62021TJ0482_RES
Case T‑482/21
TenneT TSO GmbHandTenneT TSO BV
v
European Union Agency for the Cooperation of Energy Regulators
Judgment of the General Court (Third Chamber, Extended Composition) of 25 September 2024
(Energy – Internal market for electricity – Capacity calculation region – Core region – Adoption by ACER of the methodology for cost sharing of redispatching and countertrading – Obligation to state reasons – Determination of the threshold for legitimate loop flows – Article 16(13) of Regulation (EU) 2019/943)
Judicial proceedings – Intervention – Statement in intervention – Formal requirements – Summary of the pleas in law on which the application is based – General reference to the statement in intervention submitted by the intervener in a related case – Inadmissibility
(Statute of the Court of Justice, Art. 21; Rules of Procedure of the General Court, Arts 76(d) and 145(2)(b))
(see paragraphs 25-27, 31, 32)
Energy – Internal market for electricity – Regulation 2019/943 – Management of congestion on the electricity transmission system – Implementation of remedial actions intended to relieve congestion between zones – Methodology for sharing the costs of remedial actions – Account taken of remedial actions on internal network elements with a voltage level higher than or equal to 220 kV – Whether permissible
(European Parliament and Council Regulation 2019/943, recitals 2 and 35 and Arts 1(a) and 16(4), (8), first subpara., (b), and (13); Commission Regulations 2015/1222, recitals 2 and 12 and Arts 9(11) and 74(2) and (4), and 2017/1485, Art. 76(1)(b)(iii) and (v))
(see paragraphs 78-153)
EU agencies – Agency for the Cooperation of Energy Regulators (ACER) – Appeals procedure – Appeal before the Board of Appeal of ACER – Appeal brought against a decision of ACER adopting a methodology for sharing the costs of remedial actions to relieve congestion on the electricity transmission system – Assessment of complex technical and economic facts – Scope of the review – Review of legality not limited to the assessment of manifest errors of assessment
(European Parliament and Council Regulations 2019/942, Arts 25, 26 and 28, and 2019/943, Art. 16(13); Commission Regulation 2015/1222, Art. 74)
(see paragraphs 176, 177)
EU agencies – Agency for the Cooperation of Energy Regulators (ACER) – Appeals procedure – Appeal before the Board of Appeal of ACER – Obligation to state reasons for decisions – Scope – Infringement – Consequences
(Arts 263 and 296 TFEU)
(see paragraphs 179-186, 220-224)
Energy – Internal market for electricity – Regulation 2019/943 – Management of congestion on the electricity transmission system – Implementation of remedial actions intended to relieve congestion between zones – Methodology for sharing the costs of remedial actions – Exclusion of costs induced by loop flows that do not exceed a certain threshold – Determination by the Agency for the Cooperation of Energy Regulators (ACER) of a threshold in a way that does not comply with the applicable legal framework – Not permissible – Exception – Implicit competence of ACER to determine a threshold in a way that does not comply with the applicable legal framework – Conditions – Conditions not fulfilled
(Art. 4(3) TEU; European Parliament and Council Regulations 2019/942, Art. 6(10), second subpara., (a), (11) and (12), and 2019/943, recital 34 and Art. 16(13); Commission Regulation 2015/1222, Arts 9(11) and 74(6)(a))
(see paragraphs 235-301, 305-310, 318-331)
Action for annulment – Judgment annulling a measure – Effects – Limitation by the EU judicature – Conditions
(Art. 264, second para., TFEU)
(see paragraphs 335, 338-342)
Résumé
Upholding the action for annulment brought by electricity transmission system operators (‘TSOs’), the General Court annuls a decision of the Board of Appeal of the European Union Agency for the Cooperation of Energy Regulators (ACER) (‘the Board of Appeal’) on the ground that it is vitiated by illegality regarding the determination of the threshold for loop flows and by an inadequate statement of reasons. However, the Court confirms the lawfulness of the scope of a methodology for sharing the costs of redispatching and countertrading, adopted by ACER, which includes internal network elements that are not ‘critical’.
On 24 July 2015, the European Commission adopted Regulation 2015/1222. (
1
) That regulation sets out a series of requirements, in the electricity sector, relating to cross-zonal capacity allocation and congestion management in the day-ahead and intraday markets, including, in particular, a requirement to set a common methodology for sharing the costs of redispatching and countertrading of cross-border relevance. (
2
)
Pursuant to that regulation, the TSOs of the ‘Core’ region (
3
) submitted a proposal relating to that methodology to all the national regulatory authorities (‘NRAs’) of that region.
Since the NRAs did not reach an agreement on that proposal, on 30 November 2020, ACER adopted, pursuant to that regulation, a decision approving a cost sharing methodology (‘the contested cost sharing methodology’).
The applicants, TenneT TSO GmbH and TenneT TSO BV, in their capacity as TSOs that operate an electricity transmission system in part of Germany and in the Netherlands, respectively, then brought an appeal before the Board of Appeal against that decision. After that appeal was dismissed, they brought an action before the Court for annulment of the decision of the Board of Appeal (‘the contested decision’).
Findings of the Court
Before ruling on the substance, the Court declared the statement in intervention of the Federal Republic of Germany to be inadmissible in part, since some of the pleas in law put forward were not set out in sufficient detail to enable the Court to rule on them. Thus, the general reference to the statement in intervention submitted in a related case also seeking the annulment of the contested decision, annexed to the statement in intervention in the present case, cannot make up for the absence of the essential arguments in law which must appear in the statement in intervention.
Going on to its analysis of the substance, the Court examines in turn the three pleas in law raised by the applicants, namely, a plea alleging an error of law in the determination of the scope of the contested cost sharing methodology, a plea alleging that the flow decomposition method used in that methodology is unlawful and a plea alleging that the threshold for legitimate loop flows was determined incorrectly.
The plea concerning the scope of the contested cost sharing methodology
As a preliminary point, the Court recalls that redispatching (
4
) and countertrading (
5
) constitute costly remedial actions (
6
) implemented to relieve physical congestion on the electricity transmission system.
In that regard, Article 74(2) and (4) of Regulation 2015/1222 provides for the adoption of cost-sharing solutions for remedial actions of cross-border relevance and establishes that the cost sharing methodology must define which costs incurred from using redispatching or countertrading to guarantee the firmness of cross-zonal capacity are eligible for sharing between all the TSOs of a capacity calculation region, in the present case the Core region.
Furthermore, Article 16(13) of Regulation 2019/943 provides for the sharing of the costs of remedial actions intended to relieve congestion between two bidding zones (
7
) on the basis of the contribution of flows resulting from transactions internal to a zone to the congestion between two bidding zones observed.
The scope of the contested cost sharing methodology extends not only to cross-zonal network elements (interconnectors), but also to all internal network elements with a voltage level higher than or equal to 220 kilovolts (kV). According to that methodology, cross-border relevant redispatching and countertrading actions are, in principle, all actions intended to relieve congestion on cross-border relevant network elements, as identified inter alia by the methodology for regional operational security coordination for the Core region (‘the ROSC methodology’). According to the ROSC methodology, cross-border relevant network elements are all critical network elements taken into account in the cross-zonal capacity calculation process, as well as internal network elements with a voltage level higher than or equal to 220 kV.
According to the applicants, the costs of remedial actions attributed to internal network elements that are not critical network elements should be excluded from cost sharing, since congestion on those elements is ‘internal’ congestion, which does not fall within the definition of congestion ‘between zones’.
In that regard, the Court states that Article 74(4)(b) of Regulation 2015/1222 aims to share the costs of remedial actions that are intended to guarantee the firmness of cross-zonal capacity. Since Regulation 2015/1222 is an implementing act, it must be interpreted in accordance with its basic regulation, namely Regulation 2019/943, Article 16(13) of which refers, for its part, to the costs of remedial actions activated in order to ensure cross-zonal trade.
Thus, in order to ascertain whether the contested cost sharing methodology, as confirmed by the contested decision, is compatible with the abovementioned provisions, it is necessary to determine which congestion is to be relieved in a coordinated way in order to ensure cross-zonal trade in accordance with Article 16(13) of Regulation 2019/943, which will then make it possible to establish whether the remedial actions covered by the contested methodology are intended to guarantee the firmness of cross-zonal capacity, within the meaning of Article 74(4)(b) of Regulation 2015/1222.
First, the Court notes that the mere fact of including within the scope of the contested cost sharing methodology the costs incurred as a result of congestion on network elements with a voltage level higher than or equal to 220 kV cannot be contrary to Article 16(13) of Regulation 2019/943, since that provision merely entails determining which congestion is to be relieved in a coordinated way in order to ensure cross-zonal trade.
Second, the fact that congestion may be relieved by using up to 30% of the capacity of each critical network element, whereas 70% of that capacity must remain available for cross-zonal trade, does not mean that only the costs of remedial actions carried out on those critical elements must be shared. Remedial actions on non-critical network elements may contribute to relieving congestion on critical network elements, thereby guaranteeing the firmness of cross-zonal capacity.
Third, the Court adds that the costly remedial actions of redispatching and countertrading arise only in the regional operational security assessment process (‘the CROSA process’), established by the ROSC methodology, the objective of which is, inter alia, to coordinate cross-border relevant remedial actions within the meaning of that methodology. The remedial action optimisation provided for by that process involves determining the most effective remedial action to resolve congestion on all network elements (critical or non-critical) with a voltage level higher than or equal to 220 kV.
It follows that all congestion that is managed in a coordinated way as part of the CROSA process corresponds to congestion ‘between zones’ for the purposes of Article 16(13) of Regulation 2019/943, and that all the remedial actions activated as part of that process to relieve the congestion at issue contribute to guaranteeing the firmness of cross-zonal capacity, in accordance with Article 74(4)(b) of Regulation 2015/122. Consequently, in accordance with the ‘polluter pays’ principle, the costs of those remedial actions must be shared between the TSOs.
The plea concerning flow decomposition
The applicants complain, in particular, that the Board of Appeal did not examine the arguments that they had raised against the flow decomposition method used in the contested cost sharing methodology, as confirmed by the contested decision.
As a preliminary point, the Court observes that flow decomposition, which is intended to identify the types of flow that cause congestion on network elements, is a necessary and important step in sharing the costs of remedial actions, since it provides input data necessary for the sharing of those costs. Thus, in so far as the applicants’ arguments concerned the very design of the flow decomposition method used and, consequently, essential aspects of the contested decision, the Board of Appeal was required to respond to those arguments in order to discharge its obligation to state reasons. However, the contested decision is vitiated by an inadequate statement of reasons on that point, which does not enable the applicants to ascertain the reasons for that decision or the Court to exercise its power of review of that decision.
Since an inadequate statement of reasons constitutes an infringement of essential procedural requirements within the meaning of Article 263 TFEU, the Court annuls the contested decision on that basis.
The plea concerning the loop flow threshold
The applicants dispute the threshold set by ACER in the contested cost sharing methodology, as confirmed by the Board of Appeal in the contested decision, with regard to loop flows, (
8
) which are among the types of physical flow that may cause congestion.
In that regard, the Court recalls that, according to Article 16(13) of Regulation 2019/943, the costs induced by flows resulting from internal transactions that contribute to the congestion between two bidding zones observed, but which are below the level that could be expected without structural congestion (
9
) in a bidding zone (‘the threshold’), are to be excluded from the sharing of the costs of remedial actions referred to in that provision. Under that provision, the threshold must be analysed and defined by the TSOs for each individual bidding zone border.
In the present case, since the TSOs did not carry out the required analysis, ACER considered itself authorised, or even obliged, to set a temporary threshold itself without having that analysis at its disposal, in order to avoid a deadlock situation when adopting the contested cost sharing methodology. Thus, ACER set a common threshold for all bidding zones of the Core region, which it divided equally by the number of bidding zones from which loop flows originate.
The Court finds that the threshold set by ACER does not comply with the requirements laid down in Article 16(13) of Regulation 2019/943, according to which the threshold must correspond to the ‘level that could be expected without structural congestion’ and must be defined ‘for each individual bidding zone border’.
As regards the determination of the first requirement, the analysis required by the first subparagraph of Article 16(13) of Regulation 2019/943 presupposes, inter alia, an analysis of network investments and any alternative configurations of bidding zones that would remove structural congestions. ACER, which admits that it did not carry out such an analysis, set the threshold at 10% of the maximum capacity of the network element concerned as an ‘average’ of the divergent opinions provided by the TSOs concerned.
As regards the second requirement, although the allocation made by ACER results in an individual threshold for each bidding zone, in that that threshold is determined on the basis of the individual maximum capacity of each network element concerned and according to the number of bidding zones from which loop flows that pass through those network elements originate, it does not correspond to the individualisation required by that article, which requires the threshold to be determined on the basis of the characteristics of the bidding zones in question and the different borders between them.
Next, the Court examines whether ACER had, in the specific circumstances of the present case, an implicit competence authorising it to determine a threshold in a different way than that prescribed by Article 16(13) of Regulation 2019/943.
First of all, the Court observes that it cannot in principle be accepted, in the light of the principle of legality, that an agency of the European Union, such as ACER, may derogate from the applicable legal framework. Next, although Regulation 2019/943 allows ACER to adopt an interim decision in clearly defined circumstances, the determination of the threshold in the methodology for sharing the costs of remedial actions is not among those circumstances. Last, mere reliance on an interest linked to effectiveness is insufficient to create an implicit competence on the part of ACER, unless it corresponds to a real need to ensure the practical effect of the provisions at issue.
In that regard, ACER justified, inter alia, the need to adopt the contested cost sharing methodology, without being able to wait for the analysis prescribed by Article 16(13) of Regulation 2019/943, by the time limit set for it to adopt that methodology and the TSOs’ delay in developing the proposal for a cost sharing methodology. However, first, the time limit set for ACER to adopt the methodology at issue was indicative and, therefore, capable of being extended. Second, the obligation to determine the threshold by carrying out the analysis provided for in Article 16(13) of Regulation 2019/943 entered into force after the TSOs of the Core region submitted their proposal for a cost sharing methodology to all the NRAs of the region. Moreover, ACER has not demonstrated that it facilitated the development of that analysis, when it was supposed to do so under the principle of sincere cooperation.
Having failed to demonstrate the existence of a real need to ensure the practical effect of the provisions at issue, ACER could not base its determination of the threshold in the contested cost sharing methodology on an implicit competence.
In the light of all the foregoing, the Court annuls the contested decision, adopted by the Board of Appeal, in so far as it upholds ACER’s decision of 30 November 2020 and dismisses the applicants’ appeal against that decision.
(
1
)	Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline on capacity allocation and congestion management (OJ 2015 L 197, p. 24).
(
2
)	Article 74 of Regulation 2015/2022.
(
3
)	The Core region is the geographic area comprising Belgium, the Czech Republic, Germany, France, Croatia, Luxembourg, Hungary, the Netherlands, Austria, Poland, Romania, Slovenia and Slovakia, established for the calculation of capacity in accordance with Article 15 of Regulation 2015/1222.
(
4
)	Under point 26 of Article 2 of Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (OJ 2019 L 158, p. 54), redispatching is defined as a measure that is activated by one or more TSOs or distribution system operators by altering the generation, load pattern, or both, in order to change physical flows in the electricity system and relieve a physical congestion or otherwise ensure system security.
(
5
)	Under point 27 of Article 2 of Regulation 2019/943, countertrading refers to a cross-zonal exchange initiated by system operators between two bidding zones to relieve physical congestion. Under point 4 of Article 2 of Regulation 2019/943, congestion, which is a risk to operational security that requires remedial action, is defined, for its part, as a situation in which all requests from market participants to trade between network areas cannot be accommodated because they would significantly affect the physical flows on network elements which cannot accommodate those flows. Congestion is caused by physical flows.
(
6
)	Under point 13 of Article 2 of Regulation 2015/1222, remedial action means any measure applied by a TSO or several TSOs in order to maintain operational security.
(
7
)	Point 65 of Article 2 of Regulation 2019/943 defines a bidding zone as ‘the largest geographical area within which market participants are able to exchange energy without capacity allocation’.
(
8
)	According to the contested cost sharing methodology, a loop flow is ‘a physical flow on a network element where the source and sink are located in the same bidding zone and the network element or even part of the network element is located in a different bidding zone’.
(
9
)	Structural congestion is defined in point 6 of Article 2 of Regulation 2019/943 as ‘congestion in the transmission system that is capable of being unambiguously defined, is predictable, is geographically stable over time, and frequently reoccurs under normal electricity system conditions’.