Regarding high prices in balancing energy market
Dear colleagues,
Since the launch of the Baltic Balancing Capacity Market (hereinafter – BBCM) on 5 February 2025, the transmission system operators of Estonia, Latvia, and Lithuania (hereinafter – Baltic TSOs)[1] have jointly procured FCR, aFRR and mFRR balancing capacity services through a unified auction mechanism.
In accordance with the Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (hereinafter – REMIT), the National Energy Regulatory Council of Lithuania, Estonian Competition Authority and the Public Utilities Commission of Latvia (hereinafter – Baltic NRAs) jointly monitor the BBCM and the balancing energy market.
Recently, the Baltic NRAs have observed unusually high and volatile prices in the Baltic balancing energy market. In light of the above, the Baltic NRAs will conduct an in-depth analysis to assess whether the behavior of market participants when submitting bids complies with REMIT requirements. According to REMIT and the ACER Guidance on its application[2], market participants are expected to submit bids based on their marginal and alternative costs. A situation in which a market participant fails to offer available generation capacity in the wholesale market without legitimate technical, regulatory, or economic justification, or offers it at a price significantly exceeding the marginal cost of production, could constitute a breach of REMIT. More generally, REMIT prohibits all such conduct involving, or attempting to engage in, market manipulation, as defined in Articles 2(2) and 2(3) of REMIT.
Therefore, by this letter the Baltic NRAs emphasizes all market participants to act responsibly in both the BBCM and the balancing energy market. The NRAs will continue to monitor the operation and performance of the balancing capacity and balancing energy markets on an ongoing basis. Where there is reasonable cause, bids that appear suspicious may be subject to investigation by the Baltic TSOs and NRAs. Following the conclusion of each investigation, where a breach of legislation is confirmed, the NRAs will impose sanctions in accordance with REMIT and the relevant national legal framework.
On behalf of the National Energy Regulatory Council,
Public Utilities Commission of Latvia and
Estonian Competition Authority