5 April, 2002 – Trading on the newly merged EEX power exchange has fallen sharply since it was launched a month ago with the drop in volume being blamed on the delay in introducing a new price index.

“Volume trading in individual futures products, especially the yearly ones, are still pretty good but have been lower overall because fewer contracts have been traded,” EEX spokesman Frank Hartmann told the Reuters news agency.

The EEX brings together Frankfurt’s futures bourse, the European Electricity Exchange and the Leipzig Power Exchange (LPX) and is jointly owned by the Deutsche Bourse stock market and LPX.

“That’s because a lot of participants are waiting for the new underlying (benchmark index) to be introduced before opening new positions on the futures exchange,” said Hartmann.

EEX futures volumes in March were less than a quarter of their January level, while EEX spot volumes dropped by over 30 per cent in the three-month period.

The new power exchange, to be based in Leipzig in eastern Germany, will integrate the LPX’s popular spot auction system and Frankfurt EEX’s futures bourse.

EEX expects volumes to pick up when the new index is introduced when individual traders will feel more comfortable in arranging contracts and entering into derivative deals.

Electricity trading for the German market has switched to the over-the-counter market although volumes were low overall in January and February due to the collapse of Enron and price spikes in December.

The merged EEX said on Thursday it traded a total of 2.8 TWh of electricity last month, of which the vast majority, 2.5 TWh, were in spot trades.

Its futures bourse traded just over 0.27 TWh in March, down from 0.35 TWh in February and 1.01 TWh in January.

That’s a far cry from its promising start in March 2001, when it traded 1.32 TWh in its first month of operations.

The LPX spot auction traded 1.775 TWh last month, up slightly from February’s 1.729 TWh.

But EEX’s spot exchange traded just 0.764 TWh, down from 1.035 TWh in February and 1.1 TWh in January.

EEX and LPX together cover around eight per cent of the country’s 550 TWh electricity demand.