The EU leadership pays considerable attention to creation of competitive electricity markets in states – members to the Energy Community Treaty (Energy Community – a European non-governmental organization created by the European Commission’s Directorate-General for Energy, Vienna, Austria) and places additional duty on the secretariat of the organization to develop recommendations and monitor the implementation of relevant reforms.

The wholesale electricity market is considered by the Secretariat of the Energy Community as a basis for weighted average pricing and competition. The secretariat of the organization proposes to take a number of measures to limit the dominance of natural monopoly-producers, as well as to strengthen the legislative and regulatory field to ensure the functioning of energy exchanges.

According to the results of the work of industry specialists and experts, commissioned by the Energy Community, the main measures have been identified to ensure the successful start of the electricity market reform and the criteria for evaluating the efficiency of such work by the Energy Community. The proposed measures are aimed at reducing the impact of large companies, preventing abuse on energy exchanges, attracting small players or industrial users to wholesale markets, and further integrating national markets at the regional level to increase their liquidity.

According to industry experts, the effective work of the energy regulator and the antitrust authorities will be crucial to the success of the wholesale electricity market. Member States of the Energy Community are also advised to focus on developing a legislative framework for the creation of market commercial platforms  a day in advance (the launch of such platforms may be undertaken by companies already operating in Europe, such as Nord Pool in Sweden).

The key measures recommended by the Energy Community are:

1. Measures aimed at limiting the influence of players with a large market share or players in the electricity generation chain:

– regulating market access for historical monopolies following the example of nuclear energy in France;

– launching auctions for the creation of virtual power plants (sale of part of the electricity on the energy exchange);

– introduction of obligations for large producers to sell a portion of electricity produced under direct agreements to small traders at prices that do not exceed the weighted average price on energy exchanges on the date of sale.

2. Measures at limiting cross-subsidization, profitability or collusion within vertically integrated companies to displace competitors from the market:

– restrictions on the supply of own needs within the vertically integrated company from resources of personal generation;

– an obligation to adhere to non-discriminatory treatment of competitors;

– requirements on separation of electricity production accounting and electricity consumption within the vertically integrated company;

– cancellation of agreements for the supply of large volumes of electricity.

3.   Measures aimed at direct support of liquidity at emerging markets:

– an obligation to offer certain volumes of electricity for sale at a regulated market (in particular, for RES as a prerequisite for obtaining a special price allowance);

– the obligation to trade certain volumes of electricity at the regulated markets;

– the obligation of the participant of the electricity exchange to publish its own quotations for purchase and sale on a regular basis;

– the implementation of financial transmission rights to compensate for costs from congestion, provided that the markets are merged a day in advance.

4. Measures aimed at preventing abuse of a dominant position in the market in the framework of participation in energy exchanges:

– introduction of the the maximum number of pooled lots (price / volume) for one company or the obligation to limit the maximum price when bidding on the energy exchange;

– transparency and unity of approaches in the formation of pricing principles and reporting on operations conducted at energy exchanges;

– control over the activity of energy exchanges by the authorized state bodies (energy regulator, antitrust authority, etc.).

5. Measures aimed at preventing abuse by the energy exchanges in terms of access and liquidity.

– providing free access to trading operations

– transparent procedure of registration of bidders, etc.