Regulation (EC) No 1228/2003 of the European Parliament and of the Council of 26 June 2003 on conditions for access to the network for cross-border exchanges in electricity (Text with EEA relevance)
Date: 2003-07-15
Institutions: Council of the European Union, European Parliament
Subjects: cross-border transport, electrical energy, energy grid, market access, transport network

15.7.2003

EN

Official Journal of the European Union

L 176/1

I

(Acts whose publication is obligatory)

REGULATION (EC) No 1228/2003 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 26 June 2003

on conditions for access to the network for cross-border exchanges in electricity

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

(4)

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

Having regard to the proposal from the Commission (1),

Having regard to the Opinion of the European Economic and
Social Committee (2),

Having consulted the Committee of the Regions,

Acting in accordance with the procedure laid down in Article
251 of the Treaty (3),

Whereas:

(1)

(2)

(3)

Directive 96/92/EC of the European Parliament and of
the Council of 19 December 1996 concerning common
rules for the internal market in electricity (4) constituted
an important
the
step towards
internal market in electricity.

the completion of

At its meeting in Lisbon on 23 and 24 March 2000, the
European Council
rapid work to be
called for
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.

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

(1) OJ C 240 E, 28.8.2001, p. 72, and OJ C 227 E, 24.9.2002, p. 440.
(2) OJ C 36, 8.2.2002, p. 10.
(3) Opinion of the European Parliament of 13 March 2002 (OJ C 47 E,
27.2.2003, p. 379), Council Common position of 3 February 2003
(OJ C 50 E, 4.3.2003, p. 1) and Decision of
the European
Parliament of 4 June 2003 (not yet published in the Official
Journal).

(4) OJ L 27, 30.1.1997, p. 20.

(5)

(6)

(7)

(8)

supplementing

Fair, cost-reflective, transparent and directly applicable
rules, taking account of a comparison between efficient
network operators from structurally comparable areas
of Directive
and
96/92/EC,
introduced with regard to
cross-border tarification and the allocation of available
in order to ensure effective
interconnection capacities,
the purpose of
access
cross-border transactions.

to transmission systems

should be

provisions

the

for

implementation of

In its Conclusions, the Energy Council of 30 May 2000
invited the Commission, Member States and national
regulatory authorities and administrations to ensure
congestion management
timely
European
the
measures
rapid
Transmission
(ETSO),
the
introduction of a robust
longer
cost
term which provides
allocation signals to market participants.

liaison with
System Operators

tarification system for

appropriate

and,

the

in

in its Resolution of 6 July
The European Parliament,
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 trade in electricity and called on
the Commission to submit specific proposals geared to
overcoming all the existing barriers to intra-Community
trade.

It is important that third countries that form part of the
European electricity system comply with the rules
contained in this Regulation and the guidelines adopted
under this Regulation in order to increase the effective
functioning of the internal market.

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.

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(9)

In an open, competitive market, transmission system
operators should be compensated for costs incurred as a
result of hosting cross-border flows of electricity on
their networks by the operators of
the transmission
systems from which cross-border flows originate and
the systems where those flows end.

(10)

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

(11)

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

(17)

(18)

(19)

(12) A proper system of long term locational signals would
be necessary, based on the principle that the level of the
the balance
network access charges
the region
between generation and consumption of
concerned, on the basis of a differentiation of
the
network access charges on producers and/or consumers.

should reflect

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

economic

signals

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 amongst other things tarification and capacity
allocation by the Commission whilst ensuring the
involvement of Member States' regulatory authorities in
this process where appropriate through their European
association. Regulatory authorities, together with other
relevant authorities in the Member States, have an
important role to play in contributing to the proper
functioning of the internal electricity market.

States

and the

competent national
The Member
authorities
should be required to provide relevant
information to the Commission. Such information
should be treated confidentially by the Commission.
the Commission should have an
Where necessary,
information directly
opportunity to request
from undertakings
the
concerned, provided
competent national authorities are informed.

relevant

that

(13)

(14)

(15)

It would not be appropriate to apply distance-related
tariffs, or, provided appropriate locational signals are in
place, a specific tariff to be paid only by exporters or
importers in addition to the general charge for access to
the national network.

The precondition for
competition in the
effective
internal market is non-discriminatory and transparent
charges for network use including interconnecting lines
in the transmission system. The available capacities of
the maximum levels
these lines
consistent with the safety standards of secure network
operation.

should be set at

is

important

It
to avoid distortion of competition
resulting from different safety, operational and planning
standards used by transmission system operators in
Member States. Moreover, there should be transparency
for market participants concerning available transfer
capacities and the security, planning and operational
standards that affect the available transfer capacities.

(16)

There should be rules on the use of revenues flowing
from congestion-management procedures, unless
the
specific nature of the interconnector concerned justifies
an exemption from these rules.

(20) National

regulatory

ensure
compliance with the rules contained in this Regulation
and the guidelines adopted on the basis of
this
Regulation.

authorities

should

(21) Member States should lay down rules on penalties
applicable to infringements of
this
Regulation and ensure that they are implemented. Those
penalties must
and
effective,
dissuasive.

the provisions of

proportionate

be

(22)

Since the objective 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
achieved at
Community level, the Community may adopt measures
in accordance with the principle of subsidiarity as set
out in Article 5 of the Treaty. In accordance with the
principle of proportionality, as set out in that Article,
this Regulation does not go beyond what is necessary in
order to achieve this objective.

action, be better

the

(23)

The measures necessary for the implementation of this
Regulation should be adopted in accordance with
Council Decision 1999/468/EC of 28 June 1999 laying
down the procedures for the exercise of implementing
powers conferred on the Commission (1),

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

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HAS ADOPTED THIS REGULATION:

Article 1

Subject-matter and scope

This Regulation aims at setting fair rules for cross-border
exchanges in electricity, thus enhancing competition within the
internal electricity market, taking into account the specificities
of national and regional markets. This will
involve the
establishment of a compensation mechanism for cross border
flows of electricity and the setting of harmonised principles on
cross-border
allocation of
interconnections between national
available
transmission systems.

transmission charges

capacities of

and the

Article 2

Definitions

For

this Regulation,

the purpose of

the definitions
1.
contained in Article 2 of Directive 2003/54/EC of
the
European Parliament and of the Council of 26 June 2003
concerning common rules for the internal market in electricity
and repealing Directive 96/92/EC (1) shall apply with the
exception of the definition of ‘interconnector' which shall be
replaced by the following:

trade

requested by market participants,
international
because of a lack of capacity of the interconnectors and/or
the national transmission systems concerned;

the dispatch of
‘declared export' of electricity means
electricity in one Member State on the basis of an
underlying contractual arrangement to the effect that the
simultaneous corresponding take-up (‘declared import') of
electricity will take place in another Member State or a
third country;

‘declared transit' of electricity means a circumstance where
a ‘declared export' of electricity occurs and where the
nominated path for the transaction involves a country in
which
simultaneous
corresponding take-up of the electricity will take place;

dispatch nor

neither

the

the

the take-up of
‘declared import' of electricity means
electricity
third country
simultaneously with the dispatch of electricity (‘declared
export') in another Member State;

in a Member State or

a

(d)

(e)

(f)

(g)

‘new interconnector' means
interconnector
completed by the date of entry into force of
Regulation.

an

not
this

‘interconnector' means a transmission line which crosses or
spans a border between Member States and which connects
the national transmission systems of the Member States;.

Inter transmission system operator compensation
mechanism

Article 3

2.

The following definitions shall also apply:

(a)

‘regulatory authorities' means the regulatory authorities
referred to in Article 23(1) of Directive 2003/54/EC;

(b)

(c)

State

block,

outside

control

purpose

that Member

‘cross-border flow' means a physical flow of electricity on
a transmission network of a Member State that results
the activity of producers and/or
from the impact of
consumers
on its
of
transmission network. If transmission networks of two or
more Member States form part, entirely or partly, of a
single
the
the
for
inter-transmission system operator
(TSO) compensation
mechanism referred to in Article 3 only, the control block
as a whole shall be considered as forming part of the
transmission network of one of
the Member States
concerned, in order to avoid flows within control blocks
being considered as cross-border flows and giving rise to
compensation payments under Article 3. The regulatory
authorities of the Member States concerned may decide
which of the Member States concerned shall be the one of
which the control block as a whole shall be considered to
form part of;

of

‘congestion' means a situation in which an interconnection
cannot
transmission
linking
from
physical
accommodate

national
all

networks,

resulting

flows

(1) See p. 37 of this Official Journal.

1.
Transmission
compensation for costs
cross-border flows of electricity on their networks.

receive
incurred as a result of hosting

operators

system

shall

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

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

The first period of time for which compensation payments
shall be made shall be determined in the guidelines referred to
in Article 8.

4.
Acting in accordance with the procedure referred to in
Article 13(2), the Commission shall decide on the amounts of
compensation payments payable.

The magnitude of cross-border flows hosted and the
5.
flows designated as originating
magnitude of cross-border
and/or ending in national
shall be
transmission systems
determined on the basis of the physical flows of electricity
actually measured in a given period of time.

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and

in new infrastructure,

The costs incurred as a result of hosting cross-border
6.
flows shall be established on the basis of the forward looking
long-run average incremental costs, taking into account losses,
investment
an appropriate
the cost of existing infrastructure, as far as
proportion of
the transmission of cross-border
infrastructure is used for
flows, in particular taking into account the need to guarantee
security of supply. When establishing the costs incurred,
recognised standard-costing methodologies
shall be used.
Benefits
as a result of hosting
that a network incurs
cross-border flows shall be taken into account to reduce the
compensation received.

Article 4

Charges for access to networks

for access

Charges applied by network-operators

to
1.
networks shall be transparent, take into account the need for
network security and reflect actual costs incurred insofar as
they correspond to those of an efficient and structurally
in a non
comparable network operator
be
not
Those
discriminatory manner.
distance-related.

charges

applied

shall

and

Producers and consumers (‘load') may be charged for
2.
access to networks. The proportion of the total amount of the
network charges borne by producers shall, subject to the need
to provide appropriate and efficient locational signals, be lower
than the proportion borne by consumers. Where appropriate,
the level of the tariffs applied to producers and/or consumers
shall provide locational signals at European level, and take into
account the amount of network losses and congestion caused,
and investment costs for infrastructure. This shall not prevent
Member States from providing locational signals within their
territory or from applying mechanisms to ensure that network
access charges borne by consumers
(‘load') are uniform
throughout their territory.

3. When setting the
following shall be taken into account:

charges

for network access

the

— payments and receipts resulting from the inter-transmission

system operator compensation mechanism;

— actual payments made and received as well as payments
expected for future periods of time, estimated on the basis
of past periods.

respectively, of

access to networks applied to producers and consumers shall
the countries of destination and,
be applied regardless of
origin,
specified in the
underlying commercial arrangement. This shall be without
prejudice to charges on declared exports and declared imports
resulting from congestion management referred to in Article 6.

the electricity, as

There shall be no specific network charge on individual

5.
transactions for declared transits of electricity.

Article 5

Provision of information on interconnection capacities

Transmission system operators

1.
in place
coordination and information exchange mechanisms to ensure
the security of
the networks in the context of congestion
management.

shall put

2.
The safety, operational and planning standards used by
transmission system operators shall be made public. The
information published 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 regulatory authorities.

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

include,

Article 6

General principles of congestion management

1.
Network congestion problems shall be addressed with
non-discriminatory market based solutions which give efficient
economic signals to the market participants and transmission
system operators involved. Network congestion problems shall
preferentially be solved with non transaction based methods,
i.e. methods that do not
involve a selection between the
contracts of individual market participants.

2.
Transaction curtailment procedures shall only be used in
emergency situations where the transmission system operator
must act
in an expeditious manner and redispatching or
countertrading is not possible. Any such procedure shall be
applied in a non-discriminatory manner.

4.
are in place,

Providing that appropriate and efficient locational signals
in accordance with paragraph 2, charges for

in cases of

Except
‘force-majeure', market participants who
have been allocated capacity shall be compensated for any
curtailment.

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The maximum capacity of the interconnections and/or
3.
the transmission networks affecting cross-border flows shall be
made available to market participants, complying with safety
standards of secure network operation.

(e) since the partial market opening referred to in Article 19
of Directive 96/92/EC, no part of the capital or operating
costs of the interconnector has been recovered from any
component of charges made for the use of transmission or
distribution systems linked by the interconnector;

4. Market participants shall inform the transmission system
operators concerned a reasonable time ahead of the relevant
operational period whether
they intend to use allocated
capacity. Any allocated capacity that will not be used shall be
transparent and
reattributed to the market,
non-discriminatory manner.

in an open,

(f)

the exemption is not to the detriment of competition or
the effective functioning of the internal electricity market,
the regulated system to
or the efficient
which the interconnector is linked.

functioning of

5.
Transmission system operators shall, as far as technically
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. Having full
regard to network security,
relieve the
congestion shall never be denied.

transactions

that

Any

revenues

6.
of
interconnection shall be used for one or more of the following
purposes:

from the

allocation

resulting

(a) guaranteeing
capacity;

the

actual

availability of

the

allocated

(b) network

investments maintaining

or

increasing

interconnection capacities;

(c) as an income to be taken into account by regulatory
authorities when
for
approving
calculating network tariffs, and/or in assessing whether
tariffs should be modified.

the methodology

Article 7

New interconnectors

New direct current interconnectors may, upon request, be
1.
this
exempted from the provisions of Article 6(6) of
Regulation and Articles 20 and 23(2), (3) and (4) of Directive
2003/54/EC under the following conditions:

(a)

the investment must enhance competition in electricity
supply;

in exceptional cases,

Paragraph 1 shall apply also,

to
2.
alternating current interconnectors provided that the costs and
risks of the investment in question are particularly high when
compared with the costs and risks normally incurred when
connecting two neighbouring national transmission systems by
an alternating current interconnector.

Paragraph 1 shall apply also to significant increases of

3.
capacity in existing interconnectors.

4.

(a) The regulatory authority may, on a case by case basis,
decide on the exemption referred to in paragraphs 1
and 2. However, Member States may provide that the
regulatory authorities shall submit, for formal decision,
to the relevant body in the Member State its opinion
on the request for an exemption. This opinion shall be
published together with the decision.

(b)

(i) The exemption may cover all or part of
the new interconnector, or of

the
capacity of
the
existing interconnector with significantly increased
capacity.

(ii) In deciding to grant an exemption, consideration
shall be given, on a case by case basis, to the need
to impose conditions regarding the duration of the
exemption and non discriminatory access to the
interconnector.

(iii) When deciding on the conditions in (i) and (ii)
account
the
in particular, be
additional capacity to be built, the expected time
horizon of the project and national circumstances.

taken of

shall,

(b) the level of risk attached to the investment is such that the
investment would not take place unless an exemption is
granted;

(c) When granting an exemption the relevant authority
may approve or fix the rules and/or mechanisms on
the management and allocation of capacity.

(c)

the interconnector must be owned by a natural or legal
person which is separate at least in terms of its legal form
from the
that
interconnector will be built;

system operators

in whose

systems

(d) charges are levied on users of that interconnector;

(d) The exemption decision,

including any conditions
referred to in (b), shall be duly reasoned and published.

(e) Any

exemption

after
consultation with other Member States or regulatory
authorities concerned.

decision

taken

shall

be

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The exemption decision shall be notified, without delay,
5.
by the competent authority to the Commission, together with
all the information relevant to the decision. This information
may be submitted to the Commission in aggregate form,
enabling the Commission to reach a well-founded decision.

compensation for cross-border flows including as regards
the split between the operators of national transmission
systems from which cross-border flows originate and the
systems where those flows end, in accordance with Article
3(2);

In particular, the information shall contain:

— the detailed reasons on the basis of which the regulatory
authority, or Member State, granted the
exemption,
including the financial information justifying the need for
the exemption;

— the analysis undertaken of the effect on competition and
the effective functioning of the internal electricity market
resulting from the grant of the exemption;

— the reasons for the time period and the share of the total
capacity of the interconnector in question for which the
exemption is granted;

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

(c) details of methodologies for determining the cross-border
flows hosted for which compensation is to be paid under
Article 3, in terms of both quantity and type of flows, and
the designation of
such flows as
originating and/or ending in transmission systems of
individual Member States, in accordance with Article 3(5);

the magnitudes of

— the result of the consultation with the Member States or

regulatory authorities concerned;

(d) details of the methodology for determining the costs and
benefits incurred as a result of hosting cross-border flows,
in accordance with Article 3(6);

after

receiving

the
Within two months
Commission may request that the regulatory authority or the
Member State concerned amend or withdraw the decision to
grant an exemption. The two months period may be extended
by one additional month where additional
information is
sought by the Commission.

a notification,

(e) details of the treatment in the context of the inter-TSO
compensation mechanism of electricity flows originating
or ending in countries outside the European Economic
Area;

If the regulatory authority or Member State concerned does
not comply with the request within a period of four weeks, a
final decision shall be taken in accordance with the procedure
referred to in Article 13(3).

(f)

participation

the
are
national
interconnected through direct current lines, in accordance
with Article 3.

systems which

of

preserve
The Commission shall
commercially sensitive information.

the

confidentiality of

Article 8

Guidelines

the Commission shall, acting in
1. Where appropriate,
accordance with the procedure referred to in Article 13(2),
adopt and amend guidelines on the issues
listed under
paragraph 2 and 3 and relating to the inter-transmission
system operator compensation mechanism, in accordance with
the principles set out in Articles 3 and 4. When adopting these
guidelines for the first time the Commission shall ensure that
they cover in a single draft measure at least the issues referred
to in paragraph 2(a) and (d), and paragraph 3.

2.

The guidelines shall specify:

(a) details

of

transmission

the

procedure
system operators

for

determining which
pay

liable

to

are

The guidelines shall also determine appropriate rules
3.
leading to a progressive harmonisation of
the underlying
principles for the setting of charges applied to producers and
consumers (load) under national tariff systems, including the
reflection of
inter-TSO compensation mechanism in
national network charges and the provision of appropriate and
efficient locational signals,
in accordance with the principles
set out in Article 4.

the

The guidelines
efficient harmonised locational signals at European level.

shall make provision for appropriate and

Any harmonisation in this respect shall not prevent Member
States from applying mechanisms to ensure that network
access charges borne by consumers (load) are comparable
throughout their territory.

the Commission shall, acting in
4. Where appropriate,
accordance with the procedure referred to in Article 13(2),

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detailed

set out

guidelines

in the Annex,

amend the guidelines on the management and allocation of
available transfer capacity of interconnections between national
systems
in accordance with the
principles set out in Articles 5 and 6, in particular so as to
allocation
include
that
methodologies
congestion management mechanisms evolve in a manner
compatible with the objectives of the internal market. 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.

applied in practice

and to ensure

capacity

on

all

When adopting or amending guidelines, the Commission shall
of
ensure
harmonisation required to achieve the aims of this Regulation
and do not go beyond what is necessary for that purpose.

the minimum degree

provide

they

that

When adopting or amending guidelines, the Commission shall
indicate what actions
to the
conformity of rules in third countries, which form part of the
European electricity system, with the guidelines in question.

taken with respect

it has

Article 9

Regulatory authorities

regulatory

authorities, when

The
their
responsibilities, shall ensure compliance with this Regulation
to Article 8. Where
and the guidelines adopted pursuant
appropriate to fulfil the aims of this Regulation they shall
cooperate with each other and with the Commission.

carrying

out

When sending a request for information to an undertaking, the
Commission shall at the same time forward a copy of the
request to the regulatory authorities of the Member State in
whose territory the seat of the undertaking is situated.

3.
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 12(2) for supplying
The
incorrect,
Commission shall
taking into
account the complexity of the information required and the
urgency with which the information is needed.

or misleading
fix a reasonable time limit

information.

incomplete

supply

The owners of the undertakings or their representatives
4.
and,
in the case of legal persons, the persons authorised to
represent them by law or by their instrument of incorporation,
shall
duly
authorised to act may supply the information on behalf of
their clients,
remain fully
in which case the client shall
responsible if the information supplied is incomplete, incorrect
or misleading.

information requested.

Lawyers

the

5. Where an undertaking does not provide the information
requested within the time-limit fixed by the Commission or
supplies incomplete information,
the Commission may by
decision require the information to be provided. The decision
shall
required and fix an
appropriate time-limit within which it is to be supplied. It shall
indicate the penalties provided for in Article 12(2). It shall also
indicate the right to have the decision reviewed by the Court
of Justice of the European Communities.

information is

specify what

Article 10

Provision of information and confidentiality

The Commission shall at the same time send a copy of its
decision to the regulatory authorities of
the Member State
within the territory of which the residence of the person or
the seat of the undertaking is situated.

1. Member States and the regulatory authorities shall, on
request, provide to the Commission all information necessary
for the purposes of Articles 3(4) and 8.

Information collected pursuant to this Regulation shall be

6.
used only for the purposes of Articles 3(4) and 8.

for

shall provide on a

the purposes of Article 3(4) and 3(6),
In particular,
regulatory authorities
regular basis
information on costs actually incurred by national transmission
system operators, as well as data and all relevant information
relating to the physical flows in transmission system operators'
networks and the cost of the network.

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

The Commission shall fix a reasonable time limit within which
the information is to be provided, taking into account the
complexity of the information required and the urgency with
which the information is needed.

Article 11

Right of Member States to provide for more detailed
measures

If

the Member State or

2.
regulatory authority
concerned does not provide this information within the given
time-limit pursuant
the Commission may
information necessary for the purpose of Article
request all
3(4) and 8 directly from the undertakings concerned.

to paragraph 1,

the

This Regulation shall be 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 8.

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Article 12

Penalties

applicable

lay down the

rules on penalties

all measures necessary

1. Without prejudice to paragraph 2, the Member States
shall
to
infringements of the provisions of this Regulation and shall
take
are
implemented. The penalties provided for must be effective,
proportionate and dissuasive. The Member States shall notify
those provisions to the Commission by 1 July 2004 at the
latest and shall notify it without delay of any subsequent
amendment affecting them.

to ensure

they

that

by

The

decision

Commission may

2.
on
undertakings fines not exceeding 1 % of the total turnover in
the preceding business year where, intentionally or negligently,
they supply incorrect, incomplete or misleading information in
response to a request made pursuant to Article 10(3) or fail to
supply information within the time-limit fixed by a decision
adopted pursuant to the first subparagraph of Article 10(5).

impose

In setting the amount of a fine, regard shall be had to the
gravity of the failure to comply with the requirements of the
first subparagraph.

Penalties provided for pursuant

to paragraph 1 and
3.
decisions taken pursuant to paragraph 2 shall not be of a
criminal law nature.

The period laid down in Article 5(6) of Decision 1999/468/EC
shall be set at three months.

3. Where reference is made to this paragraph, Articles 3
and 7 of Decision 1999/468/EC shall apply, having regard to
the provisions of Article 8 thereof.

4.

The Committee shall adopt its own rules of procedures.

Article 14

Commission Report

the Regulation has been successful

The Commission shall monitor the implementation of
this
Regulation. It shall submit to the European Parliament and the
Council no more than three years after the entry into force of
this Regulation a report on the experience gained in its
In particular the report shall examine to what
application.
in ensuring
extent
non-discriminatory
access
conditions for cross border exchanges of electricity in order to
contribute to customer choice in a well functioning internal
market and to long-term security of supply, as well as to what
extent effective locational signals are in place. If necessary, the
report shall be accompanied by appropriate proposals and/or
recommendations.

cost-reflective

network

and

Article 13

Committee

Article 15

Entry into force

1.

The Commission shall be assisted by a Committee.

2. Where reference is made to this paragraph, Articles 5
and 7 of Decision 1999/468/EC shall apply, having regard to
the provisions of Article 8 thereof.

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

It shall apply from 1 July 2004.

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

Done at Brussels, 26 June 2003.

For the European Parliament

The President

P. COX

For the Council

The President

A. TSOCHATZOPOULOS

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Guidelines on the management and allocation of available transfer capacity of interconnections between
national systems

ANNEX

G e n e r a l

1. Congestion management method(s)

implemented by Member States shall deal with short-run congestion in a
market-based, economically efficient manner whilst simultaneously providing signals or incentives for efficient
network and generation investment in the right locations.

2. The TSOs, or, where appropriate, Member States, shall 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, shall be described in publicly available documents.

3. Different treatment of the different types of cross-border transactions, whether they are physical bilateral contracts
or bids into foreign organised markets, shall 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
the development of
competition.

to distort or hinder

4.

Price signals that result from congestion management systems shall be directional.

5. TSOs shall offer to the market transmission capacity that is as ‘firm' as possible. A reasonable fraction of the
capacity may be offered to the market under the condition of decreased firmness, but at all times the exact
conditions for transport over cross border lines shall be made known to market participants.

6. 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, is devised unilaterally.

P o s i t i o n o f l o n g - t e r m c o n t r a c t s

1.

Priority access rights to an interconnection capacity shall not be assigned to those contracts which breach 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.

P r o v i s i o n o f i n f o r m a t i o n

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

network.

2. TSOs shall 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 shall be published by the TSOs at several time
intervals before the day of transport. At least accurate week-ahead estimates shall 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 shall be included.

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3. The TSOs shall 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 shall be subject to
approval by the regulators of the Member States concerned. The safety standards and the operational and planning
standards shall form an integral part of the information that TSOs shall publish in publicly available documents.

P r i n c i p l e s g o v e r n i n g m e t h o d s f o r c o n g e s t i o n m a n a g e m e n t

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

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

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

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

3. The possible merits of a combination of market splitting, or other market based mechanisms,

for solving
‘permanent' congestion and counter-trading for solving temporary congestion shall be immediately explored as a
more enduring approach to congestion management.

G u i d e l i n e s f o r e x p l i c i t a u c t i o n s

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 durations and with
different characteristics (e.g. with respect to the expected reliability of the available capacity in question).

2. Total interconnection capacity shall be offered in a series of auctions, which, for instance, might be held on a
yearly, monthly, weekly, daily or intra-daily basis, according to the needs of the markets involved. Each of these
auctions shall 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 shall 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 shall in principle be netted in order to maximise the
transport capacity in the direction of the congestion. However, the procedure for netting of flows shall 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, shall
be attributed to those parties causing those risks to materialise.

6. Any auction procedure adopted shall be capable of sending directional price signals to market participants.
Transport in a direction against the dominant power flow relieves the congestion thus resulting 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 participant(s),
capping of the amount of capacity that can be bought/possessed/used by any single market participant in an
auction shall be seriously considered by the competent regulatory authorities in the design of any auction
mechanisms.

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

the TSO is notified that the capacity bought will be used.