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28 July 2022
UFE answers the consultation of market operators committee NEMO on harmonized maximum and minimum clearing prices for SDAC and SIDC
UFE answers the consultation of market operators committee NEMO on harmonized maximum and minimum clearing prices for single day-ahead coupling (SDAC) and for single intraday coupling (SIDC).
First, UFE recalls its support for:
- free power price formation which amongst others guarantees optimising available generation means
- consistency and hierarchy of price limits across timeframe. UFE thus calls for increasing rule for maximum clearing prices with respect to the timeframe when approaching real time (0 ≤ maxDA ≤ maxID ≤ maxBAL) and a decreasing rule for minimum clearing prices (0 ≥ minDA ≥ minID ≥ minBAL) so as to respect the market fundamentals.
Without pronouncing itself on a specific value, UFE supports that the principles of upward and downward adjustments of the minimum and maximum clearing prices for IDAs should be similar to those applied for the DA. More generally, UFE considers that each price limit should be subject to the same mechanism for raising or lowering it if the criteria for raising or lowering it are met.
UFE calls for the organization of a public workshop between ACER, NEMOs and market participants in order to discuss the parameters of the methodology of the minimum and maximum clearing prices, in particular:
- The decrease in the maximum clearing price after a period during which the trigger for the increase in the maximum clearing price has not been reached
- The length of the transition period after which the clearing price change is to be made
- If the increase threshold is to be maintained at 1000€/MWh
- The triggering threshold of 60% of the clearing price increase.
Regarding the current rule whereby the maximum clearing price of the SDAC is systematically increased by EUR 1,000/MWh when the clearing price exceeds a value of 60% of the maximum clearing price, UFE warns against the risk of runaway energy prices, particularly in the event of system adequacy issues in the coming winters. Collateral requirements and/or trading limits can be impacted by maintaining high max clearing prices. UFE recalls that the French NRA has requested a revision of the parameters of this rule before October 2022 or its suspension.
In this context, UFE calls for the implementation of a certain inertia in the price increase and invites to explore the following levers:
- Increase the trigger threshold beyond 60%.
- Exclude cases where the trigger level is not linked to market fundamentals but to a technical or operational error
- Set a maximum number of maximum clearing price increases per year/season to allow market participants to limit the inclusion of risk premiums in their forward pricing
Find out more
31 July 2023
UFE Response to All TSOs’ proposal for amendment of the Determination of capacity calculation regions methodology in accordance with Article 15(1) of the CACM
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2023 annual conference of the Union of the French Electricity Industry
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