will be open for trading 23 hours per
day, 7 days per week, 365/366 days per year and will
offer the oppportunity to conclude trades through
each 24-trading instruments defined for each calendar
day.
The continuous trading will be the mechanism
implemented in this final stage of development.
2.5. Centralized Green Certificates Market
(CGCM)
In Romania, the mechanism to promote electricity
generation from renewable energy is the mandatory
quotas system, which means that each suppliers of
electricity to final consumers is obliged to purchase a
certain number of green certificates and to prove it.
The green certificates represent an additional gain
received by producers for "clean energy" delivered in
the network, the green certificate price being
determined by market mechanisms, namely the
centralized market of green certificates (PCCV)
organized and managed by SC OPCOM SA and the
bilateral contracts market for green certificates.
The trading mechanism applied in the Centralized
Green Certificates Market (launched commercially at
16/11/2005) is based on the closed auction principles,
the trading price (market clearing price)
corresponding to the intersection point of the sale and
purchase curves. For each market participant, based
on the transactions concluded, SC OPCOM SA sets
corresponding trading confirmations and settlement
notes including the values of payment obligations /
collection rights for each participant.
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0
50.000
100.000
150.000
200.000
250.000
300.000
350.000
400.000
450.000
2005 2006 2007 2008 2009 2010 2011
CV%
Fig. 8 Number of GCs and share development 2005-
2011
In the Green Certificates Market, SC OPCOM SA
fulfills its role as administrator of the Register of
Green Certificates, this being an electronic document
when all the green certificates issued by the
Transmission System Operator and all transactions
between market participants are recorded.
2.6. Trading Platform for Emission
Certificates (TPEC)
The Trading Platform for Emission Certificates
(TPEC) provides the centralized market place for
trading of emission of greenhouse gases in conditions
of transparency and uniformity. Trading days are all
working days.
The Regulation concerning the organisation and
functioning of the Trading Platform for Emission
Certificates, approved by the Minister of Economy,
Trade and Business Environment, creates the
regulatory framework to organize the trading
sessions, these can being scheduled for each offer
proposed by a TPEC participant to sell or buy
emission allowances.
Trading mechanism is based on the electronic
auctioning through open call auction.
The participation in the auction is allowed to market
participants who post the banking guarantee pledged
in favour of SC OPCOM SA. The validity period of
the posted guarantee must cover the whole period
between the trade confirmation, signing of bilateral
agreement proposed by the initiator together with the
published offer, and submitting it to SC OPCOM SA
in order to verify the compliance with the published
contract. The management of guarantees is made by
SC OPCOM SA.
2. SERVICES TOWARDS MARKET PARTICIPANTS – SETTLEMENT OF THE ELECTRICTY TRANSACTIONS
OPCOM acts as settlement operator for the following
markets:
- Day-Ahead market,
- Adjustment market,
- Balancing market, organized and administered by
Transmission System Operator (CNTEE
Transelectrica SA).
Also, SC OPCOM SA has the responsibility to
determine the Balancing Responsible Parties’
Imbalances and to calculate and redistribute in a
monthly basis the values of costs / income resulted
from the balancing of the national electricity system.
SC OPCOM SA acts as counterparty in the trades
concluded in the Day-Ahead Market and Adjustment
Market, role involving the following main activities:
administration of the central accounts opened to the
Central Bank; setting the payment obligations and
collection rights in a daily basis for the participants in
both markets and issuing the daily settlement
statements; in order to validate the purchase offers
submitted by the participants in these markets,
OPCOM calculates the daily value of posted
guarantee by each participant, taking into
consideration al the liabilities assumed and still
unpaid; on each banking day, the issuance and
transfer to the central bank account of the direct debit
instructions / payment orders for participants with net
position of buyer / seller, in line with the respective
values of settlement notes; issuing and sending
monthly invoices for electricity transactions, as well
as the validation of the invoices received; achieving
offset activity of the mutual payment
obligations/collection rights between OPCOM and
participants concerned, as required by law.
2008 2009 2010 2011
The value of Payment Orders issued 160 260 373 545
Number of Payment Orders 5.933 10.638 10.520 13.448
0
100
200
300
400
500
600
[mil Euro]
Fig. 7 Payment Orders 2008 - 2011
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For the markets where Transmission System
Operator acts as counterparty, the following
activities are carried out mainly by OPCOM to settle
the transactions: establishing the payment obligations
and collection rights for balancing market
participants, determining internal congestion
management costs, calculating of the price for deficit
/ surplus of energy, determine the payment
obligations and collection rights for the notification
imbalances, determining the value of quantitative
imbalances of each balancing responsible party;
calculation and redistribution the values of costs /
income resulted from the balancing of the national
electricity system.
3. CONCLUSIONS
According the theory, the reliability and consistency
of the reference price and price signals for different
time horizons of the future delivery are supported
especially by relevant liquidity exceeding the
thresholds generally accepted and by the number of
participants continuously increasing.
We strongly believe that trading of more than 25%
from the domestic consumption through OPCOM
products gives us the legitimate right to emphasize
that prices set in the centralized market for spot and
forward electricity delivery are relevant and reliable.
All products made available by OPCOM,
continuously improved and developed are intended to
meet the needs and opportunities of the participants
joining OPCOM.
About the authors
Rodica POPA, Programme Director, Projects Development and Implementation
OPCOM, 16-18 Hristo Botev Blvd., 030236, Bucharest 3, Romania
email:[email protected]
Cristina SETRAN, Programme Director, Projects Development and Implementation
OPCOM, 16-18 Hristo Botev Blvd., 030236, Bucharest 3, Romania
email:[email protected]
Victor IONESCU, CEO, Romanian Power Market Operator
email:[email protected]
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