Proposal for a Regulation of the European Parliament and of the Council on conditions for access to the network for cross-border exchanges in electricity
Date: 2001-03-13
Institutions: European Commission
Subjects: EU law, electrical energy, electricity supply, energy supply, energy transport, single market

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Official Journal of the European Communities

28.8.2001

Proposal for a Regulation of the European Parliament and of the Council on conditions for access
to the network for cross-border exchanges in electricity

(2001/C 240 E/12)

(Text with EEA relevance)

COM(2001) 125 final (cid:151) 2001/0078(COD)

(Submitted by the Commission on 13 March 2001)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

duction of a robust tarification system and methodology
to allocate available interconnection capacity for the longer
term.

Having regard to the Treaty establishing the European
Community, and in particular Article 95 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of
Committee,

the Economic and Social

Having regard to the opinion of the Committee of the Regions,

Acting in accordance with the procedure laid down in Article
251 of the Treaty,

Whereas:

(1) Directive 96/92/EC of the European Parliament and of the
Council of 19 December 1996 concerning common rules
in electricity (1) constituted an
for the internal market
important step in the completion of the internal market
in electricity.

(2) At its meeting in Lisbon on 23 and 24 March 2000, the
European Council called for rapid work to be undertaken
to complete the internal market in both the electricity and
gas sectors and to speed up liberalisation in these sectors
with a view to achieving a fully operational
internal
market in these areas.

(3) The creation of a real internal electricity market should be
promoted through an intensification of trade in electricity,
which is currently underdeveloped compared to other
sectors of the economy.

(4) Fair, cost-reflective,

transparent and directly applicable
rules, completing the provisions of Directive 96/92/EC,
should be introduced with regard to cross-border tarifi-
cation and the allocation of available interconnection
in order to ensure effective access to trans-
capacities,
mission systems for the purpose of cross-border trans-
actions.

(5) In its Conclusions, the Energy Council of 30 May 2000
invited the Commission, Member States and national regu-
latory authorities/administrations to ensure a rapid intro-

(1) OJ L 27, 30.1.1997, p. 20; Directive as amended by Directive . . .

(6) The European Parliament, in its Resolution of 6 July 2000
on the Commission’s second report on the state of
liberalisation of energy markets, called for conditions for
using networks in Member States that do not hamper
cross-border
in electricity and called on the
Commission to submit specific proposals geared to over-
coming all the existing barriers to intra-Community trade.

trade

(7) This Regulation should lay down basic principles with
regard to tarification and capacity allocation, whilst
providing for the adoption of guidelines detailing further
relevant principles and methodologies, in order to allow
rapid adaptation to changed circumstances.

(8) In an open, competitive market,

transmission system
operators should be compensated for costs incurred as a
flows of electricity on their
result of hosting transit
networks by the operators of the transmission systems
from which transits originate or for which they are
destined.

(9) Payments

and receipts

resulting from compensation
between transmission system operators should be taken
into account when setting national network tariffs.

(10) The actual amount payable for cross-border access to the
system can vary considerably, depending on the trans-
mission system operators involved and as a result of
the tarification systems
differences in the structure of
applied in Member States. A certain degree of harmon-
isation is therefore necessary in order to avoid distortions
of trade.

(11) It would not be appropriate to apply distance-related
tariffs, or a specific tariff to be paid only by exporters
or importers.

lines

access

to the

(12) Competition on the internal market can only truly
develop if
interconnecting the
different national systems is granted in a non-discrimi-
natory and transparent way. The available capacities of
these lines should be set at
the maximum complying
with the safety standards of secure network operation.
Any discrimination in the allocation of available capacities
should be shown not to unreasonably distort or hinder
the development of trade.

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(13) There

be

should

actors
transparency
concerning available transfer capacities and the security,
planning and operational
the
available transfer capacities.

for market

standards

affect

that

(14) Any revenues

flowing from congestion-management
procedures should not constitute a source of extra profit
for the transmission system operators.

(15) It should be possible to deal with congestion problems in
various ways as long as the methods used provide correct
economic signals to transmission system operators and
market parties and are based on market mechanisms.

(16) To ensure the smooth functioning of the internal market,
provision should be made for procedures which allow the
adoption of decisions and guidelines with regard to tarifi-
cation and capacity allocation by the Commission whilst
ensuring the involvement of Member States’ regulatory
authorities in this process.

should be
the

authorities
information

required to provide
(17) National
relevant
Such
Commission.
information should be treated confidentially by the
Commission. Where necessary, the Commission should
have the possibility to request
information
directly from undertakings concerned.

relevant

to

HAVE ADOPTED THIS REGULATION:

Article 1

Subject-matter and scope

through the

This Regulation aims at stimulating cross-border exchanges in
electricity and thus competition within the internal electricity
market,
compensation
mechanism for transit flows of electricity and the setting of
harmonised principles on cross-border transmission charges
and the allocation of available capacities of interconnections
between national transmission systems.

establishment of

a

Article 2

Definitions

For

1.
contained in Article 2 of Directive 96/92/EC shall apply.

the purpose of

this Regulation,

the definitions

2.

The following definitions shall also apply:

(a)

(cid:145)transit(cid:146) means a physical flow of electricity hosted on the
transmission system of a Member State, which was neither
produced nor is destined for consumption in that Member
commonly
flows which are
transit
State,
denominated as (cid:145)loop-flows(cid:146) or (cid:145)parallel-flows(cid:146),

including

(18) National regulatory authorities should ensure compliance
with the rules contained in this Regulation and the
guidelines adopted on the basis of this Regulation.

(b) (cid:145)congestion(cid:146) means a situation in which an interconnection
transmission networks cannot accom-
linking national
modate all transactions resulting from international trade
by market operators due to a lack of capacity.

(19) Member States

should lay down rules on penalties
applicable to infringements of the provisions of this Regu-
lation and ensure that
they are implemented. Those
penalties must be effective, proportionate and dissuasive.

(20) In accordance with the principles of subsidiarity and
proportionality as set out in Article 5 of the Treaty, the
objectives of the proposed action, namely the provision of
a harmonised framework for cross-border exchanges of
electricity, cannot be achieved by the Member States and
can therefore, by reason of the scale and effect of the
action, be better achieved by the Community. This Regu-
lation confines itself to the minimum required in order to
achieve those objectives and does not go beyond what is
necessary for that purpose.

for

the exercise of

(21) In accordance with Article 2 of Council Decision
1999/468/EC of 28 June 1999 laying down the
implementing powers
procedures
conferred on the Commission (1), measures
the
implementation of this Regulation should be adopted by
use of the regulatory procedure provided for in Article 5
the advisory
of Decision 1999/468/EC, or by use of
procedure provided for in Article 3 of
that Decision,
according to the nature of the measures to be adopted,

for

(1) OJ L 184, 17.7.1999, p. 23.

Article 3

Inter-transmission system operator compensation
mechanism

Transmission system operators shall receive compensation
1.
for costs incurred as a result of hosting transit flows of elec-
tricity on their network.

2.
The compensation referred to in paragraph 1 shall be
paid by the operators of national transmission systems from
which transit flows originate and/or the systems where those
flows end.

3.
Compensation payments shall be made on a regular basis
with regard to a given period of time in the past. Ex-post
adjustments of compensation paid shall be made where
necessary to reflect actual costs incurred.

4.
The first period of time with regard to which compen-
sation payments shall be made shall be determined in the
guidelines referred to in Article 7.

5.
Acting in accordance with the procedure referred to in
Article 13(2), the Commission shall decide on the amounts of
compensation payments payable.

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The amounts of transit hosted and the amounts of transit
6.
transmission
flows originating and/or ending in national
systems shall be determined on the basis of
the physical
flows of electricity actually measured in a given period of
time. The costs incurred as a result of hosting transit flows
the forward looking
shall be established on the basis of
(reflecting costs and
long-run average
benefits that a network bears from hosting transit
flows
compared to the costs it would bear in the absence of such
flows).

incremental

costs

Article 4

Charges for access to networks

1.
Charges applied by national network-operators for access
to national networks shall reflect actual costs incurred, and
shall be transparent, approximated to those of an efficient
and applied in a non-discriminatory
network operator
manner. They shall not be distance-related.

Generators and consumers (load) may be charged for
2.
access to national networks. The proportion of
the total
amount of the network charges borne by generators shall be
lower than the proportion borne by consumers. Where appro-
priate,
the tariffs applied to generators and/or
signals, and take into
consumers
account the amount of network losses and congestion caused.

shall provide locational

the level of

Payments and receipts resulting from the inter-trans-
3.
mission system operator compensation mechanism shall be
taken into account when setting the charges for network
access. Actual payments made and received as well as
payments expected for future periods of time, estimated on
the basis of past periods, shall be taken into account.

Subject to paragraph 2, charges for access to national
4.
shall be
networks applied to generators and consumers
the country of destination and
applied independently of
respectively origin of
specified in the
underlying commercial arrangement. Exporters and importers
shall not be charged any specific charge in addition to the
general charge for access to national networks.

the electricity, as

5.
There shall be no specific network charge on individual
transactions for transits of electricity covered by the inter-trans-
mission system operator compensation mechanism.

Article 5

Provision of information on interconnection capacities

1.
Coordination and information exchange mechanisms shall
be put in place by transmission system operators to ensure the
congestion
security of
management.

the networks

context of

in the

cation shall include a general scheme for the calculation of the
total transfer capacity and the transmission reliability margin
based upon the electrical and physical features of the network.
Such schemes shall be subject to the approval of the national
regulatory authority.

3.
Transmission system operators shall publish estimates of
available transfer capacity for each day, indicating any available
transfer capacity already reserved. These publications shall be
made at specified time intervals before the day of transport and
shall
in any case, week-ahead and month-ahead
estimates.

include,

The data published shall include a quantitative indication of the
expected reliability of the available capacity.

Article 6

General principles on congestion management

Network congestion problems shall be addressed with
1.
give
based
non-discriminatory market
efficient economic signals to the market participants and trans-
mission system operators involved.

solutions which

Transaction curtailment procedures shall only be used in
2.
emergency situations where the transmission system operator
must act
in an expeditious manner and redispatching or
countertrading is not possible.

Market participants who have been allocated capacity shall be
compensated for any curtailment of this capacity.

The maximum capacity of the interconnections shall be
3.
made available to market participants, complying with safety
standards of secure network operation.

Any allocated capacity that will not be used shall be

4.
reattributed to the market.

Transmission system operators shall, as far as technically
5.
possible, net the capacity requirements of any power flows in
opposite direction over the congested interconnection line in
order to use this line to its maximum capacity. In any event,
transactions that relieve the congestion shall never be denied.

Any rents resulting from the allocation of interconnection
the following

6.
capacities shall be used for one or more of
purposes:

(a) guaranteeing the

actual

availability of

the

allocated

capacity;

(b) network investments maintaining or increasing intercon-

nection capacities;

2.
The safety, operational and planning standards used by
transmission system operators shall be made public. This publi-

(c) reduction of network charges.

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These rents may be put into a fund that is managed by trans-
mission system operators. They shall not constitute a source of
extra profit for the transmission system operators.

Article 7

Guidelines

the Commission shall, acting in
1. Where appropriate,
accordance with the procedure referred to in Article 12(2),
adopt and amend guidelines on the following issues with
regard to the inter-transmission system operator compensation
mechanism:

(a) details of

the determination of

the transmission system
operators liable to pay compensations for transit flows, in
accordance with Article 3(2);

(b) details of the payment procedure to be followed, including
the determination of the first period of time for which
in accordance with the
compensations are to be paid,
second subparagraph of Article 3(3);

(c) details of methodologies to determine the amount of
transits hosted and exports/imports of electricity made, in
accordance with Article 3(5);

(d) details of the methodology to determine the costs incurred
as a result of hosting transits of electricity, in accordance
with Article 3(6);

(e)

the participation of national systems which are intercon-
nected through direct current
in accordance with
Article 3.

lines,

The guidelines shall also determine details of the harmon-
2.
isation of the charges applied to generators and consumers
(load) under national tariff systems,
in accordance with the
principles set out in Article 4(2).

transfer

3. Where appropriate,
the Commission shall, acting in
accordance with the procedure referred to in Article 12(2),
amend the guidelines on the management and allocation of
between
available
national systems set out in the Annex,
in accordance with
the principles set out in Articles 5 and 6. Where appropriate,
in the course of such amendments common rules on minimum
safety and operational standards for the use and operation of
the network, as referred to in Article 5(2) shall be set.

interconnections

capacity of

Article 8

National regulatory authorities

National regulatory authorities shall ensure that national tariffs
and methodologies for congestion management are set and
applied in accordance with this Regulation and the guidelines
adopted pursuant to Article 7.

Article 9

Provision of information and confidentiality

1. Member States and national regulatory authorities shall,
information
on request, provide to the Commission all
necessary for the purpose of Articles 3(4) and 7.

In particular, for the purpose of Article 3(4), national regu-
shall provide on a regular basis, costs
latory authorities
actually incurred by national
transmission system operators
associated with hosting transit flows as well as the amount
of exports and imports made in a given period. They shall
also provide the relevant data and information used for the
calculation of those figures.

2. Member States shall ensure that national regulatory auth-
orities and administrations are able and entitled to provide the
information required pursuant to paragraph 1.

The Commission may also request all

3.
necessary for
directly from undertakings and associations of undertakings.

information
the purpose of Article 3(4) and Article 7

When sending a request for information to an undertaking or
an association of undertakings, the Commission shall at the
same time forward a copy of the request to the regulatory
authority, established pursuant
to Article 22 of Directive
96/92/EC of the Member State in whose territory the seat of
the undertaking or the association of undertakings is situated.

4.
In its request for information, the Commission shall state
the legal basis of the request, the time-limit within which the
information is to be provided, the purpose of the request, and
also the penalties provided for in Article 11(2) for supplying
incorrect, incomplete and misleading information.

5.
The owners of the undertakings or their representatives
and, in the case of legal persons, companies of firms, or of
associations having no legal personality, the persons authorised
to represent them by law or by their constitution, shall supply
the information requested. Lawyers duly authorised to act may
supply the information on behalf of their clients, in which case
the information
the client shall remain fully responsible if
supplied is incomplete, incorrect or misleading.

6. Where an undertaking or association of undertakings
information requested within the
does not provide the
fixed by the Commission or supplies incomplete
time-limit
information,
the Commission shall by decision require the
information to be provided. The decision shall specify what
information is required and fix an appropriate time-limit
indicate the
to be supplied.
within which it
penalties provided for in Article 11(2). It shall also indicate
the right
to have the decision reviewed by the Court of
Justice of the European Communities.

shall

is

It

The Commission shall at the same time send a copy of its
decision to the regulatory authority referred to in the second
subparagraph of paragraph 3 of the Member State within the
territory of which the residence of the person or the seat of the
undertaking or the association of undertakings is situated.

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Information collected pursuant to this Regulation shall be

7.
used only for the purposes of Articles 3(4) and 7.

The Commission shall not disclose information acquired
pursuant to this Regulation of the kind covered by the obli-
gation of professional secrecy.

Article 10

Right of Member States to provide for more detailed
measures

This Regulation is without prejudice to the rights of Member
States to maintain or introduce measures that contain more
detailed provisions than those set out in this Regulation and
the guidelines referred to in Article 7.

Article 11

Penalties

1.
The Member States shall lay down the rules on penalties
applicable to infringements of the provisions of this Regulation
and shall take all measures necessary to ensure that they are
implemented. The penalties provided for must be effective,
proportionate and dissuasive. The Member States shall notify
those provisions to the Commission by [indicate date] at the
latest and shall notify it without delay of any subsequent
amendment affecting them.

the total
intentionally or negligently,

2.
The Commission may by decision impose on under-
takings or associations of undertakings fines not exceeding
turnover in the preceding business year
1 % of
where,
they supply incorrect,
incomplete or misleading information in response to a
request made pursuant
to supply
information within the time-limit fixed by a decision adopted
pursuant to the first subparagraph of Article 9(6).

to Article 9(3) or

fail

Penalties provided for pursuant

4.
decisions taken pursuant
criminal law nature.

to paragraph 1 and
to paragraph 2 shall not be of

Article 12

Regulatory committee

1.
The Commission shall be assisted by a committee
composed of the representatives of the Member States and
chaired by the representative of the Commission.

2. Where reference is made to this paragraph, the regulatory
procedure laid down in Article 5 of Decision 1999/468/EC
shall apply, in compliance with Article 7 and Article 8 thereof.

The period provided for in Article 5(6) of Decision

3.
1999/468/EC shall be two months.

Article 13

Advisory committee

1.
The Commission shall be assisted by a committee
composed of the representatives of the Member States and
chaired by the representative of the Commission.

2. Where reference is made to this paragraph, the advisory
procedure laid down in Article 3 of Decision 1999/468/EC
shall apply, in compliance with Article 7 and Article 8 thereof.

Article 14

Entry into force

This Regulation shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Communities.

It shall apply from [indicate date].

In setting the amount of a fine, regard shall be had both

3.
to the gravity and to the duration of the infringement.

This Regulation shall be binding in its entirety and directly
applicable in all Member States.

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GUIDELINES ON THE MANAGEMENT AND ALLOCATION OF AVAILABLE TRANSFER CAPACITY OF
INTERCONNECTIONS BETWEEN NATIONAL SYSTEMS

ANNEX

General

1. Congestion management method(s) implemented by Member States should deal with short-run congestion in an
economically efficient manner whilst simultaneously providing signals or incentives for efficient network and
generation investment in the right locations.

2. In order to minimise the negative impact of congestion on trade, the current network should be used at the

maximum capacity that complies with the safety standards of secure network operation.

3. The TSOs should provide non-discriminatory and transparent standards, which describe which congestion
management methods they will apply under which circumstances. These standards, together with the security
standards, should be described in open and publicly available documents.

4. Different treatment of the different types of cross-border transactions, whether they are physical bilateral contracts
or bids into foreign organised markets, should be kept to a minimum when designing the rules of specific methods
for congestion management. The method for allocating scarce transmission capacity must be transparent. Any
differences in how transactions are treated must be shown not to distort or hinder the development of competition.

5. Price signals that result from congestion management systems should be directional.

6. Every effort should be made to net the capacity requirements of any power flows in opposite direction over the
congested tie line in order to use the congested tie line to its maximum capacity. In any adopted congestion
management scheme, transactions that relieve the congestion should never be denied.

7. Any unused capacity must become available to other agents (the use-it-or-lose-it principle). This may be imple-

mented by devising notification procedures.

8. Any rents resulting from the allocation of interconnection capacities may be used for redispatching or counter
trading in order to comply with the firmness of the capacity that was allocated to market parties. In principle, any
remaining rents should be spent on network investments for relieving the congestion or on reducing the total
network tariff. TSOs may manage these funds, but cannot retain them.

9. TSOs should offer transmission capacity to the market as firm’ as possible. A reasonable fraction of the capacity
may be offered to the market under condition of decreased firmness, but at all times the exact conditions for
transport over cross-border lines should be made known to market parties.

10. Considering the fact that the European continental network is a highly meshed network and that the use of
interconnection lines has an effect on the power flows on at least two sides of a national border, national regulators
shall ensure that no congestion management procedure with significant effects on power flows in other networks,
be devised unilaterally.

Position of long-term contracts

1. Priority access rights to an interconnection capacity can not be assigned to those contracts which violate Articles 81

and 82 of the EC Treaty.

2. Existing long-term contracts shall have no pre-emption rights when they come up for renewal.

Provision of information

1. TSOs should implement appropriate coordination and information exchange mechanisms to guarantee security of the

network.

2. TSOs should publish all relevant data concerning the cross-border total transfer capacities. In addition to the winter
and summer ATC values, estimates of transfer capacity for each day should be published by the TSOs at several time
intervals before the day of transport. At least accurate week-ahead estimates should be made available to the market
and the TSOs should also endeavour to provide month-ahead information. A description of the firmness of the data
should be included.

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3. The TSOs should publish a general scheme for calculation of the total transfer capacity and the transmission
reliability margin based upon the electrical and physical realities of
the network. Such a scheme should be
subject to approval by the regulators of the involved Member States concerned. The safety standards and the
operational and planning standards should form an integral part of the information that TSOs should publish in
open and public documents.

Preferred methods for congestion management

1. Network congestion problems should in principle be addressed with market-based solutions. More specifically,
congestion management solutions are preferred which give appropriate price signals to the market parties and
the TSOs involved.

2. Network congestion problems should preferentially be solved with non-transaction based methods, i.e. methods that

do not involve a selection between the contracts of individual market parties.

3. The system of market splitting, as used in the Nordpool area, is the congestion management procedure that, in

principle, best meets this requirement.

4. In the short term, however, methods for congestion management in Continental Europe that may be used are implicit

and explicit auctions and cross-border coordinated redispatching.

5. Cross-border coordinated redispatching or counter trading may be used jointly by the concerned TSOs. The costs

that TSOs incur in counter-trading and redispatching must, however, be at an efficient level.

6. Transaction curtailment, following pre-established priority rules, should be left only for emergency situations where

the TSOs must act in an expeditious manner and redispatching is not possible.

7. The possible merits of a combination of market splitting for solving (cid:145)permanent(cid:146) congestion and counter trading for
solving temporary congestion should be immediately explored as a more permanent approach to congestion
management.

Guidelines for explicit auctions

1. The auction system must be designed in such a way that all available capacity is being offered to the market. This
may be done by organising a composite auction in which capacities are auctioned for differing duration and with
different characteristics (e.g. with respect to the expected reliability of the available capacity in question).

2. Total interconnection capacity should be offered in a series of auctions, which, for instance, might be held on a
yearly, monthly, weekly, daily and intra-daily basis, according to the needs of the markets involved. Each of these
auctions should allocate a prescribed fraction of the available transfer capacity plus any remaining capacity that was
not allocated in previous auctions.

3. The explicit auction procedures should be prepared in close collaboration between the national regulatory authority
and the TSO concerned and designed in such a way as to allow bidders to participate also in the daily sessions of any
organised market (i.e. power exchange) in the countries involved.

4. The power flows in both directions over congested tie lines should in principle be netted in order to maximise the
transport capacity in the direction of the congestion. However, the procedure for netting of flows should comply
with safe operation of the power system.

5. In order to offer as much capacity to the market as possible, the financial risks related to the netting of flows, should

be attributed to those parties causing those risks to materialise.

6. Any auction procedure adopted should be capable of sending directional price signals to market participants.
Transports in a direction opposite the dominant power flow relieve the congestion and should therefore result in
additional transport capacity over the congested tie line.

7.

In order not to risk creating or aggravating problems related to any dominant position of market player(s), capping
of the amount of capacity that can be bought/possessed/used by any single market player in an auction should be
seriously considered by the competent regulatory authorities in the design of an auction mechanisms.

8. To promote the creation of liquid electricity markets, capacity bought at an auction should be freely tradeable before

the moment of notification.