Opcom OTC volumes fall in September as taxes rise

Traded volumes on the Opcom over-the-counter (OTC) platform fell to historically low levels in September, widening the January-September 2022 deficit to the same period in 2021, as increased tax rates for power producers hit liquidity.

Liquidity in the Romanian Opcom OTC power market fell by 680GWh on the month to about 3GWh, well below the 2.85TWh traded volume in September 2021. September's volumes are the lowest since the beginning of the exchange's operation in 2006, the president of the Romanian energy suppliers association Afeer Laurentiu Urluescu told Argus. This brought the total traded volume for the first three quarters of 2022 to 6.7TWh, at a 14.5TWh deficit to the same period in 2021.

The increase in tax on power producers' revenues to 100pc and to power traders' margins to 98pc at the beginning of September, from 80pc previously, has impacted trading activity in Romania, Urluescu told Argus. The Romanian government also introduced a tax on power exports last month. The difference between the day-ahead market price a day before the transaction and the price at the time of the transaction is taxed at 100pc. This also affects negatively trading activity in the country and endangers Romania's energy security, Urluescu said.

The introduction of a maximum level of support for domestic power suppliers of 1,300 lei/MWh (€263.25/MWh) last month has also dented forward liquidity in Romania.

In comparison, the Opcom spot averaged €377.92/MWh in September which, despite dropping by €112.88/MWh on the month, was well above the regulated maximum support level. The Romanian discount to Hungary widened by €8.01/MWh to €12.50/MWh, a four-month high.

Romanian power futures liquidity on the European energy exchange EEX also fell to the lowest so far in 2022 at 15.6GWh, down from 340GWh in August and 663GWh lower than in September 2021. The lack of liquidity in Romanian physical forward contracts has also decreased interest in hedging with financial futures, Urluescu told Argus. High initial margin payments and market volatility have also weighed on market liquidity.

Traded volumes on the Opcom extended auction platform also fell sharply in September to 2.7GWh, down by 769GWh on the month. January-September 2022 volumes totalled 6.9TWh, about 13.4TWh lower on the year. No trades took place on the Opcom continuous negotiation platform in September, from 128GWh of traded volumes in August and 268GWh in September 2021.

Romanian day-ahead trade also fell, moving down by 407GWh on the month to 1.81TWh in September. But this was 3pc higher compared with the same period in 2021. This narrowed the deficit to volumes seen a year ago by 51GWh month on month to 179GWh in the first three quarters of 2022.

By Apostolos Tsarikas