MVM to sell electricity at auction in October

Analysis

Hungary’s Energy Office (MEH) has classified MVM Trade, the trade unit of the Hungarian Electricity Works (MVM), as a significant market power, requiring the unit to hold a public auction on October 27 to sell electricity at an MEH-stipulated price, MEH announced on Thursday.

MVM Trade will be required to sell an amount of electricity that will keep it under a market share of 40%. MTI has learned that MVM Trade will not sell electricity used by households at the auction. MVM Trade will use a cap on prices at the auction for next year’s electricity sales in line with prices at the Leipzig electricity exchange. MVM Trade sold 9TWh of electrical capacity for Ft 163 billion at an auction in October 2007. Market players said the electricity prices for consumers increased as a result of the auction in spite of MVM Trade’s efforts to keep prices down. MVM Trade stored 12TWh of electricity to keep the rise in prices under 10% in January.

Experts at MVM are analyzing the effect of the auction on the group’s targeted results, MVM spokesman Ágoston Tringer told MTI on Thursday, adding that it might be necessary to ask the group’s owner to revise MVM’s business plan. Tringer said the company is not aware of any other European country in which there is a cap on wholesale electricity prices. The resolution has practically restored the officially regulated price, Tringer said.

MVM experts said major European electricity companies in Germany, France and Spain are dominant market powers just as MVM. A Hungarian ministerial decree enacted on January 1 makes it possible to define significant market powers on Hungary’s deregulated electricity market and to regulate their operations. Hungary’s electricity market was fully deregulated in January 1 of this year. (MTI-Econews)

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