France's RTE faces trader pressure over balancing corrections as Italy hedging disputes drag on
Retroactive balancing corrections by French TSO RTE have left cross-border traders nursing losses since May, with no resolution in sight two months on.
French TSO RTE has still not resolved the retroactive balancing market corrections that triggered trader complaints in late May (2026-05-21), with market participants telling Montel that unexpected revisions to published electricity balancing prices and volumes continue to cause financial losses for desks hedging cross-border positions.1
One trader described the corrections as "insane." That phrasing is not hyperbole for the desks involved. France sits at the centre of European power flows, and balancing signals from RTE are a routine input for Italian and other European trading operations managing bilateral exposures. When those signals get revised after the fact, hedges built on original data become mismatched, and the losses are real.1
Montel reported in mid-July (2026-07-16) that the problems persisted despite RTE having attempted earlier process corrections. Validation errors and registration barriers are still limiting full market access for some participants, adding friction on top of the pricing unreliability.6
Italian day-ahead power closed at €100.82/MWh on 2026-08-08, a level set against a European summer backdrop where Montel senior energy analyst Fintan Devenney noted that power demand was running high across the continent, driven in part by increased cooling load.5 German front-month power settled at €131.18/MWh on the same date. Both figures underline how little room traders have to absorb pricing errors introduced by retroactive corrections on a major corridor. [LIVE PRICES]
A separate mechanism has drawn its own scepticism. Italy's scheme designed to boost power exports to Switzerland during periods of renewable oversupply may prove ineffective precisely when markets are stressed, market participants told Montel, because timing constraints limit its usefulness in the volatile conditions where it would matter most.3 The two issues — RTE's balancing corrections and Italy's export mechanism — are distinct problems, but they converge on the same underlying question of whether the France-Italy corridor can function as a reliable hedging instrument.
The political backdrop has not helped. France and Italy issued a joint statement on 2026-06-26 calling on the EU to cut fossil fuel dependence, expand cooperation on small modular reactors and deliver effective EU ETS reform.4 The statement said nothing specific about balancing market harmonisation or the retroactive correction problem that traders have been raising since May. ETS reform, even if delivered, would operate through the carbon-to-switching-cost channel over years, not through the balancing market mechanisms that are currently misfiring.4
Fiscal constraints bind both capitals. France's borrowing costs are now on a par with Italy's, a consequence of political paralysis over how to reduce a deficit running at 5.4% of GDP, according to The Economist.2 That does not leave obvious room for the kind of infrastructure or market-structure investment that would accelerate balancing market harmonisation.
France's RTE has a longer track record of balancing market opacity that traders flagged well before this year. But higher prices and tighter summer supply margins in 2026 have increased the financial damage each correction causes. The complaints that surfaced on 2026-05-21 remain live as of 2026-07-16, when Montel last reported on the matter.6,1
The question traders are watching now is whether RTE publishes another round of retroactive corrections through August (2026-08), when elevated cooling demand keeps day-ahead prices elevated and hedging errors carry larger P&L consequences. The next concrete signal would be a regulatory filing or formal commitment on balancing market harmonisation from either Paris or Rome — something neither government has yet produced.6