Polish law causes worry over power contracts -CEZ

                                
 * Worry over meeting calendar-year contracts
                                
 * CEZ objects to rule that each unit have broker on site
                                
 * Trader says regulators should have consulted with market
                                
 
                                
 By Michael Kahn
                                
 WARSAW, June 9 (Reuters) - A Polish law requiring generators
to sell power on the country's energy bourse has left companies
scrambling to honour calendar-year contracts, CEZ's <CEZPsp.PR>
head of trading said on Wednesday.
                                
 The measure, which also calls for each generation plant to
have a licensed broker on site, is unclear and is costing
generators time and money to figure how it will affect them,
said CEZ's Michal Skalka.
                                
 "We are hoping the Polish authorities will somehow amend the
law," he told an energy trading conference.
                                
  Poland in January approved broad changes to the energy law
aimed at increasing transparency of the electricity market and
strengthening regulatory oversight.
                                
 Under the measure, starting in August, companies will have
to trade at least 15 percent of the power they generate on the
market, either on Poland's Towarowa Gielda Energii bourse or
other public trading platforms.
                                
 One of the most worrying aspects is what to do about
calendar-year contracts, because it appears generators will need
to find ways to channel them through the exchange, Skalka said.
                                
 "What should we do? Cancel the contracts?"
                                
 Skalka said it was unclear whether brokers in the far more
liquid over-the-counter market will count and suggested the best
way for Poland to increase liquidity would be for regulators to
lower fees and open up borders.
                                
 "Exchange trading is a good thing but it is more logical to
have it voluntary, rather than forced," he said. "If Poland
opened up its borders and lowered fees, there would be
liquidity."
                                
 Energy bourses around central Europe struggle with lower
trading volumes than their counterparts in Germany or Britain,
but good grid connections and plenty of capacity provide the
potential to develop a lucrative trading market.
                                
 Skalka made clear that CEZ -- Central Europe's biggest
utility -- was committed to complying with the law but that too
much uncertainty was making it difficult.
                                
 He also objected to a part of the measure calling for each
generation unit to have a licensed broker on site -- something
that made no business sense for companies like CEZ that have a
centralized trading model.
                                
 "It is a waste of energy and time trying to figure out what
the Polish parliament meant with the law," Skalka said, adding
it would have been better for regulators to have consulted with
market participants before crafting the measure.
                                
 (Reporting by Michael Kahn, Editing by Jane Baird)