Scope of risk management by OeKB
The energy traders are required to deposit sufficient collateral to cover all present and future payment obligations to OeMAG.
OeKB continually recalculates the margin requirements and the current value of the pledged collateral. OeKB manages the collateral pledged to OeMAG by the power traders and, on OeMAG’s behalf, is responsible for the realisation and release of collateral.
The amount of pledged collateral is calculated as follows
| Amount of collateral (in EUR) |
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= [(annual trading volume of small hydropower (in kWh)) |
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x settlement price for small hydropower (in €/kWh) |
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+ (annual trading volume of other green electricity (in kWh) |
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x settlement price for other green electricity (in €/kWh))/6] |
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x (1 + VAT/100) |
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The annual trading volume of "small hydropower" and of "other green electricity" represents projections based on the information available to the green electricity clearing and settlement agency regarding the likely annual sales.
A market participant is not required to post any collateral if its total (projected) annual trading volume across all three balancing areas is less than 30,000 euros.
Fulfilling the obligation to post collateral
The collateral must as a rule be posted for an indefinite period. OeMAG is entitled to unlimited and immediate recourse to the deposited collateral.
Electricity traders can meet their margin requirements with the following types of instruments:
- Bank guarantee
- Pledged securities
- Pledged cash denominated in euros
- Parent company’s guarantee