ACER urges a review of the rules on the automatic maximum price adjustment mechanism in the day-ahead electricity market

Europe’s single day-ahead electricity market has an automatic maximum price adjustment mechanism in case of high prices. ACER wants to review the methodology for automatically increasing the maximum price limit in case of price spikes.

Under the Harmonised Maximum and Minimum Clearing Price (HMMCP) methodology, if prices in any zone reach 60% of the maximum price, it triggers an increase in the maximum price limit 5 weeks later. Price spike incidents in April in France and more recently in the Baltic area each triggered the need for an automatic increase of the harmonised maximum clearing price for Single Day-Ahead Coupling (SDAC).

Why change the methodology?

With expected high prices on the electricity markets ahead, ACER urges a review of the HMMCP methodology to limit the frequency of increases of the maximum clearing price in the single day-ahead market allowing consumers and market participants to gradually and better adapt to the scarcity situation in the market.

Process to change the methodology

First the Nominated Electricity Market Operators (NEMOs) must propose an amendment to the HMMCP methodology. Then, ACER formally has 6 months to reach a decision but aims at conducting the process in a significantly more rapid manner.

Upcoming public consultation

• ACER urges the NEMOs to propose amendments to the HMMCP Methodology for ACER’s approval.

• In the second half of September (and conditional on the NEMOs’ submission), ACER will run an expeditious public consultation on the NEMOs’ proposals.

What to remain vigilant of in the coming months?

Price spikes can occur more frequently if not enough cross-border interconnector capacity is made available for trade and/or demand response is not being brought to the market. In some instances, this may even endanger security of supply.

Therefore, and irrespective of the ongoing review of the mechanism, in the coming months, ACER calls on:

• Transmission System Operators (TSOs) to make sufficient cross-zonal capacity available for cross-border trade.

• Market participants to bring significant demand response to the market.