Electricity Market Participants Fixated the Price Difference Risk Between Estonia and Latvia at 7.11 Euros for the Year 2015

On November 13, Elering undertook an auction for the electricity market trade risk hedging instruments (PTR-limited) for the year 2015, where the price of instruments was determined at 7.11 euros per MW.

Seven auction participants acquired risk hedging instruments. All PTR-limited instruments on sale with a capacity of 200 megawatts per every hour of the year 2015 found owners. The auction revenue was 12.5 million euros.

The risk hedging instrument auction for next year’s first quarter will be held on November 20th for the capacity of 100 megawatt hours. Instruments auction for January will be held in the middle of December.

Risk hedging instruments enable participants to fixate the price difference risk between the Estonian and Latvian price area on the electricity market. The sale is conducted with an obligation to sell back transmission capacity acquired with PTR-limited instruments. The system operators will repurchase PTR-limited instruments with a price equalling the price difference of the Estonian and Latvian price area on every hour on the Nord Pool Spot (NPS) electricity market. With that the excessive risk of the risk hedging price acquired in the auction is covered within the amount of instruments bought by the market participant.

The transmission capacity embraced with PTR-limited instruments is repurchased from the market participants by the System Operators and returned to the market operator Nord Pool Spot (NPS) in order to distribute it on the day-ahead market. Therefore, the use of risk hedging instruments by NPS does not lessen the total transmission capacity available to the market’s disposal.