Directed contracts in the Irish electricity market

NIAER/CER consultation (57 pages, PDF) on the directed contract arrangements proposed to "mitigate" the effect on prices of possible market power of generators in the future single Irish electricity trading area. The regulators have not yet determined whether NIE's power procurement business will be required to offer these contracts alongside ESB power generation, whether the directed contracts will be call options or forward trades (in either case, structured as contracts for differences against the pool price), whether and how prices might be indexed.

The regulators do express a preference for a price based on the concept of what a hypothetical market price would be in the absence of market power, rather than a price based on ESB's (or NIE's) own costs. They also endorse the idea of an allocation of contracts to suppliers who want them in proportion to the loads they serve, although it is not clear whether and how allocations could be "transferred" when a customer switches suppliers. Responses by Friday 21 July 2006 (5 pm).

For further information or advice please contact Franck Latrémolière.

Filed under CER, Electricity, Ofreg.

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