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(Bloomberg) — Italy’s energy regulator fined A2A SpA €5 million ($5.8 million) for market manipulation dating back to Europe’s energy crisis in 2022, finding that the company held back some gas plants from the market, pushing power prices higher.
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The finding is the latest example of how power plant owners can influence prices during times of stress on the system. Italy’s energy regulator Arera reported that A2A’s actions led to a “very significant” impact on prices during a year when wholesale power prices in the country soared to record levels, according to a filing dated July 30 that was published by the regulator over the weekend.
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Arera found that in an undisclosed month of 2022, A2A offered to run some of its gas plants in the day-ahead market at prices above short-run marginal costs, causing the bids to be rejected. That limited power supplies and pushed up market prices. To make this determination, the regulator used a counterfactual analysis that considered how a similar gas plant would bid based on its assumed costs.
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A2A plans to appeal the decision. In a statement, a spokesperson for the company said the decision is based on an interpretation of regulations that doesn’t adequately take into account the characteristics of liberalized electricity markets and the specific circumstances of the case.
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While the findings are four years old, they underscore a potentially growing vulnerability in Europe’s power market. With more renewable power generation, the market increasingly swings between times of abundant energy and those of scarcity, sometimes within a single day.
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That could give operators with flexible assets like gas-fired turbines the ability to push prices even higher during times of stress. Earlier this year, Britain’s energy regulator warned traders not to hoard capacity on cables that link the country to continental Europe.
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