Sunday 27 March 2011, the CWE exchanges were not able to perform the coupling before the critical deadline at 14:00. After unsuccessful repeated attempts to correct the problem before 14:00, the CWE Incident Committee decided to trigger the planned fallback procedures. As foreseen in such a case, the Explicit Shadow Auction was used to allocate the ATC to the market participants. The local market results were published respectively at 14:26 in the German and French areas and at 14:38 in the Belgian and Dutch areas in order to respect the cross border nomination deadline.
The following sequence of events recapitulates the session (see messages in annex 1):
- 12:00 – CWE gate closure for PXs’ order books
- 12:35 – ITVC results delayed due to a technical issue. EPEX sends warning message to market at 12:41 that publication of results will take place later than 12:40 (level 0 message)
- 12:40 – CWE Market coupling results were rejected by the PXs due to file inconsistency
- Between 13:10 and 13:20 – messages to the market (level 1 message)
- Announcing delay in results publication
- Reminding participants to update their Explicit Shadow Auction bids, if they wish
- Announcing cross border nomination deadline extension
- Around 13:30 – messages to the market (level 2 message)
Announcing further delay in market results publication and likeliness of a problem - Reminding participants again of an Explicit Shadow Auction bid update
- Announcing cross border nomination deadline extension
- 13:40 – CASC Explicit Shadow Auction gate closure
- Around 14:00 – messages to the market (level 3 message)
- Full decoupling
- Explicit Shadow Auction results publication
- PXs Order book reopening
- Announcing cross border nomination deadline extension
- 14:20 – PX Order Book closure
- 14:26 – EPEX Spot market results publication
- 14:38 – APX-Endex and Belpex market results publication
- 15:30 – Gate closure cross border nominations
What was the origin of the incident?
The root cause of the decoupling is a bug in the identification of the trading date in the results file produced by the market coupling system. This bug has been identified on Monday 28 March by the system provider and is an indirect consequence of the time change that occurred the previous day.
The trading date is computed based on the delivery date, by subtracting 24 hours. Once the date is computed, the correct time setting is added. Since the short clock change day has only 23 hours and not 24 hours, the trading date returned by the formula was 26 March 2011 and not 27 March 2011 as expected by the PXs local systems which rejected the file automatically.
What were the immediate actions taken by the CWE partners?
The CWE partners followed the fallback procedures as outlined in the Exchange rules and CWE auction rules. Knowing that unexpected events can cause the CWE chain to fail, the partners had developed, in consultation with market parties, fallback procedures in order to have acceptable solutions to face such events. These procedures had been discussed and simulated with the market parties, ahead of the CWE market coupling launch.
The execution of the fallback procedures on the 27th of March (including shadow auctions) took place properly in accordance with the rules and the agreed procedures.
The CWE PXs joined their efforts together with the system providers to ascertain the origin of the problem, to fix it and to run tests before the next CWE session of Monday the 28 March 2011 to make sure that the problem will not spread or be repeated.
What were the main consequences of the lack of CWE coupling?
The fallback procedure foresees to keep the initial MCO (ITVC market coupling order) calculated by EMCC (with the assumption of a successful coupling of the CWE region) respectively in the Dutch and in the German order books. Since the CWE markets were subsequently decoupled within CWE and reopened, the resulting prices can imply adverse flows between Nordic and CWE regions.
The Belgian market, with traditionally lower domestic liquidity, turned out to clear at almost the upper maximum price set in the MC system on hour 8. Fallback procedures and the time left to the gate closure of international nomination (15:30) prevented Belpex to send a request for quote and to reopen its order book. After the closing, several stakeholders and market participants have approached Belpex on this matter, and a meeting with Belgian market parties is planned for 7 April to consider a request to revise the price for hour 8.
An overview of the market results and of the shadow auction results is provided in annex 2. Another consequence of the decoupling is that according to the CWE auction rules the forward capacity rights not used by the participants (use-it-or-sell-it) are compensated at the marginal price of the shadow auction.
What are the subsequent actions taken?
The Steering Committee of CWE has set up a task force to fully assess the incident, its origin and consequences, and to examine the need for improvements in the normal and fallback procedures, if any.
It will liaise with the Nordic partners to examine how counter flows can be avoided or mitigated in such cases.
There will be a rehearsal of the fallback procedures organized by CWE partners on the 10th of May 2011 (ITVC decoupling) and on the 11th of May 2011 (CWE decoupling) and a forum with the market participants will be organized on the 1st of June 2011.
Following this incident and the subsequent rehearsal on the 11th of May, CWE partners and CASC will seek feedback from market parties in order to optimise the procedures, if possible.