October 1, 2022

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Bills rise dramatically due to distortions in the Dutch gas market. And Confused Ideas of Italian Power Don’t Help – Analysis

price dynamics Gas It seems more and more out of control. TheThe alarm was triggered by ArreraThe authority that will be responsible for regulating the market has created more anxiety among citizens and businesses. I use the clause because in its 27 years of existence the Italian structure, which is responsible for analyzing and defining the rules of the energy market, has played a greater role Notary towards that Organizer. Witness the price trend and its repercussions Invoices From citizens and companies but little or nothing to prevent some skewness You have devastating negative effects on system costs. Specifically, also in the “last report on Monitor purchase contracts The intended import of gas to Italy”, which was sent to Parliament last June 12, has been limited to the repeated choice of building the price system” which is equal to the arithmetic average of forward quotes OTC quarterly reports related to the third quarter of gas in the center TTF and recognized in the second calendar month before the same quarter.

Translated from high-tech: 95% of the real price is tied to the direction of futures prices (i.e. bets on the future) in an unregulated market (over the counter) in the infamous Ttf center that was set up for Amsterdam. In the report submitted to Parliament Arrera legitimacy His choice which states that “the choice to refer to quotes recorded in the Ttf position and not in the national futures markets stems from consideration of the different levels of liquidity, as the risks of to treat Market prices rise significantly in the presence of a low level of liquidity. This consideration has resulted in the authority not yet being used to refer to PSV (virtual trading point) products, while retaining the reference to indexing to Ttf which is still today the most popular trading platform. liquid In Europe “while” the national developed central market, regulated by GME, still exists Little fluid and competitive in relation to the fund of funds, particularly in relation to the futures products used to set protection prices.”

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On top of our authority, they must not have clear ideas, because after less than two months, with the decision of the last July 29, Completely overturn the sentenceAs part of the advice, users have referred to the PSV Day Ahead price as an indicator more representative The spot price of the Italian market, which is characterized by liquidity levels that are more important than other indicators proposed at that time and suitable for reducing the costs of hedging activities; Therefore, the Authority, by Resolution 189/2022/R/gas, has adopted the PSV Day Ahead price as a price reference for the above contracts.” In short, from next October 1, for private consumers only, Arera will use the national PSV platform operated by GME in place of the Ttf center in Amsterdam. A change that could have positive effects on citizens given a situation that appears increasingly out of control on the Amsterdam platform.

To better understand what this is about, a brief historical reconstruction is necessary. Created by Gasunie Transport Services BV, as a substitute for national balance point The British Address Transfer Facility has become a global standard even in the face of a simultaneous decline in trade on its major American counterpart, the Henry Hub in Chicago. Officially, Ttf is organized in Amsterdam by ICE Endex. There are no limits to the maximum price. So there will be no possibility to suspend negotiations for excess height. Monthly position limit is set at 25% of deliverable volumes approx 55 million megawatt hours From the total available approx 219 million. Limits in line with the standards of the trading system raw materials They are too large to allow ample room for maneuvering strategies to hedge operators’ risks. noun, the European regulator, has only coordination and harmonization functions. In short, the limits are set by Ice (a private stock exchange that lives off commissions on contracts traded on its platform) and the authorities, with Esma, limit themselves to assessing compatibility with MiFiDEuropean Regulation on Financial Markets.

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A huge house of cards for one person Very opaque market: According to the same operating rules, information about contracts, actors and positions is confidential and not public. Therefore, we must rely on the superior technical information and guesses of some operators and analysts who fully confirm that Ttf is The den of legal gambling Very few operators (215 in the list available on the ICE website) determine the fate of millions of companies and hundreds of millions of European citizens. Accepting all observers, the Amsterdam market is very high volatilei.e. highly sensitive to price fluctuations, e little liquid. Suffice it to consider that publicly traded futures contracts can be worth approx 250 million megawatt-hours per month, which is the average real value of consumption in the entire European Union While the front hedge system is usually several multiples of the foundation (eg oil).

The first speculative price jump occurred after the end of pandemic Specifically due to the bearish positions of the major traders (It turnsand Gunvor and Glencore First of all): When the recovery took place, prices moved up, and therefore had to Closing operations by buying back contracts on gas. This has led to an increased demand for securities future Which was short sold earlier, causing the price to go up even more. The episode sparked fierce protests from different classes of operators, from network operators to some big players like coincidencewithout the European Commission or other authorities interfering or investigating in any way dynamics Which led to the distortion of prices. On the other hand, this stage is characterized by an economy warin the market there are those who, no doubt, gain (a lot) from the huge volatility of Ttf: in addition to the usual suspects (merchant Energy and large companies with where are you or baby) even countries like Norway Given that nowadays ICIS, the most important site for information and analysis on raw materials, explained that the Scandinavian country became the first supplier in Europe with 25% of the market, followed by American liquefied gas and in third place only by Russia origin.

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