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2 nd Mini-For um for Northern European Region

2 nd Mini-For um for Northern European Region. EuroPEX Discussion Points Copenhagen, 27 th of June 2006. Market Coupling - Market design elements. Implicit auctions complemented by hedging instruments represent the most efficient solution to congestion management

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2 nd Mini-For um for Northern European Region

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  1. 2nd Mini-Forum for Northern European Region EuroPEX Discussion Points Copenhagen, 27th of June 2006

  2. Market Coupling - Market design elements • Implicit auctions complemented by hedging instruments represent the most efficient solution to congestion management • implicit auctions are the most efficient short-term method for congestion management • financial Transmission Rights (FTRs) and, where sufficiently liquid compared to cross-border volumes, electricity derivatives are preferred hedging instruments • physical Transmission Rights (PTRs) with UIOSI are possible interim solution • Price difference bids (or ‘capacity bids’, but for firm flow obligations) if desired and beneficial to the market • Implicit intra-day cross-border markets: continuous matching, or intraday market coupling, or both

  3. Market Coupling - Governance of Market Coupling • Recognised as a critical issue • PXs have a critical role in market coupling: provide orders, enable firm positions, clear and settle • Governance needs to reflect roles and responsibilities of TSOs and PXs • TSOs: capacity allocation according to regulation • PXs: price formation, fair and orderly market, may be regulated • Market coupling should be supported by a Central Coupling Office (CCO) – possibly jointly owned • contractual interface to TSOs and PXs • possible role of CCO in price formation • limit regulation to existing scope, and may vary locally

  4. Market Coupling - Way Forward • EuroPEX should play an active role on two aspects: • need to define a longer-term model • need to define a strategy for transition towards the longer-term model – how build on existing/planned arrangements? • Institutional and governance issues are crucial in progressing towards a common approach to congestion management • EuroPEX can facilitate consultation process across markets

  5. EuroPEX Members’ Projects – NE Region

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