BNetzA Reported to Investigate Electricity Trading During Recent Cold Spell

According to various newspapers, the German grid regulator BNetzA sent a letter to power traders on Monday, informing that it was investigating allegations that operating reserves had to be used during the recent cold spell to make up for balancing forecast errors by suppliers.

Reportedly the letter speaks of considerable hour-long power shortages since 6 February 2012, which were offset by using emergency power reserves so that these reserves would not have been available as back-up emergency power.

Operating reserve in the form of primary, secondary and minute control reserve is intended to cover unexpected imbalances between supply and demand at very short notice. Parties such as energy traders which are so-called balance area control parties (Bilanzkreisverantwortliche) are legally obliged to ensure a balanced power flow in their area, making forecasts with due care for the fact that the operating reserve shall only be used for unexpected imbalances between supply and demand in the grid zone.

Due to the severe cold of the last weeks, electricity prices at the exchanges temporarily soared. Traders that wanted to avoid paying such high prices deliberately lowered forecasts regarding the demand of their customers and delivered only the incorrectly predicted amount of energy, Frankfurter Rundschau reported based on industry sources. To avoid a blackout, transmission system operators had to revert to operating reserves. While the price of this energy is normally higher than prices at the energy exchange, this was not the case at the time.

Allegedly the back-up power plants in Mannheim and Austria that are meant to be the operating reserve after Germany’s accelerated phase-out of nuclear energy had to be activated during the cold spell because of the forecast errors, Frankfurter Allgemeine Zeitung says.

The Federal Economics Ministry was in talks with BNetzA and BNetzA announced supervisory procedures if necessary, the papers report. One way to put a stop to such trading strategies would be to link the price for balancing power to the prices at the energy exchange, making it more expensive than the current exchange price, papers say.

Sources: Frankfurter Rundschau, Frankfurter Allgemeine Zeitung, Manager Magazin, Berliner Zeitung

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