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MEFF, BME’s derivatives market, has today announced that, following a conference held at the Bolsa de Madrid building on 29 July 2008, it has launched the 6th auction for Emisiones Primarias de Energía. This follows the appointment of MEFF, together with IBM, as the auction manager for the 6th and the 7th auctions by the National Energy Commission.
The occasion was an information session organised to inform potential bidders about the changes to the product being offered for sale and the auction arrangements as a consequence of Royal Decree 324/2008. The decree required Endesa and Iberdrola to continue to offer wholesale energy products for sale, following the five successful auctions held in 2007-8.
In the 6th and 7th auctions, participants will be able to buy 6 and 12 month option contracts based on the hourly price of energy in the daily electricity market. A fundamental change is that the contracts will no longer be fulfilled by physical delivery of electricity in hours nominated by the seller, as in previous auctions. Under the new contract, fulfillment will be financial, with Endesa and Iberdrola making compensation payments to holders whenever the hourly market price exceeds the exercise price of the options. Buyers will pay a monthly premium per MW of contract capacity held which will be determined in the auction.
As in the previous auctions, there will be a base and a peak product, the latter having a higher exercise price. But from the 6th auction, the peak product will be valid from 8.00- 20.00h on working days, the definition of peak period used elsewhere in Europe.
The option contracts are expected to be of interest to all entities who buy from the electricity market, as well as traders in commodity derivatives. It is no longer a requirement to be a member of the Spanish electricity market- the auction is open to all incorporated entities, other than companies categorised as dominant operators by CNE.
The auction is expected to take place on 23rd September 2008 and will be carried out on the internet. In total, 2230 MW semesters will be offered for sale. The split between peak and base will be fixed by resolution of the Secretary General for Energy in September. Interested parties may register to receive additional information at www.subasta-epe.com .
