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ACM approves new auction rules for cross-border trade in electricity

Thanks to new auction rules, buyers and sellers of electricity are able to trade internationally within the European Union more easily. Furthermore, they are offered more financial security. The new rules may prove favorable to electricity prices that businesses and consumers pay. This is the result of the approval that the Netherlands Authority for Consumers and Markets (ACM) has given to the new auction rules.

Increased security

Availability of cross-border transmission capacity that can be used for a period of a month or a year (long-term) is limited. That is why such capacity is auctioned and sold to the highest bidder. With the approval of these new rules, auction rules within the European Union are further harmonized. In addition, they also offer market participants increased financial security. Producers will be better able to project their future turnover from cross-border trade, and energy companies have more clarity about future costs of the electricity that they buy. That is beneficial to businesses and consumers that purchase that power. Remko Bos, Director of the Energy Department of ACM, explains: “The new auction rules offer energy firms more security and more choice when buying electricity. Now that it has become easier to buy electricity across the border too, competition will increase. And that will have a positive effect on prices.”

Less red tape

Harmonization of the auction rules within the European Union leads to more clarity about such rules, and reduces the amount of red tape. Harmonization currently takes place on a voluntary basis. In 2016, a new European regulation will make harmonization mandatory for all EU member states. Even farther-reaching steps towards complete harmonization of the auction rules will be taken then.