(For other news from the Reuters Global Energy Summit, click
on http://www.reuters.com/summit/GlobalEnergy10?pid=500)
* Volumes in 2010 less than expected
* Hungary's probe reputation damaging
* Considering moving into Poland and Romania
By Michael Kahn
PRAGUE, May 25 (Reuters) - Volumes on the Prague-based power
exchange covering three Central European markets will rise in
2010 from a year ago but still miss original forecasts in an
uncertain economy , the head of the bourse said on Tuesday.
Speaking at the Reuters Global Energy Summit, the Power
Exchange Central Europe's chief David Kucera said the impact of
the global financial crisis was lingering and leaving him less
bullish about 2011 as well.
Power demand has plummeted the past few years due to the
global financial crisis and Europe's growing debt problems have
heightened fears about future growth.
"We are on track to achieve 30 terawatt hours (from 29
terawatts a year ago). However, our official budget projection
was higher," he said.
"It was expected that consumption levels of electricity
would grow, however this did not happen. Now I am not even very
bullish about next year."
The PXE, established in 2007, is making a big push to be the
main hub for regional power trading and operates in the Czech,
Slovak and Hungarian markets.
Central and eastern Europe offers traders a potentially
lucrative place to trade power but fragmented national
electricity markets and a lack of liquidity stand in the way.
It currently boasts 35 members but Kucera said the exchange
was about to sign 3 new participants and had identified another
50 that would potentially fit in.
Kucera said the next logical step for the Prague exchange is
expanding into the bigger power markets of neighboring Poland
and Romania but he stressed this would be done by cooperating
with local governments.
"We are studying both countries," he said. "We don't want to
come in hostile."
A challenge for the exchange as it seeks to move into other
countries will be convincing regulators and politicians in other
markets to balance regional and national interests.
Kucera also said that it would be technically feasible to
get a regional power market off the ground in as little as one
year but solving the political issues such as cross-border
transmission rights makes it a far longer proposition.
"I believe from a techincal perspective this can be done in
one year," Kucera said.
Underlining such hurdles is Hungary's decision to announce
an investigation of the PXE on the same day in May when it began
offering spot power contracts there. Hungary's state-owned power
company is seeking to start a rival exchange in May.
The investigation has hurt the PXE's reputation but so far
traders have continued to use the exchange, Kucera said, adding
he did not believe there was enough liquidity in the country for
two spot markets.
"There has been no decline in volumes," he said. "The market
is functioning as usual."
(additional reporting by Chris Baldwin in London, Editing by
William Hardy)
