The balancing group representatives must pledge collateral to APCS (in its role as balancing group coordinator). In the event of payment delay or non-payment by the liable party, the collateral provides cover for the financial consequences of the payment default.
Scope of risk management by OeKB
As the risk management provider to APCS, OeKB continually recalculates the value of the items of security posted, manages this collateral and realises it in the event of non-performance of payment obligations.
The balancing group representatives may meet their margin requirements with the following types of instruments:
- Bank guarantee
- Pledged securities
- Pledged cash denominated in euros
Details on the amount and composition of collateral required
The minimum amount of collateral per balancing group in an Austrian balancing area is 50,000 Euro.
Method for calculating the amount of collateral to be pledged:
In the case of balancing groups less than one year old and of trading-oriented balancing groups (BGs that derive more than one-third of their revenues from power trading), the margin requirements are calculated by reference to the collateral table in the Annex "Risk Management – Posting of Collateral" (item 2, paragraph 3.1) that forms part of the terms and conditions of business of the balancing group coordinator (the terms and conditions are also referred to as TC-BGC, or "AB-BKO" in German).
This calculation is performed on the basis of the trading volume forecast for the year or, in the case of balancing groups that are at least one year old, on the basis of statistical data.
If the balancing group coordinator does not report daily its open positions of the day-ahead transactions, this has the effect of tripling the amount of collateral required. The open positions are reported online at www.apcs.at under "Clearingplatform".
The amount of collateral to be pledged by those utility balancing groups also known as consumption responsible parties (BGs deriving no more than 33% of their revenues from power trading) for which at least one year’s statistical data exists is calculated based on their historical balance-risk profile by referring to the Annex "Risk Management – Posting of Collateral" in the TC-BGC.
Composition of the collateral
The collateral to be posted by a given balancing group has a fixed and a variable component: basic collateral and variation collateral.
With the basic collateral, the BGR is liable both for its own payment obligations and, in the event of default by other BGRs, for the payment obligations of such other BGRs.
The variable collateral covers the BGR's own payment obligations only. For BGRs with sufficiently good credit quality the variable collateral requirement is reduced by a certain amount (the collateral reduction amount).