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In its regular meeting chaired by Dr. Günther Rabensteiner in Paris on 10 September 2009, the Exchange Council of European Energy Exchange AG (EEX) praised the successful integration of the EEX and Powernext Power Spot Markets into EPEX Spot SE. As a final formal step, EEX Power Spot GmbH was merged into EPEX Spot SE as of 1 September 2009. In connection with this, the current trading participants of EEX Power Spot GmbH were transferred to EPEX Spot SE.
New products on the Power Derivatives Market
The discussion of product launches on the core market of EEX – the Power Derivatives Market – constituted the essential focus of the meeting. Oliver Maibaum, EEX Managing Director Exchange, explained the plans of the exchange for a diversification of the product range. At the moment, EEX Power Derivatives e.g. offers financial Phelix Futures with month, quarter and year maturities for the load profiles of base load and peak load.
In order to enable the trading participants to trade in the off-peak load range the product range is to be expanded with an off-peak future with financial settlement. In addition to this, EEX will supplement the maturities in the Phelix Futures product with week futures. This means it will offer its trading participants short-term derivatives market products with financial settlement for the first time. These products are introduced both as a response to the strong interest by the customers and with a view to the bilateral market on which week futures have prevailed as a liquid and saleable product. The Exchange Council welcomed these plans and approved the introduction of the new products. In the next meeting, the specifications for two further products, Short Dated Options on Phelix Base Year Futures and Within-Day products for the spot market trading of natural gas, will be presented as well as a roadmap for the introduction.
EEX facilitates exchange trading in market area ”Gaspool”
Upon the start of the new gas business year, EEX will facilitate exchange trading for the entire “Gaspool“ market area. The “Gaspool” market area co-operation comprises the former H-Gas Northern Germany, Ontras and Wingas Transport market areas. In the course of the integration of the market areas the exchange council agreed to an adjustment of the contract specifications. As a result of this, exchange trading in the “Gaspool” market area will be possible from 1 October. Furthermore, the members of the Exchange Council were informed of the results of the natural gas auction. A dayahead auction on the basis of 1 MW contract volumes was launched on the Natural Gas Spot Market on 15 July. So far, 18 EEX trading participants have actively traded gas quantities in the auction.
Study ”Simulation of the European Power Market“
At the suggestion by the investors‘ representative on the Exchange Council, University Professor Dr.-Ing. Albert Moser, the council welcomed Dr.-Ing. Tobias Mirbach as a guest. Mr. Mirbach is a research associate at the Institute of Power Systems and Power Economics (IAEW) at the Rhenish-Westphalian Technical University Aachen (RWTH Aachen) and presented a study on the simulation of the European power market to the Exchange Council. The objective of the study was to provide an analysis of the factors influencing the market price for power. For this purpose a market simulation model, which includes the European power plant fleet with a high degree of detail, grid congestions as well as the trading strategies of the market participants, was developed.
In this context, the research project established the following essential findings:
- The marginal costs of production describe pricing insufficiently. For this reason, studies analysing the competition on the basis of marginal costs overestimate the impact of market power.
- The additional consideration of the start-up costs of thermal power plants, risk premiums for power plant failures, opportunity costs of hydraulic power plants and opportunity costs of avoided start-up and shut-down procedures of thermal power plants provide a much better representation of pricing.
- The single hour auction does not provide incentives for withholding capacities if a Black Box procedure is used.
The Exchange Council is a body of the exchange according to the German Exchange Act. It comprises a total of 24 members adequately representing the various interest groups and business circles: In addition to the trading participants with a total of 19 members elected from within various groups (interconnected utilities and trading companies, municipal and regional suppliers, brokers and financial service providers as well as commercial consumers), four representatives of associations and one investors’ representative are members of the Exchange Council. The Exchange Council primarily adopts the rules and regulations of the exchange and the amendments thereto. Furthermore, it appoints and monitors the Management Board of the Exchange and appoints the head of Market Surveillance.
