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Preparations for the interconnection of electricity spot markets in the Czech Republic and Slovakia are underway



Press release
Bratislava, Prague 15.1.2009

ČEPS, a.s. (the Czech Transmission System Operator), SEPS, a.s. (the Slovak Transmission System Operator) and OTE (the Czech Electricity Market Operator) are preparing changes to conditions and rules for day-ahead electricity trading and access to cross-border capacity on the Czech-Slovak interconnector. Preparations go ahead in line with the conclusions of the minutes of meeting on the respective national markets interconnection signed on 22 May 2008 by Mr Martin Říman, the Czech Minister of Industry and Trade, and Mr Ľubomír Jahnátek, the Slovak Minister of Economy.

The two national markets are to be interconnected in the second half of 2009, when the day-ahead electricity market will be launched in Slovakia and interconnected with the spot market in the Czech Republic. Available transmission capacity on the interconnector required for electricity transfer from one national market to the other will be allocated in a so-called daily implicit auction (capacity allocation will be part of electricity trading). Such integration of electricity markets is referred to as Market Coupling.

This initiative is in accordance with a European Union objective to create a common EU electricity market by coupling national electricity markets, as well as with EU legislation (Regulation 1228/2003/EC and Directive 2005/89/EC). The integration of the Czech and Slovak national electricity markets by implicit allocation of transmission capacity is a pilot project within the Central and East Europe region. The initiative was appreciated by regulatory authorities in other the CEE countries at a meeting of the representatives of Transmission System Operators and regulatory authorities in Vienna on 16 September 2008 and presented at the XV Florence forum meeting on 24-25 November 2008.

The aim of the coupling of the national Czech and Slovak electricity markets is to offer to players in both national markets the possibility of bidding/offering electricity at the national marketplaces while maintaining the sovereignty in managing the individual national transmission systems and control zones. As a result of cross-border trading, a common price in both national markets will be reached if sufficient amount of transmission capacity on the interconnector is available, or different prices will be charged in each market if available capacity on the interconnector has been utilised.

For purchasing electricity and the required transmission capacity on the interconnector, two separate transactions are currently needed while after the market coupling both will be integrated in one. Electrical energy purchase/sale together with the utilisation of available transmission capacity on the interconnector will be organised at the same marketplace.

The new scheme will allow market participants to submit in the spot market their bids and offers, improve their trading position prior to the execution of the required transaction thus reducing the probability of imbalance which might occur between the planned and actual volumes of electricity supplied/received.

A further liquidity improvement of the day-ahead electricity market organised on the Czech part by OTE is another expected benefit of the market coupling, as well as better availability of electricity, transparent setting of electricity prices and avoidance of risk associated with separate electricity trading and interconnector capacity trading (under-utilisation of capacity purchased). As for market participants in Slovakia, this project offers them launching the electricity spot market with a relatively stable liquidity from the start. SEPS, a.s. was licensed to run the intra-day market in Slovakia. The aim of parties involved in the project is to follow the principles for electricity trading applied in the Czech intra-day market (known to market players in both countries) and improve access to electricity for market players, primarily those in Slovakia. The stability and reliable operation of both power systems are the key objectives.

A working group has been established under the auspices of both relevant ministries (the Czech Ministry of Industry and Trade and the Slovak Ministry of Economy) to meet the objectives of the project. The working group consists of representatives of the Transmission System Operators of both national transmission systems (ČEPS and SEPS, a.s.) and the respective market operators (OTE and SEPS, a.s.), supervised by the national regulatory authorities (ERÚ and ÚRSO). The task of the working group is to prepare trading conditions and a trading platform in compliance with both EU and national legislation. This new instrument will contribute towards ensuring the safe operation of the two power systems and will set electricity prices in the integrated day-ahead market in a non-discriminatory and transparent manner.

Certain necessary changes to rules and regulations relating to the electricity market and access to the network have been made during the first stage of the project, as well as changes to the information systems of all the companies involved. Team members will inform electricity market players about current developments and changes so that the market participants might duly prepare for new trading conditions.

SEPS, a.s
The Slovak Electricity Transmission System joint stock company was established on 21 January 2002 as the Slovak Transmission System Operator. The Company’s mission is to ensure Slovak transmission system’s reliable operation, maintenance, upgrade and development so as to provide high-quality electricity supply for its customers at any time. SEPS is responsible for reliable parallel operation with neighbouring transmission systems in compliance with UCTE rules while respecting non-discriminatory and transparent principles for access to the network with minimum impact on the environment. Additional information is available on www.sepsas.sk.
Igor Gallo (gallo_igor@sepsas.sk, +421 908 714 752)

ČEPS, a.s.
ČEPS, a. s. a holder of an electricity transmission licence issued by the Energy Regulatory Office in accordance with the Atomic Act, is the sole Czech Transmission System Operator. The Company is responsible for the maintenance and upgrading of 39 substations comprising 67 transformers allowing electricity to be supplied from the transmission system to the distribution grid, as well as of 400kV lines with a total length of 2968km and 220kV lines with a total length of 1371km. ČEPS is a member of relevant European international organisations. The Company is responsible for maintaining the national balance of electricity supply and demand in real time (system services) and for organising cross-border power exchanges including transits. ČEPS has traditionally been involved in the creation of liberalised electricity markets both within the Czech Republic and Europe. Additional information is available on www.ceps.cz.
Jana Jabůrková (jaburkova@ceps.cz, + 420 724 551 687)

OTE, a.s.
The Czech Electricity Market Operator (OTE), a joint stock company established in 2001, provides comprehensive services to individual electricity market players. OTE commenced organising electricity trading in the day-ahead market in 2002 and the intra-day and block markets in later years. Continuous data processing and exchange required for the accounting and settlement of imbalance between the contractual and actual volumes of electricity supplied and received are among services offered by the OTE to players in the Czech electricity market, as well as administrative procedures associated with a switch of supplier. The OTE also administers the National Register of Greenhouse Gas Emissions. Additional information is available on www.ote-cr.cz.
Igor Chemisinec (ichemisinec@ote-cr.cz, +420 731 502 327)

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