Turkey Said to Mull Electricity Price Caps Amid Natgas Shortage

  • Energy Ministry held meeting with power producers Thursday
  • Turkey asked producers to lower spot power prices voluntarily

Skyscrapers and buildings stand illuminated at night on the city skyline seen from the Sapphire viewing platform in Istanbul.

Photographer: Kerim Okten/Bloomberg

Turkey’s Energy Ministry met with major power producers on Thursday to ask them to voluntarily lower electricity market rates or face price caps, according to two people with knowledge of the matter.

The meeting came after electricity for immediate delivery in the so-called spot market soared to a record on Wednesday as a natural gas shortage coincided with unusually cold weather, one of the people said, who asked not to be named because the meeting was private. The ministry team, led by Undersecretary Fatih Donmez, requested about 10 major producers to attend the meeting, said the people.

Prices soared as state gas grid operator Botas asked private power producers to lower gas consumption by 90 percent as residential demand for heating surged. The so-called curtailment procedure is forcing gas-fired power plant operators to buy power elsewhere at current market rates to meet existing, long-term contracts with consumers, the people said.

Some companies at the meeting favored price caps as current rates mean they’re selling power at a loss, the people said. The Energy Ministry’s press office didn’t comment on the issue when reached by phone and there was no immediate response to requests for comment sent by e-mail.

Read more: How Turkey is running out of gas this winter

Spot prices soared to 2,000 liras ($569) a megawatt-hour on Wednesday, one of the people said. Those levels are expected to decline after the ministry’s ultimatum, though still remain above average levels, the people said. Spot prices traded at 1,778 liras on Friday, according to prices quoted at Energy Exchange Istanbul

Baseload electricity futures for delivery this month on Borsa Istanbul reached 234.6 liras at 2:50 p.m. local time, compared with an average 162.7 liras this quarter, according to data compiled by Bloomberg. The contracts climbed to a record 260.6 liras as of Thursday’s close.

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