On Tuesday, the former chair of Eesti Energia's management board, Sandor Liive, criticized Nord Pool's opaque price formation on Vikerraadio's "Vikerhommik" morning show and proposed changing the rules so that it would be publicly visible who makes the price-determining offer on which the next day's stock exchange price is based.

Ots, who is now responsible for overseeing the reform of the electricity market due to record-breaking electricity prices, told ERR that Liive's proposal is excellent and that there is a need to strengthen the stock exchange's transparency, but that this can only be done at the European level. As stock market regulations apply across Europe, Estonia cannot alter them independently.

He did not, however, say that the proposal is unrealistic.

"I believe it is a realistic idea; however, due to the nature of these challenges in Europe, bringing about change at the European level will take a significant amount of time. Many people today, for example, are debating whether the power exchange model makes any sense at all; or if a more efficient or different model is not required. This topic has been debated at the European level since last fall," he said on Vikerraadio's "Vikerhommik" morning show on Wednesday.

Ots added that Estonia, along with the Baltic and Nordic states, could take the initiative in this regard.

Liive also said that after examining the statistics released by Nord Pool, in which the bids increased in very minute increments, and he had the impression that there was no single power plant responsible for the hike, that it was an alternative bidding tactic.

Ots explained that it may not have been a power plant, but rather a consumer that had committed to cut its energy consumption. No significant tampering has been identified thus far.

"When prices skyrocketed last December, the Estonian regulator, other national regulators, and the European regulator investigated, but no manipulation has been found, at least not yet. During my service as general director of the Competition Authority, we also addressed this issue. At the very least, there were no such bids from Estonia, and we did not receive any evidence from other regulators or the European regulator that there had been any manipulation," he said.

Ots said the whole Nord Pool system needs an overhaul, and it is highly likely that Europe will conduct a comprehensive stock exchange review to determine whether the current day-ahead trading system — where the market price is essential "the last bid accepted" that is then paid by all market participants — is a suitable trading regulation for its intended purpose and possibly propose a new system instead. There is no doubt that transparency can be improved.

Ots said Estonia has not taken any concrete initiatives to reform Nord Pool, and while the ministerial energy council discussed the topic, no decisions has been taken.

He also said with this coming winter prices expected to range between €400 and €500 per megawatt-hour, concerns should be raised about whether this system is fit for the purpose. But he was not willing to label the entire system a failure.

"It is too early to discard it, but it certainly needs to be checked. It is not quite normal to have such outrageously high prices. There could be a systemic flaw, because the system itself is relatively young — between 10 and 20 years old. It is too short a period of time from an economic perspective, and under pressure, these flaws can become apparent," said the ministerial adviser.

The Competition Authority is not persuaded by Liive's arguments to disclose Nord Pool's bidders.

Külli Haab, the deputy director general and head of regulatory division at the Competition Authority said because we are dealing with market stock exchanges this data is confidential in the same way as a financial stock exchange is.

"Exchange transactions are being monitored," Haab added.

She stated that the European Union Agency for the Cooperation of Energy Regulators (ACER) closely monitors bids, that the algorithms are known, and that any anomalies are investigated. In addition, the regulatory agencies are cooperating.

"Currently, the identity of the last bidder is not public. However, if it is deemed that revealing this information will increase transparency and will not compromise trade secrets or other sensitive information, then we could authorize making this information public and identify the last bidder."

Haab added that it is now possible to determine who is removing capacity from the market, such as when a station or block is being repaired. In the end, it is the consumers, not the producers, who determine the price, because if a major consumer says they will stop consuming at, say, €700 per megawatt-hour, they are releasing - returning their portion of consumption to the market - and hence setting the price.

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