A trading platform on the OPCOM for the major consumers

The major electricity consumers have worked together with the representatives of the OPCOM, on a new product for trading on the centralized energy market, to satisfy their needs when it comes to long term contracts.

The characteristics of the new product and the proposed trading environment (completed at the end of August) were developed as part of a working group organized by OPCOM (the operator of the Romanian energy market). At the present time, the documents drafted as part of this working group are available on the website of the OPCOM and are open for public consultation. All economic entities have been invited to formulate observations and proposals for the amendment of the documents.

The ANRE (the regulator of the energy market) has even organized a first working meeting with the representatives of the energy producers and suppliers, during which the trading methods of the new platform were discussed.

According to official data, this product, called PCCB-DC, is intended to meet the needs of market participants to conclude the contracts for supplying electricity for periods greater than one year, which can be also used for attracting financing from lenders. For that purpose, a framework contract was elaborated and proposed, which will be considered as an appendix to the regulations pertaining to the organized environment for the trading of bilateral contracts.

PCCB-DC (the trading method according to which the contracts are awarded through competitive dialog) allows both sellers and buyers to initiate bidding sessions regardless of the type of license they hold. The documents proposed for discussion do not require or recommend that bids be proposed exclusively by the producers. Therefore, any company which holds a license issued by the ANRE and which has registered for participation in the centralized Market for Bilateral Electricity Contracts will be able to participate as both seller and as buyer, regardless of the type of license it holds, according to the documents submitted for public debate.

Considering the fact that in the call for tenders organized through this mechanism contracts with long term delivery terms will be traded, big consumers have proposed some elements of flexibility. Thus, the originators of bidding sessions will propose the initial conditions of the tender and of the contract. The conditions will be published, mentioning the screening criteria for participants who will submit bids, the price adjustment formula for the successive years of delivery and the terms of the contract which are open to negotiation through dialogue. Such an approach will provide the makers of calls for tenders with the flexibility necessary to determine the conditions of the offer and of the contract, in order to maximize the number of tenders received and the odds of the call for tenders being awarded successfully.

In the first stage of the trading session (see diagram below), the participants who have submitted bids will be selected according to the criteria set by the initiator of the call for tenders. This stage has been proposed in order to provide guarantees concerning the creditworthiness of the parties and the fulfillment of the criteria required by the financial institutions, in the event that contract will be used as a supporting document for obtaining funding to support the development of the company. Thus, the contractual partnership also manifests itself through mutual trust in a long term relationship.

The second stage is where the originator of the session meets each of the participants which qualified as the result of the selection process, in order to have a dialogue with them. As such, the initiator can identify conditions that may result in the maximization of the chances of the call for tenders being successful. The dialogue will be organized only concerning terms and conditions which were mentioned in the original offer as being open to dialogue and will not lead to the conclusion of bilateral agreements. The purpose of this stage is to allow the originator to obtain the opinion of the participants who responded to the call for tenders.

At the end of the dialog stage, the initiator will decide on the final conditions of the tender and of the contract which will be firmly undertaken upon its awarding. These conditions will be published and the awarding stage will be announced. The final contract subjected to the call for tenders will be identical to the one published in order to launch the trading session, with the exception of the items initially announced as variable by the initiator, following the dialogue with the participants who qualified to this stage. The awarding of the call for tenders will be made exclusively based on price.

In the third stage of the trading session, the awarding of the trading session will take place. Market participants which are deemed as qualified following the selection stage may participate in the electronic call for tenders held for the awarding of the final offer through the centralized platform managed by the OPCOM. The trading session for this stage has two phases: open auction followed by continuous trading. In the tender awarding stage, the trading environment is anonymous, as the initiator does not know the identity of those who respond to its call for tenders.