EFET objects to the amendments to the Electricity Market Code of EMS

European Federation of Energy Traders stated its concerns relating to the Rules on Amendments and Supplements of the Electricity Marked Code adopted by EMS on 21 October 2021, related to collateral amounts, periods and lead times of amendments’ introduction.

A letter was submitted to Elektromreža Srbije A.D.  AERS, Ministry of Mining and Energy of the Republic of Serbia and Energy Community Secretariat, and the Energy Agency of the Republic of Serbia gave its consent to amendments of the Electricity Marked Code on 28 October 2021.

EFET concerns relate to:

  • significant increase in the minimum and maximum collateral amount for balance responsible parties;
  • short period for balance responsible parties to comply with new collateral amounts; and
  • short lead times within which the amendments to the Electricity Market Code have been introduced.

As per the increase of collateral amounts, the earlier minimum amount was EUR 50.000,00 and now is EUR 1.000.000,00; the earlier maximum amount was EUR 1.000.000,00 and now is EUR 5.000.000,00. Furthermore, in the case of collateral is given in the form of a cash deposit, the validity period of the deposit must not be less than 3 years.

Introduced amendments stipulate a deadline of 15 days for balancing responsible parties to execute a new balancing agreement with EMS and within the same deadline to deliver a new financial security instrument complying with new collateral amounts.

Last but not least, the whole process of drafting and adopting amendments to the Electricity Market Code was not transparent, without consultations with market participants. Amendments were published and became known to the market participants after the whole procedure was conducted and consent by AERS has been obtained.

Having all the above in mind, EFET is on the stance that such amendments will possibly lead to the exit of some market participants unwilling or unable to obtain significantly higher collaterals in rather a short deadline of 15 days, as well as such amounts, represent obstacles for entry of new market participants. This may lead to a reduction in liquidity in both the wholesale market and the balancing mechanism in Serbia. Therefore, these new requirements could contribute to both higher and more volatile prices.

Finally, amending the Electricity Market Code must be a transparent process and interested parties should be consulted, in order to be fair for all market participants.

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