Power exchange boots up early
The Polish Power Exchange looks to be opening its doors or more accurately, internet and ISDN lines several weeks ahead of analysts' expectations.
But June 7 would be right in line with the Power Exchange's own schedule, said Agnieszka Szostek, spokeswoman for the exchange. When it was registered on Dec. 7, 1999, the Treasury Ministry mandated that the company be up and running six months later, she said.
"Six months isn't a long time," Szostek said last week, but "we hope we'll be ready." The finishing touches are going into the exchange's operations center with its IBM hardware and SEMA software, she said. The latter French firm also makes software that is used in two European stock exchanges, she added.
But industry observers said they believed the Power Exchange was behind schedule. "I had some doubts," said Pawel Zach, senior research analyst at Citibank (Poland), mentioning a meeting he had with a Power Exchange representative about a month ago. Zach asked him how trade settlements would work in the power exchange.
"He indicated a number of options and he was not quite sure what the settlement would look like," Zach said. "I like the idea that they will start trading electricity next month."
Among the initial problems the Power Exchange faces, Zach said, are commission costs that could run as high as 1% and the long-term contracts the Polish Power Grid (PSE) has with energy providers, which set the price of energy. He said the exchange is considering enlarging its shareholder base to attract more shareholder traders.
The exchange is 30% state treasury-owned with 10% stakes held by Elektrim, Spanish power company Endesa, the Warsaw Stock Exchange (WSE) and PSE. Other companies, including various power-sector companies and the Polish State Railways (PKP), hold additional stakes.
Complications aside, Zach sees a bright future for the Power Exchange, perhaps 10 years down the line, when most of the mid- and long-term contracts with PSE have matured.
"They will attract no more than 1-2% of the market in the first few months of operations," he said. "It will not change in the next few years, so this is going to be a gradual process."
Szostek said the Power Exchange hopes to have 5-8% of the energy market by the end of the first quarter 2001. Eventually, it would like to have 15-20%. In line with other European energy exchanges, Poland's exchange doesn't expect to exceed 30%. Currently, Szostek said, exchanges are running in Norway, England, Spain and Holland. Norway's was among the first, having opened in the early 1990s, she said.
One of the main advantages of trading energy on an exchange is that "the exchange produces clean and transparent rules for transactions. The rules are the same for everybody," Szostek said.
