Dear trading participants,
Against the background of an increasing debate about a potential change to the market design in the Spanish day-ahead power market, European Energy Exchange (EEX) wants to outline the process and steps which would be taken in reaction if such intervention in the market design will occur.
As a result of the European Council meeting on 25 March 2022, European member states have the possibility to introduce “emergency temporary measures in the electricity market”, subject to the assessment of the European Commission. The Spanish government has declared that it intends to do so. So far, no official measure has been presented. However, EEX intends to achieve certainty as far as possible and to be prepared for such a potential situation. This Customer Information does not comment on the appropriateness of market interventions and is not to be seen as a recommendation for such a measure.
European Energy Exchange AG (EEX AG), acting in its role as "benchmark administrator", uses hourly prices sourced from local power spot exchanges, OMI, POLO ESPANOL S.A . (OMIE) in case of the Spanish day-ahead power market, to calculate the indices (“benchmarks”) which form the basis of the final settlement prices of futures contracts listed at EEX. Should any competent body decide that such hourly power spot prices will be capped, thereby determining the values of those prices, then these capped prices would be used to calculate the respective benchmarks accordingly.
If, contrary to the abovementioned scenario, additional day-ahead market auctions would be introduced, EEX would need to determine which auction prices it would use for calculating the benchmarks. That determination would qualify as a material change according to Regulation (EU) 1011/2016 (“Benchmark Regulation”), triggering – to the possible extend – a public consultation under the “Benchmark Change and Cessation Procedure” of EEX AG.
Given the specifics of such a scenario, the public consultation not only needs to be done as thoroughly as possible, but also as quickly as possible to ensure the appropriateness of the benchmarks and to reduce any uncertainty for market participants arising from such changes to market design. The specific consultation process will be determined by the EEX Benchmark Committee, in close alignment with the EEX Exchange Management and the EEX Benchmark Oversight Committee. EEX aims at offering all relevant stakeholders (including all trading participants) the opportunity to provide comments in the course of the consultation. However, we note that the scope and timeframe of the consultation will very much depend on the lead time with which any national measures are announced and implemented. Based on the respective input, the EEX Benchmark Committee, in consultation with EEX Exchange Management, would then take a decision on the benchmark calculation.
More information on the benchmarks provided by EEX AG and relevant applicable procedures are available in the benchmark section on the EEX website.
EEX will send an update via Customer Information as soon as further information regarding governmental actions as outlined above are available.
Please do not hesitate to contact your EEX Sales Manager at sales@eex.com if you have any further questions.
Yours sincerely,
Contact:
EEX Market Operations
T +49 341 2156-222
trading@eex.com