Megawatts on the market

Producers and consumers of electrical power will be trading ‘megawatts per hour’ on the Electrical Power Exchange as of January 1, 2005. They are set to operate in a manner similar to the sale of shares or bonds on the Bucharest Stock Exchange, based on supply and demand.

On Tuesday, Transelectrica and OPCOM, the commercial operator of the energy market, signed a 6.3 million-euro consulting contract with a consortium headed by KEMA International and Nord Pool Consulting, to develop an operational Electrical Power Market in Romania. Energy consumers will be able to buy power online from the spot market, starting next year. Futures contracts should similarly be made available.

Transelectrica’s CEO Jean Constantinescu announced that the market would become operational in 2005. The first trading platform will be established next January and used for the actual energy transactions, while the financial trading platform will become operational as of the second half of 2005.

Companies will pay a registration fee and will have an account, allowing them to buy and sell orders directly. The market will also contain brokers, able to mediate trading orders.

Initial estimates show that about 5%-10% of the energy demand will be filled through the energy exchange, where prices will vary depending on supply and demand.

Industrial consumers hope to see producers of cheap energy such as Hidroelectrica or Nuclearelectrica, as well as foreign energy producers, start trading as soon as possible.

However, how will consumers respond to these changes?

“This exchange is a very good thing because we can trade for very short periods. We can make long-term commitments for smaller amounts of energy and buy the rest from the energy exchange. Though the overall trend will be a rise in energy prices across Europe and Romania, the energy exchange will allow us access to cheap power,” suggested Adrian Goicea, energy resources manager with aluminium smelter Alro Slatina, which uses 6% of the national power output.

“It will not be of much help to us at first, at least not until the cheaper producers come along, which wont happen instantly. I don’t expect immediate benefits, but it will encourage competition,” explained Aurelian Nicolae, head of utilities with the Petromidia complex, held by private oil group Rompetrol, another major energy consumer.

At present, the electrical power market in Romania is made up of regulated contracts that account for 60% of the total energy traded, and of negotiated contracts, which make up no more than 40%.
adrian.mirsanu@zf.ro