The National Energy Regulatory Council (NERC), together with the Latvian and Estonian regulatory authorities, will carry out an assessment regarding the significant balancing price fluctuations recorded in the region last week. These developments have raised concerns that certain market participants may have breached the provisions of Regulation on Wholesale Energy Market Integrity and Transparency (REMIT), in particular the prohibition of market manipulation in the electricity market. The Baltic national regulatory authorities will therefore conduct a thorough investigation to determine whether the bidding behaviour of market participants in the balancing energy market complied with the requirements of REMIT.
According to publicly available information from the Baltic transmission system operators, early August saw balancing energy price spikes exceeding EUR 10,000/MWh. Under normal circumstances, in situations of energy scarcity the price is around EUR 360/MWh, while in cases of surplus it is around EUR -75/MWh.
“Last week we observed exceptionally large price fluctuations in the Baltic balancing energy market, which raise questions regarding market participants' behaviour. Together with the Latvian and Estonian regulators, we intend to launch a detailed investigation to ensure that all market participants comply with the REMIT rules prohibiting manipulation and abusive practices in electricity trading, and that bids reflect actual generation costs or costs in alternative energy markets," said Renatas Pocius, Chair of NERC.
The regulators underline to market participants that bids must be based on marginal and alternative costs. A situation where a market participant, without legitimate technical, regulatory or economic justification, withholds available generation capacity from the wholesale market, or offers it at a price significantly above marginal generation costs or alternative costs, may constitute a breach of REMIT.
REMIT prohibits any behaviour involving market manipulation or attempted market manipulation, with the aim of ensuring a transparent and fair balancing energy market for all.
R. Pocius also reminded all market participants of their responsibility to act prudently both in the Baltic balancing capacity and balancing energy markets.
NERC, together with the Latvian and Estonian regulatory authorities, will continue to monitor the functioning and outcomes of the balancing energy market on an ongoing basis. Where justified, suspicious bids may be subject to investigation by both TSOs and national regulatory authorities.
Upon completion of any investigation, where a breach of legislation is established, sanctions will be imposed in line with REMIT and national law.
