AFEER: Approval of bilateral contracts – an important step forward for ANRE

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The approval of the legislation related to the new bilateral contracts opens new opportunities for the Romanian electricity market, by making more flexible the wholesale transactions established between the market operators, says the Romanian Electricity Suppliers Association – AFEER.

The draft Order on amending Order 65/2020 of ANRE, launched for public debate, states that “long-term supply contract means any contract with a delivery duration greater than or equal to 1 month.”

“It is an important step forward that ANRE is taking. The previous order, 65/2020, defined the long-term contract as the one concluded for a period of at least one year. The new definition is closer to what the European Union considers by this term. As early as 2016, the European Parliament stated in Regulation 1719 that long term means ‘before the market timeframe for the next day’. I am convinced that, with the development of the internal market, the increase of its flexibility and liquidity, ANRE will continue, as soon as possible, the updating of the internal legislation, so that it reflects exactly the European one,” says Ion Lungu, AFEER President.

AFEER considers that, by amending Order 65/2020, an important provision of European Parliament Regulation 943 of 2019 and Directive 944 of the same year, which shows that prices are formed according to supply and demand, is taken into account in domestic legislation, and market rules encourage free price formation and avoid actions that prevent price and supply price formation.

The new ANRE Order also has beneficial implications on the balancing market, regarding the application of the 15-minute imbalance settlement interval. Moreover, in another draft Order, it is foreseen to modify the ANRE orders that contain references to trading/delivery/settlement intervals lasting one hour, in the sense of modification, by using the phrase “settlement interval” and establishing the duration of this interval at 15 minutes.

“Restrictive interpretations of domestic law have maintained the fear of wholesale market participants of concluding directly negotiated bilateral contracts, which would allow transactions to be settled within 15 minutes of any delivery period. Through the new changes operated by ANRE to several Orders, I am convinced that it will increase the flexibility and liquidity of the electricity market, including the adjustment of imbalances to 15 minutes. In fact, starting with February 11, 2021, the 15-minute product is available on the border between Romania and Hungary within the unique coupling of intraday markets. As mentioned by OPCOM representatives, this new facility will increase the opportunities for market participants to adjust their trading positions on the domestic market closer to physical delivery, thus increasing the benefits of electricity trading and reducing their costs related to imbalances in case of deviations from the program. Thus, in the end, all these changes of the secondary legislation will lead to more competitive prices for consumers, households and industrialists,” Ion Lungu also said.

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