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Nord Pool Mulls Changes to Nordic System Price

Power exchange Nord Pool is seeking input from market participants on whether to amend the calculation of the joint Nordic system price or replace it with new indexes as references for financial contracts, it said on Thursday.

“We are witnessing a decline in financial trading at the same time as many other changes affect the market. We have to adapt, and it is important to do that together with market participants so that we can analyse and test different proposals,” Nord Pool spokesman Hans Randen told Montel.

The exchange encouraged market participants to produce proposals for a broad, two-way dialogue.

The system price has been used as reference for financial Nordic power contracts since the mid-1990s, pooling liquidity from the region’s 12 bidding zones to create a more liquid financial market.

But its relevance has been increasingly questioned in recent years, due to widening price spreads between the bidding zones that have also hit market liquidity

Rival EEX said in June it would push liquidity from system price contracts to individual futures per bidding zones when it acquires Nasdaq’s Nordic power derivatives business early next year.

The European Commission said in August it had been asked by Denmark, Finland, Sweden and Norway to investigate the deal due to its importance to Europe’s energy market amid competition concerns.

North-south divide?
Randen said one possibility would be to establish two reference prices for the Nordic market, one for the northern parts of Norway and Sweden, and another for southern parts of these countries, which would also include Finland and Denmark.

He stressed, however, that this was not a concrete proposal from the exchange.

Last year, spot prices in the northern zones were largely isolated from the energy price crisis that hit the rest of Europe – averaging only EUR 24.47/MWh in Tromso in northern Norway against EUR 192.51/MWh in Oslo and EUR 219.04/MWh in Aarhus, Denmark.

Nord Pool said in June it plans to launch financial products in the Nordic region to rival EEX, but Randen said he had no additional information to share at present.

Source : Montel

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