PXE strongly objects to the allegations in the article published in the E15 daily on 30 June 2016 under the title „Prague Avoids a Million-Crown Penalty from PXE”. The article contains false information that harms both PXE and its contractual partners.
1) Quote from the article: „For each day that passed after the deadline for concluding additional contracts between suppliers and customers, the exchange demanded hundreds of thousands of crowns.” – PXE has never demanded any sanction from the Prague City Hall and has not even considered applying it. This statement is completely false. The sanction is included in the rules to ensure that the customer or supplier is protected in the event that either party shows a clear unwillingness to fulfil the contract arising from the concluded transaction. In this case, the deadline was not met due to the high administrative burden, of which PXE was aware and therefore never even considered applying sanctions. So if you are saying that „the exchange demanded...”, that is completely false.
2) Quote from the article: “However, the practice of concluding additional contracts after an exchange trade is controversial and, according to some opinions, contravenes both the Public Procurement Act and the Commodity Exchange Act.“ – No such practice exists on PXE. The delivery contract is concluded at the moment the exchange trade is concluded. The conclusion of the transaction is followed only by confirmation (pursuant to Section 1757 of the CIVIL CODE). This is literally stated in PXE rules. It is therefore completely nonsensical to claim that this is a violation of law. For that matter, the same practice is applied by the Czech-Moravian Commodity Exchange Kladno, which issues a „closing certificate” after the conclusion of a trade.
3) Quote from the article: “PXE charged over CZK 2.4 million in four days as a sanction for the supplier. And it wanted more than 640,000 more for itself.“ – PXE has never charged Prague any penalty. This statement is false, as already stated in the first point. Furthermore, if PXE had charged something, there would have to be a corresponding tax document (invoice). However, nothing like it exists. PXE has never applied any sanction against Prague and has never considered applying it.
4) Quote from the article: “The Ministry of Industry and Trade is now dealing with PXE activities. This was prompted by a case in which the same entity acted as a consultant preparing documentation for a client to participate in an energy auction and was also the official PXE trader that won the contract.“ – The Ministry of Industry and Trade is the supervisory authority for commodity markets. It thus deals with the activities of all commodity exchanges licensed by it, by virtue of its supervisory function. There are no administrative proceedings pending with PXE and, to the best of PXE’s knowledge, the MIT is not conducting any special investigations into PXE activities.
Full article published in the E15 daily on 30 June 2016:
Prague avoids a million-crown penalty from PXE
According to the rules of the exchange, the city had to sign a contract with the supplier within thirty days. The deadline was exceeded by just four days.
Prague City Hall could lose more than CZK 3 million due to the strict rules of the Prague Energy Exchange PXE. For each day that passed after the deadline for concluding additional contracts between suppliers and customers, the exchange demanded hundreds of thousands of crowns.
Purchases through PXE are approved by the City Council, headed by Mayor Adriana Krnáčová (ANO). However, the practice of concluding additional contracts after an exchange trade is controversial and, according to some opinions, violates both the Public Procurement Act and the Commodity Exchange Act.
Prague purchased 60,412 megawatt-hours of gas in the exchange auction, which was won by EP Energy Trading. According to PXE rules, the city had to sign a contract with the supplier within thirty days.
However, officials did not do so until the 34th day. Even such a negligible delay could be costly.
PXE charged a penalty of over CZK 2.4 million for the four days, money that was to compensate the supplier. And it wanted more than CZK 640,000 more for itself. The calculation was based on a formula of forty crowns per megawatt hour for the supplier and ten crowns for PXE. “The exchange had the opportunity to request a sanction, but for objective reasons leading to a short delay in signing the combined deliveries contract, it did not use this opportunity. In the currently applicable exchange rules, the possibility of this sanction has been removed,“ said Vít Hofman, spokesman for the City Hall.
The Ministry of Industry and Trade is now dealing with PXE activities. This was prompted by a case in which the same entity acted as a consultant preparing documentation for a client to participate in an energy auction and was also the official PXE trader that won the contract.
PXE wanted CZK 2.4 million for the four days of delay for the supplier. It demanded another 640,000 for itself.