The Electricity Market Development Council discusses progress in the Power Exchange

On 2 September Elering hosted a meeting of the Electricity Market Development Council in order to discuss the events of 24 August in the Power Exchange and the steps that should now be taken.

The Electricity Market Development Council is a forum where electricity traders, distribution networks, producers and consumer representatives work together with experts from the Ministry of Economic Affairs and Communications, the Estonian Competition Authority and Nord Pool Spot (NPS). For the long-term it was agreed that the Estlink2 cable is needed alongside Estlink1 to provide sufficient connection capacity, and that an NPS price area needs to be opened quickly in Latvia and Lithuania. The Estlink2 project is going forward according to schedule, but the opening of the price area in Latvia and Lithuania has been held up, despite agreements between governments and TSOs. This unfortunately has a negative impact on the Estonian electricity market and on prices here, and so the discussion also focused on measures that could alleviate the future impact of the uncertain situation in Latvia and Lithuania. During the discussions it became clear that the simplest way to avoid prices spiking in the short-term is to have more transparency, better communications with market participants and clear procedural rules. One solution is to develop Urgent Market Message (UMM), the rapid market information system for unplanned events. The Nordic power exchange operator NPS confirmed that it is ready to roll out the UMM information system from 1 October. Council members agreed that despite the regrettable event of 24 August it is necessary to continue to apply market principles and not return to prices being set administratively or by any other form of regulation. It was unanimously agreed that the experience was a useful lesson for all market participants and they have all considered how to apply that lesson in their market dealings in future in order to lower the risk of a similar event occurring again. NPS and the Estonian Competition Authority have started official investigations into the behaviour of market participants in connection with the massive rise in electricity prices on 24 August.