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In its meeting under the new chairman Dr. Günther Rabensteiner in Aachen on 4 March 2008 the essential results of an expertise on the pricing mechanism were presented and discussed by Prof. Ockenfels, full professor of Experimental Economic Research at Cologne University, on the exchange council of the European Energy Exchange (EEX). The result: The pricing mechanism in the uniform auction of EEX is the best feasible procedure for pricing on the spot market for power according to the economic findings by Prof. Ockenfels. Compared with all other pricing procedures discussed the uniform price auction used by EEX, in particular, has a number of well-documented advantages. These include higher transparency, a clear reference price and the same price for all trading participants. Moreover, the expert con-firmed that no other procedure is more appropriate for ensuring equal opportunities for all trading participants in the auction process and for restricting the possibilities of exer-cising market power. Moreover, the expertise is also intended to make a contribution to the further development of the market design in power trading and will be made accessi-ble to the public by EEX.
In summer 2007 the Saxon exchange supervisory authority asked EEX to look into the current market rules for the power spot auction with regard to competitive pricing and to indicate alternative pricing procedures if applicable. Not least against the background of the public discussion of the quality of the prices established on EEX, the exchange in-vestigated the pricing procedure for possibilities of optimisation. After consulting with the exchange supervisory authority, the EEX management board decided to have an exter-nal expertise prepared with regard to this and it carried out a tender on the topic of “Pric-ing mechanism in the auction procedure for hourly contracts on power on EEX“. Prof. Ockenfels was awarded the contract. The expertise is used to fulfil the investigation task set by the exchange supervisory authority and has been submitted to it.
Status report on the conversion of the trading system
In its meeting, the exchange council received comprehensive information on the status of the migration of the Spot Market from the current Xetra trading system to a new plat-form, which is already used for intraday trading today. The conversion of the systems will take place on 28 April 2008 and, as a first step, concerns the hourly auction and continuous trading in power on the Spot Market. This means EEX now offers its trading participants the possibility of entering negative prices for the first time and, hence, it makes a contribution to better hedging against the basic risk on the Spot Market. The simulation phase for the trading participants will begin on 31 March 2008. The other products which can be traded on the Spot Market (natural gas and CO2) will be switched to the new system at a later point in time.
Exchange council adopts rules for the introduction of new products in the frame-work of the CO2 co-operation
In its meeting of 4 March 2008, the exchange council adopted the rules for the launch of the CER Futures and EUA Options in the framework of the co-operation with the Eurex derivatives exchange. As planned, the CER Futures will be launched on 26 March 2008 and the EUA options will be launched on 14 April 2008.
The exchange council of EEX is a body of the exchange defined in the German stock exchange act. It consists of in total 23 members that adequately represent the different interest groups and business circles on the exchange: In addition to 18 representatives of the trading participants (domestic as well as foreign transmission system operators – power trading companies, municipal utilities and regional suppliers, brokers and finan-cial service providers as well as commercial consumers) elected from within various groups, four representatives of major associations (German Association of the Energy and Power Supply Industry, registered association (VIK), Federation of German Consumer Organisations, registered association (vzbv), German Association of Energy and Water Industries, registered association (BDEW) and the Federation of German Indus-tries, registered association (BDI)) and Prof. Wolfgang Pfaffenberger, the investors’ representative, are members of the council.
