Successful start of the Czech-Slovak-Hungarian Day-ahead Electricity Market Coupling on 11 September 2012

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9/11/2012

On 11th September 2012 market coupling was successfully launched to handle the allocation of the daily cross-border electricity and transmission capacities in and between the Czech, Slovak, Hungarian market areas through price coupling mechanism. This method allows simultaneous use of the order books of the three countries' day-ahead electricity markets including available daily cross-border capacities on both Czech-Slovak and Slovak-Hungarian borders. The current two-step process on the Slovak-Hungarian border - daily explicit cross-border capacity auctions followed by the power trading on local exchanges - therefore will be replaced by the simpler and more efficient process called market coupling. The main advantage of the new mechanism is the higher efficiency of utilisation of cross-border capacities resulting from the implicit allocation system and the one-step approach. The better utilisation of cross-border capacities and the ease of daily export-import possibilities will ensure better portfolio optimization opportunities. The three coupled markets together represent a scale of volume that altogether creates higher security of supply, higher liquidity and thus less price volatility on the coupled organized markets. The market coupling results are published on the website of the power exchanges.

Following the Memorandum of Understanding (MoU) (signed by the Czech, Slovak and Hungarian PXs, TSOs and national energy regulators on 30 May 2011) the project was adopted by local power exchanges (OTE, OKTE and HUPX) and transmission system operators (CEPS, SEPS and MAVIR) on the basis of the institutional support given by the ministries and national energy regulators (ERU, URSO and MEH). The introduced implicit allocation uses the price coupling mechanism compatible with the algorithm used in the Central Western European region, and Parties are ready to follow their cooperation on implementation of implicit flow-based allocation of the Central Eastern Europe region (CEE) and the North West Europe region (NWE) as next steps to create one European single electricity market.

Involved parties are happy to announce that the implicit allocation by means of the market coupling mechanism ran smoothly without incidents on the first day, all standard processes were functioning as planned.

The ERU, URSO and MEH jointly stated: We are very pleased by the promising start of the Market Coupling between Czech Republic, Slovakia and Hungary. We are working on the goal of successfully extending the fruitful cooperation between the three countries to other projects in connection with the integration of the CEE electricity markets in order to achieve the final goal of having a single European electricity market by 2014.