UPDATE 1-Poland, Czech Republic eye power market integration

                                
 * Market coupling could start in 2011
                                
 * Infrastructure in place
                                
 * Latest step in regional power market integration
                                
 
                                
 By Patryk Wasilewski
                                
 WARSAW, March 29 (Reuters) - Poland's largest energy bourse
-- PolPX -- and Czech market operator OTE are in talks about
joining their power markets, possibly later in 2011, the chief
of the Polish bourse Grzegorz Onichimowski said on Tuesday.
                                
 Electricity trade on linked exchanges could potentially
start using existing interconnectors to transfer about 7 GWh of
power a year, about 5 percent of Poland's annual consumption,
Onichimowski said.
                                
 "We are talking to the Czech exchange about market coupling,
which we think can be done this year," he said in a telephone
interview.
                                
 "The infrastructure is in place and all that needs to be
done is to reach an agreement between grid operators, exchanges
and a slight change in regulations."
                                
 The discussions represent the latest move among central
European exchanges to couple their power markets in a region
that offers a potentially lucrative, but currently fragmented,
market.
                                
 The Czech and Slovak electricity markets merged in 2009 in a
move that boosted liquidity and showed other central and eastern
European countries that integration could work.
                                
 In February, the Czech and Slovak grid operators said they
would look to combine their markets with Hungary as a step
toward integrating the region with western electricity markets.
[ID:nLDE71F9E]
                                
 "Originally there was an idea to link all the exchanges in
the region through market coupling, but recently there is a
shift toward bilateral agreements," Onichimowski said. "The
latter scenario is more likely at the moment."
                                
 The integration would mark the second for PolPX, which last
year linked its power market with Scandinavia's Nordpool via a
600 MW cable to give Warsaw-based investors access to Europe's
most liquid energy market and boost trade on the Polish bourse.
                                
 Most power contracts in Poland are traded bilaterally but
day ahead volumes have risen on the PolPX exchange following an
energy law that took effect last year requiring generators to
sell a certain amount of production on regulated markets.
                                
 The European Union plans ultimately to bind together the
power networks of all EU countries to boost distribution of
renewable energy and help the region cope in the event of an
energy crisis.
                                
 The first step toward that goal is combining different
countries together in the same region before joining together
neighbouring areas.
 (Additional reporting by by Gabriela Baczynska and Michael
Kahn; writing by Michael Kahn; editing by James Jukwey)