Market Council expects to conduct competitive capacity outtake in 2013
MOSCOW. Feb 22 (Interfax) - Market Council Nonprofit Partnership expects to conduct at least another competitive capacity outtake (CCO) from the end of 2012 to next year, Market Council Director Vyacheslav Kravchenko said.
"We have just made the decision to conduct a CCO for 2013," he said.
As reported, the CCO system could be canceled and a new market model could be introduced in 2013.
Kravchenko said that Market Council plans to develop a new model for the wholesale electricity market based on a system of long-term relations by the end of 2013 "with the goal of it starting to work normally starting in 2014." The partnership is not yet sure whether the new model will imply a transition to single-rate pricing.
As of yet, there are no plans to conduct a CCO in 2014-2015, he said. Based on the new market model, it will become clear in 2013 whether or not the CCO will be abandoned.
At the moment, industry players are discussing the possibility of moving to single-rate pricing on the energy market; in other words, to a uniform price for electricity and capacity. The new model's underlying principle is non-regulated electricity and capacity contracts based on price and supply hedging financial mechanisms. The model currently under consideration involves departing from competitive capacity selection.
Two goods are currently traded on the energy market: electricity and capacity. Producers compensate for variables in costs, mostly fuel expenditures (on the day-ahead market and balancing market, where deviations from the schedule are bought and sold) through electricity sales. Capacity sales provide for a return on the relatively fixed costs of generation - operational and capital expenditures. Under the existing rules, the price for capacity is determined based on competitive selections, formulated under capacity supply agreements (investors' obligations under new inputs), or determined by the Federal Tariff Service for certain categories of stations (constrained, the most expensive, nuclear power plants (NPP), hydro-electric power plants (HPP), pump storage plants).
The purpose of CCO is to select generating companies with the lowest cost of capacity.
