ACER Publishes Its Assessment Report On The Market Effects Resulting From The Gas Market Correction Mechanism

Today, the EU Agency for the Cooperation of Energy Regulators (ACER) publishes its assessment report on the effects of the Market Correction Mechanism (MCM) on energy markets and security of supply.

The MCM Regulation (December 2022) establishes a Market Correction Mechanism to protect citizens and the economy against excessively high gas prices.

The Regulation tasks ACER and European Securities and Markets Authority (ESMA) with assessing the market effects from the introduction of the MCM and submitting their MCM effect assessment reports to the European Commission by 1 March 2023.

ACER Market Correction Mechanism Effects Assessment – Key findings

MCM seems not to have a discernible gas market impact to date

ACER has not identified significant impacts (positive or negative) that could be unequivocally and directly attributed to the adoption of the MCM. However, one should not infer from this that the MCM might not have any impacts on financial and energy markets or on security of supply in the future.

Challenges of extending the MCM to derivatives linked to other EU Virtual Trading Points (VTPs)

ACER finds valid arguments for extending the MCM only to VTPs where the liquidity of gas derivative trading is modest to high. ACER considers that the extension of the MCM to other VTPs would not likely lead to significant negative effects in gas markets.
ACER finds valid arguments for using the same activation and de-activation conditions, making use exclusively of the Dutch TTF front-month price and the same dynamic price-bidding limit at the EU VTPs where the MCM is extended to other VTPs.

No technical reasons to review the key design elements of the MCM

ACER could not identify a need for revising the price references used for calculating the reference price.
ACER could not identify technical reasons to change the current activation or de-activation conditions of the MCM or for changing the dynamic price-bidding limit.

ACER will continue monitoring the effects of the MCM in energy markets and on security of energy supply.

ACER Market Correction Mechanism Effects Assessment Report.

Further information on the Market Correction Mechanism (including link to the ESMA report).