Common Position (EC) No 11/2009 of 9 January 2009 adopted by the Council, acting in accordance with the procedure referred to in Article 251 of the Treaty establishing the European Community, with a view to the adoption of a Regulation of the European Parliament and of the Council on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 (Text with EEA relevance )
Date: 2009-01-09
Institutions: Council of the European Union
Subjects: electrical energy, energy supply, energy transport, single market, transport network

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COMMON POSITION (EC) No 11/2009

adopted by the Council on 9 January 2009

with a view to the adoption of Regulation (EC) No …/2009 of the European Parliament and of the
Council of … on conditions for access to the network for cross-border exchanges in electricity and
repealing Regulation (EC) No 1228/2003

(Text with EEA relevance)

(2009/C 75 E/02)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

(4)

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 95 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Economic and
Social Committee (1),

Having regard to the opinion of
Regions (2),

the Committee of

the

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

laid down in

Whereas:

(1)

(2)

(3)

in electricity, which has been
The internal market
progressively implemented since 1999, aims at delivering
real choice for all consumers in the Community, be they
citizens or businesses, new business opportunities and
more cross-border trade, so as to achieve efficiency gains,
competitive prices, higher standards of service, and to
contribute to security of supply and sustainability.

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 (4) and 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 (5)
have made significant contributions towards the creation
of such an internal market in electricity.

However, at present, there are obstacles to the sale of
electricity on equal
terms, without discrimination or
disadvantage in the Community. In particular, non-discri-
minatory network access and an equally effective level of
regulatory supervision do not yet exist in each Member
State.

(1) OJ C 211, 19.8.2008, p. 23.
(2) OJ C 172, 5.7.2008, p. 55.
(3) Opinion of

the European Parliament of 18 June 2008 (not yet
published in the Official
Journal), Council Common Position of
9 January 2009 and Position of the European Parliament of … (not yet
published in the Official Journal).

(4) OJ L 176, 15.7.2003, p. 37.
(5) OJ L 176, 15.7.2003, p. 1.

(5)

(6)

The Communication of the Commission of 10 January
2007 entitled ‘An Energy Policy for Europe’ highlighted
the importance of completing the internal market in elec-
tricity and creating a level playing field for all electricity
undertakings in the Community. The Communications of
the Commission of 10 January 2007 entitled ‘Prospects
for the internal gas and electricity market’ and ‘Inquiry
pursuant to Article 17 of Regulation (EC) No 1/2003
into the European gas and electricity sectors
(Final
Report)’ showed that the present rules and measures do
not provide the necessary framework to achieve the
objective of a well-functioning internal market.

Besides thoroughly implementing the existing regulatory
the regulatory framework for the internal
framework,
market
in Regulation (EC)
set out
No 1228/2003 should be adapted in line with those
communications.

in electricity

In particular,
increased cooperation and coordination
among transmission system operators is required to
create network codes for providing and managing effec-
tive access to the transmission networks across borders,
and to ensure coordinated and sufficiently forward-
looking planning and sound technical evolution of the
transmission system in the Community, with due regard
to the environment. Those network codes should be in
line with non-binding framework guidelines developed
by the Agency for the Cooperation of Energy Regulators
established by Regulation (EC) No …/… (6) of
the
European Parliament and of the Council (‘the Agency’).
The Agency should have a role in reviewing draft
network codes,
including their compliance with non-
binding framework guidelines, and it should be enabled
to recommend them for adoption by the Commission.
The Agency should assess proposed modifications to the
network codes and it should be enabled to recommend
them for adoption by the Commission. Transmission
system operators
in
accordance with those network codes.

should operate their networks

(7)

In order to ensure optimal management of the electricity
transmission network and to allow trading and supplying
electricity across borders in the Community, a European
Network of Transmission System Operators for Electricity
(‘the ENTSO for Electricity’), should be established. The
tasks of the ENTSO for Electricity should be carried out
in compliance with Community competition rules which
the ENTSO for
remain applicable to the decisions of

(6) OJ L …

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Electricity.
Its tasks should be well-defined and their
working method should be such as to ensure efficiency,
its representative nature and transparency. The network
codes prepared by the ENTSO for Electricity are not
intended to replace the necessary national network codes
for non-cross-border issues. Given that more effective
progress may be achieved through an approach at
regional level, transmission system operators should set
up regional structures within the overall cooperation
structure, whilst ensuring that results at regional level are
compatible with network codes and non-binding 10-year
network development plans at Community level. Coop-
eration within such regional structures presupposes effec-
tive unbundling of network activities from production
and supply activities. In the absence of such unbundling,
regional cooperation between transmission system opera-
tors gives rise to a risk of anti-competitive conduct.

in the work
All market participants have an interest
expected of
the ENTSO for Electricity. An effective
consultation process is therefore essential and existing
structures that are set up to facilitate and streamline the
consultation process, such as the Union for the Coordina-
tion of Transmission of Electricity, national regulators or
the Agency should play an important role.

(14)

(15)

(16)

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

those lines should be set at

is

important

It
to avoid distortion of competition
resulting from the differing safety, operational and plan-
ning 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 stan-
dards that affect the available transfer capacities.

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.

(17) Market monitoring undertaken over recent years by the
national regulatory authorities and by the Commission
has shown that current transparency requirements and
rules on access to infrastructure are not sufficient.

(8)

(9)

(10)

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.

(18)

Equal access to information on the physical status of the
system is necessary to enable all market participants to
assess the overall demand and supply situation and iden-
tify the reasons for movements in the wholesale price.
This includes more precise information on electricity
generation,
supply and demand including forecasts,
network and interconnection capacity, flows and mainte-
nance, balancing and reserve capacity.

(11)

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

(19)

(12)

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

To enhance trust in the market, its participants need to
be sure that those engaging in abusive behaviour can be
subject
to penalties. Competent authorities should be
enabled to investigate effectively allegations of market
abuse. Competent authorities therefore need access to
data that provides information on operational decisions
made by supply undertakings. In the electricity market,
many relevant decisions are made by the generators,
which should keep this information available to the
competent authorities for a fixed period of time. Small
generators with no real ability to distort
the market
should be exempt from that obligation.

(13) A proper system of long-term locational signals would
be necessary, based on the principle that the level of the
the balance
charges
network access
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

(20)

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 those rules.

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The management of congestion problems should provide
correct economic signals to transmission system opera-
tors and market participants and should be based on
market mechanisms.

(28)

(21)

(22)

(23)

rules

Investments
in major new infrastructure should be
promoted strongly while ensuring the proper functioning
of the internal market in electricity. In order to enhance
the positive effect of exempted direct current interconnec-
tors on competition and security of supply, market
interest during the project planning phase should be
should be
tested and congestion management
adopted. Where direct current interconnectors are located
in the territory of more than one Member State, the
Agency should handle as a last resort the exemption
request in order to take better account of its cross-border
implications and to facilitate its administrative handling.
Moreover,
of
constructing those exempt major infrastructure projects,
undertakings with supply and production interests
should be able to benefit from a temporary derogation
the projects
from the
concerned.

full unbundling

exceptional

profile

given

rules

risk

the

for

To ensure the smooth functioning of the internal market
in electricity, provision should be made for procedures
which allow the adoption of decisions and guidelines
with regard, inter alia, to tarification and capacity alloca-
tion by the Commission whilst ensuring the involvement
of Member States' regulatory authorities in that process,
where appropriate through their European association.
Regulatory authorities,
relevant
authorities in the Member States, have an important role
to play in contributing to the proper functioning of the
internal market in electricity.

together with other

(24) National regulatory authorities should ensure compliance
with the rules contained in this Regulation and the guide-
lines adopted on the basis of this Regulation.

(25)

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

(26) Member States should lay down rules on penalties applic-
able to infringements of the provisions of this Regulation
and ensure that they are implemented. Those penalties
must be effective, proportionate and dissuasive.

(27)

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.

In particular, the Commission should be empowered to
establish or adopt the guidelines necessary for providing
the minimum degree of harmonisation required to
achieve the aims of this Regulation. Since those measures
are of general scope and are designed to amend non-
essential elements of this Regulation, by supplementing it
with new non-essential elements, they must be adopted
in accordance with the regulatory procedure with scru-
tiny provided for in Article 5a of Decision 1999/468/EC.

(29)

a harmonised framework for

Since the objective of this Regulation, namely the provi-
cross-border
sion of
exchanges of electricity, cannot be sufficiently achieved
by the Member States and can therefore be better
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 that objective.

(30) Given the scope of the amendments that are being made
herein to Regulation (EC) No 1228/2003, it is desirable,
for reasons of clarity and rationalisation, that the provi-
sions in question should be recast by bringing them all
together in a single text in a new Regulation,

HAVE ADOPTED THIS REGULATION:

Article 1

Subject-matter and scope

This Regulation aims at:

(a) setting fair rules for cross-border exchanges in electricity,
thus enhancing competition within the internal market in
electricity, taking into account the particular characteristics
of national and regional markets. This will involve the estab-
lishment of a compensation mechanism for cross-border
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;

(b) facilitating the emergence of a well-functioning and trans-
parent wholesale market with a high level of security of
supply in electricity. It provides mechanisms to harmonise
the rules for cross-border exchanges in electricity.

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Article 2

Definitions

For

this Regulation,

the purpose of

1.
the definitions
contained in Article 2 of Directive 2009/…/EC of the European
Parliament and of the Council of … concerning common rules
for the internal market in electricity (1) apply, with the exception
of the definition of ‘interconnector’ which shall be replaced by
the following:

‘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.

2.

The following definitions shall apply:

(a) ‘regulatory authorities’ means

the regulatory authorities

referred to in Article 34(1) of Directive 2009/…/EC;

(b) ‘cross-border flow’ means a physical flow of electricity on a
transmission network of a Member State that results from
the impact of the activity of producers and/or consumers
outside that Member State on its transmission network. If
transmission networks of two or more Member States form
part, in whole or in part, of a single control block, for the
purpose of the inter-transmission system operator compen-
sation mechanism referred to in Article 13 only, the control
block as a whole shall be considered as forming part of the
transmission network of one of
the Member States
in order to avoid flows within control blocks
concerned,
being considered as cross-border flows and giving rise to
compensation payments under Article 13. 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;

(c) ‘congestion’ means a situation in which an interconnection
linking national transmission networks cannot accommo-
date all physical flows resulting from international trade
requested by market participants, because of a lack of capa-
city of the interconnectors and/or the national transmission
systems concerned;

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

to the effect

(e) ‘declared transit’ means a circumstance where a declared
export of electricity occurs and where the nominated path
for the transaction involves a country in which neither the
dispatch nor the simultaneous corresponding take-up of the
electricity will take place;

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

(g) ‘new interconnector’ means

an

interconnector

not

completed by … (*).

(1) OJ L …
(*) Date of entry into force of repealed Regulation (EC) No 1228/2003.

Article 3

Certification of transmission system operators

1.
The Commission shall examine any notification of a deci-
sion on the certification of a transmission system operator as
laid down in Article 10(6) of Directive 2009/…/EC as soon as it
is received. Within two months of the day of receipt of such
notification, the Commission shall deliver its opinion to the
relevant national regulatory authority as to its compatibility
with Article 10(2) or Article 11, and Article 9 of Directive
2009/…/EC.

When preparing the opinion referred to in the first sub-
paragraph, the Commission may request the Agency to provide
its opinion on the national regulatory authority's decision. In
such a case, the two-month period referred to in the first sub-
paragraph shall be extended by two further months.

In the absence of an opinion by the Commission within the
period referred to in the first and second subparagraphs, the
Commission shall be deemed not to raise objections to the regu-
latory authority's decision.

the Commission,

Upon receiving an opinion of

2.
the
national regulatory authority shall, within two months, adopt its
final decision regarding the certification of
the transmission
system operator, taking the utmost account of that opinion. The
regulatory authority's decision and the Commission's opinion
shall be published together.

the Commission may request

At any time during the procedure, regulatory authorities
3.
and/or
from a transmission
system operator and/or an undertaking performing any of the
functions of generation or supply any information relevant to
the fulfilment of their tasks under this Article.

Regulatory authorities and the Commission shall preserve

4.
the confidentiality of commercially sensitive information.

5.
The Commission may adopt guidelines setting out the
details of the procedure to be followed for the application of
paragraphs 1 and 2 of this Article. Those measures, designed to
this Regulation by supple-
amend non-essential elements of
menting it, shall be adopted in accordance with the regulatory
procedure with scrutiny referred to in Article 23(2).

of

6. Where the Commission has received notification of the
certification
under
Article 9(10) of Directive 2009/…/EC, the Commission shall
take a decision relating to certification. The regulatory authority
shall comply with the Commission decision.

system operator

transmission

a

Article 4

European network of transmission system operators for
electricity

All transmission system operators shall cooperate at Community
level through the ENTSO for Electricity, in order to promote the
completion of the internal market in electricity and to ensure
the optimal management and sound technical evolution of the
European electricity transmission network.

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Article 5

Establishment of the ENTSO for Electricity

1.
By … (*) the transmission system operators for electricity
shall submit to the Commission and to the Agency the draft
statutes, a list of members and draft
rules of procedure,
including the rules of procedures on the consultation of other
stakeholders, of the ENTSO for Electricity to be established.

2. Within two months of the day of receipt, the Agency, after
consulting the organisations representing all stakeholders, shall
provide an opinion to the Commission on the draft statutes, list
of members and draft rules of procedure.

3.
The Commission shall deliver an opinion on the draft
statutes, list of members and draft rules of procedures within
three months from the day of receipt of the opinion of the
Agency.

4. Within three months from the day of receipt of
the
Commission's opinion, the transmission system operators shall
establish the ENTSO for Electricity, adopt its statutes and rules
of procedure and publish them.

Article 6

Establishment of network codes

The Commission shall, after consulting the Agency, the
1.
ENTSO for Electricity and the other relevant stakeholders, estab-
lish an annual priority list
in
Article 8(6) to be included in the development of network
codes.

identifying the areas set out

2.
The Commission may request the Agency to submit to it
within a reasonable period of time not exceeding six months a
draft non-binding framework guideline setting out clear and
in accordance with Article 8(7), for the
objective principles,
development of network codes relating to the areas identified in
the priority list. Each draft non-binding framework guideline
shall contribute to non-discrimination, effective competition
and the efficient functioning of the market. Upon a reasoned
request from the Agency, the Commission may extend that
period.

The Agency shall consult the ENTSO for Electricity and
3.
in regard to the draft
the other
non-binding framework guideline, during a period of no less
than two months, in an open and transparent manner.

stakeholders

relevant

4.
If the Commission considers that the draft non-binding
framework guideline does not contribute to non-discrimination,
effective competition and the efficient
the
market,
the Agency to review the draft
non-binding framework guideline within a reasonable period of
time and re-submit it to the Commission.

it may request

functioning of

If

the Agency fails

5.
re-submit a draft
non-binding framework guideline within the period set by the
Commission under paragraphs 2 or 4, the Commission shall
elaborate the non-binding framework guideline in question.

to submit or

(*) Date of application of this Regulation, i. e. 18 months after the entry

into force of this Regulation.

6.
The Commission shall request the ENTSO for Electricity to
submit a network code which is in line with the relevant non-
binding framework guideline, to the Agency within a reasonable
period of time not exceeding twelve months.

7. Within a period of three months after the day of receipt
of a network code, during which the Agency may formally
consult the relevant stakeholders, the Agency shall provide a
reasoned opinion to the ENTSO for Electricity on the network
code.

The ENTSO for Electricity may amend the network code
8.
in the light of the opinion of the Agency and re-submit it to the
Agency.

9.
Once the Agency is satisfied that the network code is in
line with the relevant non-binding framework guidelines, the
Agency shall submit the network code to the Commission and
may recommend that it be adopted.

10. Where the ENTSO for Electricity has failed to develop a
network code within the period of time set by the Commission
under paragraph 6, the Commission may request the Agency to
prepare a draft network code on the basis of the relevant non-
binding framework guideline. The Agency may launch a further
consultation in the course of preparing a draft network code
under this paragraph. The Agency shall submit a draft network
code prepared under this paragraph to the Commission and
may recommend that it be adopted.

11.
The Commission may adopt, on its own initiative where
the ENTSO for Electricity has failed to develop a network code,
or the Agency has failed to develop a draft network code as
referred to in paragraph 10 of this Article, or upon recommen-
dation of the Agency under paragraph 9 of this Article, one or
more network codes in the areas listed in Article 8(6).

Where the Commission proposes to adopt a network code on
its own initiative, the Commission may consult the Agency, the
ENTSO for Electricity and all relevant stakeholders in regard to
the draft network code during a period of no less than two
months.

Those measures, designed to amend non-essential elements of
this Regulation by supplementing it, shall be adopted in accord-
ance with the regulatory procedure with scrutiny referred to in
Article 23(2).

12.
This Article shall be without prejudice to the Commis-
sion's right to adopt and amend guidelines as laid down in
Article 18.

Article 7

Modification of Network Codes

1.
Draft modifications to any network code adopted under
Article 6 may be proposed to the Agency by persons who are
likely to have an interest in that network code, including the
ENTSO for Electricity, transmission system operators, system
users and consumers. The Agency may also propose modifica-
tions on its own initiative.

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2.
The Agency shall establish, in its Rules of Procedure, effi-
cient processes for assessment of and thorough consultation on
draft modifications,
including with the ENTSO for Electricity
and system users. Following this process, the Agency may make
reasoned proposals
to the Commission,
for modifications
explaining how such proposals are consistent with the objectives
of the network codes set out in Article 6(2).

3.
The Commission may adopt, taking account of the Agen-
cy's proposals, modifications to any network code adopted
under Article 6. Those measures, designed to amend non-essen-
tial elements of this Regulation by supplementing it, shall be
adopted in accordance with the regulatory procedure with scru-
tiny referred to in Article 23(2).

Consideration of proposed modifications under the proce-
4.
dure set out in Article 23(2) shall be limited to consideration of
the aspects
related to the proposed modification. Those
proposed modifications are without prejudice to other modifica-
tions which the Commission may propose.

5.
The annual work programme referred to in point (c) of
paragraph 3 shall contain a list and description of the network
codes to be prepared, a plan on coordination of operation of
the network, and research and development activities, to be
realised in that year, and an indicative calendar.

The network codes referred to in paragraphs 1 and 2 shall
if appropriate,

6.
cover the following areas, taking into account,
regional specificities:

(a) network security and reliability rules including rules for
capacity for operational

transmission reserve

technical
network security;

(b) network connection rules;

(c) third-party access rules;

(d) data exchange and settlement rules;

(e) interoperability rules;

(f) operational procedures in an emergency;

Article 8

(g) capacity allocation and congestion management rules;

Tasks of the ENTSO for Electricity

(h) rules for trading related to technical and operational provi-

sion of network access services and system balancing;

The ENTSO for Electricity shall elaborate network codes in
1.
the areas referred to in paragraph 6 of this Article upon a
request addressed to it by the Commission in accordance with
Article 6(6).

2.
ENTSO for Electricity may elaborate network codes in the
areas set out in paragraph 6 where these codes do not relate to
areas covered by a request addressed to it by the Commission.
Those network codes shall be submitted to the Agency for an
opinion.

(i) transparency rules;

(j) balancing rules including network-related reserve power

rules;

(k) rules regarding harmonised transmission tariff structures
including locational signals and inter-transmission system
operator compensation rules; and

(l) energy efficiency regarding electricity networks.

3.

The ENTSO for Electricity shall adopt:

(a) common network operation tools,

including a common

incidents classification scale, and research plans;

(b) a non-binding Community-wide 10-year network develop-
including a

ment plan,
European generation adequacy outlook, every two years;

(‘network development plan’),

(c) an annual work programme;

(d) an annual report;

(e) annual summer and winter generation adequacy outlooks.

4.
The European generation adequacy outlook referred to in
point (b) of paragraph 3 shall cover the overall adequacy of the
electricity system to supply current and projected demands for
electricity for the next five-year period as well as for the period
between five and 15 years from the date of that outlook. The
European generation adequacy outlook shall build on national
generation adequacy outlooks prepared by each individual trans-
mission system operator.

codes

The network

7.
for
cross-border network issues and shall be without prejudice to
the Member States' right to establish national codes for non-
cross-border issues.

developed only

shall be

The ENTSO for Electricity shall monitor and analyse the
8.
the network codes and the guidelines
implementation of
adopted by the Commission in accordance with Article 6(11),
and their effect on the harmonisation of applicable rules aimed
at facilitating market integration. The ENTSO for Electricity shall
report its findings to the Agency and include the results of the
analysis in the annual report referred to in point (d) of para-
graph 3 of this Article.

9.
The ENTSO for Electricity shall make available all informa-
tion required by the Agency to fulfil its tasks under Article 9(1).

10.
The ENTSO for Electricity shall adopt and publish a
network development plan every two years. The network devel-
the integrated
opment plan shall
network,
generation
scenario
adequacy outlook and an assessment of the resilience of the
system.

include the modelling of
development,

European

a

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The network development plan shall, in particular:

(a) build on national

investment plans, regional

investment
plans as referred to in Article 12(1), and, if appropriate, on
the guidelines
in
accordance with Decision No 1364/2006/EC (1);

trans-European energy networks

for

(b) regarding cross-border interconnections, also build on the
reasonable needs of different system users and integrate
long-term commitments
referred to in
Article 8 and Articles 13 and 22 of Directive 2009/…/EC;

from investors

(c) identify

investment

gaps,

notably with

respect

to

cross-border capacities.

11.
Upon request of the Commission, the ENTSO for Electri-
city shall give its views to the Commission on the adoption of
the guidelines as laid down in Article 18.

Article 9

Monitoring by the Agency

The Agency shall monitor the execution of

1.
the tasks
referred to in Article 8(1), (2) and (3) of the ENTSO for Electri-
city and report to the Commission.

The Agency shall monitor the implementation by the ENTSO
for Electricity of network codes elaborated under Article 8(2)
and network codes which have been developed in accordance
with Article 6(1) to (10) but which have not been adopted by
the Commission under Article 6(11). The Agency shall provide
a duly reasoned opinion to the Commission where the ENTSO
for Electricity has failed to implement any such network codes.

The Agency shall monitor and analyse the implementation of
the network codes and the guidelines adopted by the Commis-
sion as laid down in Article 6(11), and their effect on the
harmonisation of applicable rules aimed at facilitating market
integration as well as on non-discrimination, effective competi-
tion and the efficient functioning of the market, and report to
the Commission.

The ENTSO for Electricity shall submit the draft network
2.
development plan and the draft annual work programme,
including the information regarding the consultation process, to
the Agency for its opinion.

Within a period of two months from the day of receipt, the
Agency shall provide a duly reasoned opinion as well as recom-
mendations to the ENTSO for Electricity and to the Commission
where it considers that the draft annual work programme or the
draft network development plan submitted by the ENTSO for
Electricity do not contribute to non-discrimination, effective
competition, the efficient functioning of the market or a suffi-
cient level of cross-border interconnection open to third-party
access.

(1) Decision No 1364/2006/EC of the European Parliament and of the
Council of 6 September 2006 laying down guidelines for trans-Euro-
pean energy networks (OJ L 262, 22.9.2006, p. 1).

Article 10

Consultations

1. While preparing the network codes, the draft network
development plan and the annual work programme referred to
(2) and (3), the ENTSO for Electricity shall
in Article 8(1),
conduct an extensive consultation process, at an early stage and
in an open and transparent manner,
involving all relevant
market participants, and, in particular, the organisations repre-
senting all stakeholders, in accordance with the rules of proce-
dure referred to in Article 5(1). That consultation shall also
involve national regulatory authorities and other national autho-
rities, supply and generation undertakings, customers, system
users, distribution system operators, including relevant industry
associations, technical bodies and stakeholder platforms. It shall
aim at identifying the views and proposals of all relevant parties
during the decision-making process.

All documents and minutes of meetings related to the

2.
consultations referred to in paragraph 1 shall be made public.

3.
Before adopting the annual work programme and the
network codes referred to in Article 8(1),
the
indicate how the observations
ENTSO for Electricity shall
received during the consultation have been taken into considera-
tion. It shall provide reasons where observations have not been
taken into account.

(2) and (3),

Article 11

Costs

The costs related to the activities of the ENTSO for Electricity
referred to in Articles 4 to 12 shall be borne by the transmis-
sion system operators and shall be taken into account in the
calculation of tariffs. Regulatory authorities shall approve those
costs only if they are reasonable and proportionate.

Article 12

Regional cooperation of transmission system operators

1.
Transmission system operators shall establish regional
cooperation within the ENTSO for Electricity to contribute to
the activities referred to in Article 8(1), (2) and (3). In particular,
they shall publish a regional investment plan every two years,
and may take investment decisions based on that regional
investment plan.

2.
Transmission system operators shall promote operational
arrangements in order to ensure the optimum management of
the network and shall promote the development of energy
exchanges, the allocation of cross-border capacity through non-
discriminatory market-based solutions, paying due attention to
the specific merits of implicit auctions for short-term alloca-
tions, and the integration of balancing and reserve power
mechanisms.

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3.
The geographical area covered by each regional coopera-
tion structure may be defined by the Commission, taking into
account existing regional cooperation structures. Each Member
State shall be allowed to promote cooperation in more than one
geographical area. The measure referred to in the first sentence,
designed to amend non-essential elements of this Regulation by
supplementing it, shall be adopted in accordance with the regu-
latory procedure with scrutiny referred to in Article 23(2).

For that purpose, the Commission may consult the ENTSO for
Electricity and the Agency.

Article 13

Inter-transmission

system

operator

compensation

mechanism

1.
Transmission system operators shall receive compensation
for costs incurred as a result of hosting cross-border flows of
electricity on their networks.

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.

3.
Compensation payments shall be made on a regular basis
with regard to a given period of time in the past. Ex-post adjust-
ments 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 18.

4.
Acting in accordance with the procedure referred to in
Article 23(2), the Commission shall decide on the amounts of
compensation payments payable.

The magnitude of cross-border

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

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

Article 14

Charges for access to networks

Charges applied by network-operators

1.
to
networks shall be transparent, take into account the need for

for access

network security and reflect actual costs incurred insofar as they
correspond to those of an efficient and structurally comparable
network operator and are applied in a non-discriminatory
manner. Those charges shall not be distance-related.

2.
Producers and consumers (‘load’) may be charged for
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 Community 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 charges for network access, the following
shall be taken into account:

(a) payments and receipts resulting from the inter-transmission

system operator compensation mechanism;

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

4.
Providing that appropriate and efficient locational signals
are in place, in accordance with paragraph 2, charges for access
to networks applied to producers and consumers shall be
applied regardless of the countries of destination and origin
respectively, of
the electricity, as 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 16.

There shall be no specific network charge on individual

5.
transactions for declared transits of electricity.

Article 15

Provision of information

Transmission system operators shall put in place coordina-
1.
tion and information exchange mechanisms to ensure the
security of the networks in the context of congestion manage-
ment.

2.
The safety, operational and planning standards used by
transmission system operators shall be made public. The infor-
mation published shall include a general scheme for the calcula-
tion 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.

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

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 reattributed
to the market, in an open, transparent and non-discriminatory
manner.

4.
Transmission system operators shall publish relevant data
on aggregated forecast and actual demand, on availability and
actual use of generation and load assets, on availability and use
of the networks and interconnections, and on balancing power
and reserve capacity. For availability and actual use of small
generation and load units, aggregated estimate data may be
used.

The market participants concerned shall provide the trans-

5.
mission system operators with the relevant data.

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 that line to its maximum capacity. Having full
regard to network security, transactions that relieve the conges-
tion shall never be denied.

Any revenues resulting from the allocation of interconnec-

6.
tion shall be used for the following purposes:

(a) guaranteeing the actual availability of the allocated capacity;

and/or

Generation undertakings which own or operate generation
6.
assets, where at least one generation asset has an installed capa-
city of at least 250 MW, shall keep at the disposal of
the
national regulatory authority, the national competition authority
and the Commission, for five years all hourly data per plant that
is necessary to verify all operational dispatching decisions and
the bidding behaviour at power exchanges,
interconnection
auctions, reserve markets and over-the-counter-markets. The
per-plant and per hour information to be stored shall include,
but shall not be limited to, data on available generation capacity
those
and
committed reserves on a per-plant
the times the
bidding is carried out and when production takes place.

allocation of

committed

including

level, at

reserves,

(b) maintaining

capacities
through network investments, in particular in new intercon-
nectors.

interconnection

increasing

or

If the revenues cannot be efficiently used for the purposes set
out in points (a) and/or (b) of the first subparagraph, they may
be used, subject to approval by the regulatory authorities of the
Member States concerned, up to a maximum amount to be
decided by those regulatory authorities, as income to be taken
into account by the regulatory authorities when approving the
methodology for calculating network tariffs and/or
fixing
network tariffs.

Article 16

The rest of revenues shall be placed on a separate internal
account line until such time as it can be spent on the purposes
set out in points (a) and/or (b) of the first subparagraph.

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
involved. Network congestion problems
system operators
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 re-dispatching or coun-
tertrading is not possible. Any such procedure shall be applied
in a non-discriminatory manner.

Except in cases of force-majeure, market participants who have
been allocated capacity shall be compensated for any curtail-
ment.

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

Article 17

New interconnectors

1.
New direct current interconnectors may, upon request, be
exempted, for a limited period of time, from the provisions of
this Regulation and Articles 9, 31 and
Article 16(6) of
Article 36(6) and (8) of Directive 2009/…/EC under
the
following conditions:

(a) the investment must enhance competition in electricity

supply;

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

(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 system operators in whose systems that intercon-
nector will be built;

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

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(e) since the partial market opening referred to in Article 19 of
Directive 96/92/EC of the European Parliament and of the
Council of 19 December 1996 concerning common rules
for the internal market
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 inter-
connector;

in electricity (1), no part of

(f) the exemption must not be to the detriment of competition
or the effective functioning of the internal market in electri-
city, or the efficient functioning of the regulated system to
which the interconnector is linked.

the investment

2.
Paragraph 1 shall also apply, in exceptional cases, to alter-
nating current interconnectors provided that the costs and risks
of
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 also apply to significant increases of

3.
capacity in existing interconnectors.

4.
The decision on the exemption under paragraphs 1, 2
and 3 shall be taken on a case-by-case basis by the regulatory
authorities of the Member States concerned. An exemption may
cover all or part of the capacity of the new interconnector, or of
the existing interconnector with significantly increased capacity.

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. When deciding those conditions,
account shall, in particular, be taken of additional capacity to be
built or the modification of existing capacity, the time-frame of
the project and national circumstances.

for management

Before granting an exemption, the regulatory authorities of the
Member States concerned shall decide upon the rules and
mechanisms
capacity.
Congestion management rules shall
include the obligation to
offer unused capacity on the market and users of the facility
shall be entitled to trade their contracted capacities on the
secondary market. In the assessment of the criteria referred to
in points (a), (b) and (f) of paragraph 1, the results of the capa-
city allocation procedure shall be taken into account.

and allocation of

The exemption decision, including any conditions referred to in
the second subparagraph of
this paragraph, shall be duly
reasoned and published.

The decisions referred to in paragraph 4 shall be taken by

5.
the Agency only

(a) where the regulatory authorities concerned have not been
able to reach an agreement within six months from the date
the exemption was requested before the last of these regula-
tory authorities; or

(b) upon a joint
concerned.

request

from the regulatory authorities

The Agency shall consult the regulatory authorities concerned.

6.
Notwithstanding paragraphs 4 and 5, Member States may
provide for the regulatory authority or the Agency, as the case
may be, to submit, for formal decision, to the relevant body in
the Member State, its opinion on the request for an exemption.
That opinion shall be published together with the decision.

7.
A copy of every request for exemption shall be transmitted
for information without delay by the regulatory authorities to
the Agency and to the Commission on receipt. The decision
shall be notified, without delay, by the regulatory authorities
concerned or by the Agency (‘notifying bodies’), to the Commis-
sion, together with all the relevant information with respect to
information may be submitted to the
the decision. That
Commission in aggregate form, enabling the Commission to
reach a well-founded decision.
In particular, the information
shall contain:

(a) the detailed reasons on the basis of which the exemption
information justifying

including the financial

was granted,
the need for the exemption;

(b) the analysis undertaken of the effect on competition and the
the internal market in electricity

effective functioning of
resulting from the grant of the exemption;

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

(d) the result of the consultation of the regulatory authorities

concerned.

8. Within a period of two months from the day following
receipt of notification under paragraph 7, the Commission may
take a decision requesting the notifying bodies to amend or
withdraw the decision to grant an exemption. That two-month
period may be extended by an additional period of two months
where further information is sought by the Commission. That
additional period shall begin on the day following receipt of the
complete information. The initial two-month period may also
be extended by consent of both the Commission and the noti-
fying bodies.

When the requested information is not provided within the
period set out in the request, the notification shall be deemed to
be withdrawn unless, before the expiry of that period, either the
period is extended by consent of both the Commission and the
notifying bodies, or the notifying bodies,
in a duly reasoned
statement, inform the Commission that they consider the notifi-
cation to be complete.

The notifying bodies shall comply with a Commission decision
to amend or withdraw the exemption decision within one
month and shall inform the Commission accordingly.

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

The Commission shall preserve the confidentiality of commer-
cially sensitive information.

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The Commission's approval of an exemption decision shall
expire two years after the date of its adoption in the event that
construction of the interconnector has not yet started by that
date, and five years after the date of its adoption if the intercon-
nector has not become operational by that date.

appropriate and efficient locational signals, in accordance with
the principles set out in Article 14.

The guidelines shall make provision for appropriate and efficient
harmonised locational signals at Community level.

9.
The Commission may adopt guidelines for the application
of the conditions laid down in paragraph 1 of this Article and
set out the procedure to be followed for the application of para-
graphs 4, 7 and 8 of this Article. Those measures, designed to
amend non-essential elements of
this Regulation by supple-
menting it, shall be adopted in accordance with the regulatory
procedure with scrutiny referred to in Article 23(2).

Article 18

Guidelines

1. Where appropriate, guidelines relating to the inter-trans-
mission system operator compensation mechanism shall specify,
in accordance with the principles set out in Articles 13 and 14:

(a) details of the procedure for determining which transmission
system operators are liable to pay compensation for cross-
border flows including as regards the split between the
transmission systems from which
operators of national
cross-border flows originate and the systems where those
flows end, in accordance with Article 13(2);

(b) details of the payment procedure to be followed, including
the determination of the first period for which compensa-
tion
the
in
be
second subparagraph of Article 13(3);

accordance with

paid,

to

is

(c) details of methodologies for determining the cross-border
flows hosted for which compensation is to be paid under
Article 13, in terms of both quantity and type of flows, and
the designation of the magnitudes of such flows as origin-
ating and/or ending in transmission systems of individual
Member States, in accordance with Article 13(5);

(d) details of the methodology for determining the costs and
benefits incurred as a result of hosting cross-border flows,
in accordance with Article 13(6);

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.

3. Where appropriate, guidelines providing the minimum
degree of harmonisation required to achieve the aim of this
Regulation shall also specify:

(a) details relating to provision of information, in accordance

with the principles set out in Article 15;

(b) details of rules for the trading of electricity;

(c) details of investment incentive rules for interconnector capa-

city including locational signals;

(d) details of the areas listed in Article 8(6).

Guidelines on the management and allocation of available
interconnections between national

4.
transmission capacity of
systems are laid down in Annex I.

5.
The Commission may adopt guidelines on the issues listed
in paragraphs 1, 2 and 3 of this Article. It may amend the
guidelines referred to in paragraph 4 of this Article, in accord-
ance with the principles set out in Articles 15 and 16, in par-
ticular so as to include detailed guidelines on all capacity alloca-
tion methodologies applied in practice and to ensure that
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 15(2) shall be
established.

Those measures, designed to amend non-essential elements of
this Regulation by supplementing it, shall be adopted in accord-
ance with the regulatory procedure with scrutiny referred to in
Article 23(2).

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

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

(f) the participation of national systems which are intercon-
in accordance with

lines,

nected through direct current
Article 13.

2.
Guidelines may also determine appropriate rules 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
the
compensation
mechanism in national network charges and the provision of

system operator

inter-transmission

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

When adopting these guidelines for the first time, the Commis-
sion shall ensure that they cover in a single draft measure at
least the issues referred to in point (a) and (d) of paragraph 1
and paragraph 2.

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Article 19

Regulatory authorities

The regulatory authorities, when carrying out their responsibil-
ities, shall ensure compliance with this Regulation and the
guidelines adopted pursuant to Article 18. Where appropriate to
fulfil the aims of this Regulation they shall cooperate with each
other, with the Commission and the Agency in compliance with
Chapter IX of Directive 2009/…/EC.

Article 20

Provision of information and confidentiality

1. Member States and the regulatory authorities shall, on
request, provide to the Commission all information necessary
for the purposes of Article 13(4) and Article 18.

In particular, for the purposes of Article 13(4) and (6), regula-
tory authorities shall, on a regular basis, provide information on
the actual costs incurred by national transmission system opera-
tors, as well as data and all relevant information relating to the
physical flows in transmission system operators' networks and
the cost of the networks.

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

taking into account

2.
If the Member State or the regulatory authority concerned
does not provide that information within the given time-limit
pursuant to paragraph 1 of this Article, the Commission may
request
the purpose of
Article 13(4) and Article 18 directly from the undertakings
concerned.

information necessary

for

all

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
the penalties provided for in Article 22(2) for supplying incor-
incomplete or misleading information. The Commission
rect,
shall
the
fix a reasonable time limit
complexity of the information required and the urgency with
which the information is needed.

taking into account

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

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 deci-
sion require the information to be provided. The decision shall

specify what information is required and fix an appropriate
time-limit within which it is to be supplied. It shall indicate the
penalties provided for in Article 22(2). It shall also indicate the
right to have the decision reviewed by the Court of Justice of
the European Communities.

The Commission shall at the same time, send a copy of its deci-
sion to the regulatory authorities of the Member State within
the territory of which the person is resident or the seat of the
undertaking is situated.

The information referred to in paragraphs 1 and 2 shall be

6.
used only for the purposes of Article 13(4) and Article 18.

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

Article 21

Right of Member States to provide for more detailed
measures

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 18.

Article 22

Penalties

1. Without prejudice to paragraph 2, the Member States shall
lay down rules on penalties applicable to infringements of the
provisions of this Regulation and shall take all measures neces-
sary to ensure that
those provisions are implemented. The
penalties provided for must be effective, proportionate and
dissuasive. The Member States shall notify those rules corre-
sponding to the provisions laid down in Regulation (EC)
No 1228/2003, to the Commission by 1 July 2004 and shall
notify the Commission without delay of any subsequent amend-
ment affecting them. They shall notify those rules not corre-
sponding to the provisions laid down in Regulation (EC)
No 1228/2003 to the Commission by … (*) and shall notify
the Commission without delay of any subsequent amendment
affecting them.

The Commission may, by decision, impose on undertak-
2.
ings fines not exceeding 1 % of
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 20(3) or fail to
supply information within the time-limit fixed by a decision
adopted pursuant to the first subparagraph of Article 20(5).

the total

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.

3.
Penalties provided for pursuant to paragraph 1 and deci-
sions taken pursuant to paragraph 2 shall not be of a criminal
law nature.

(*) Date of application of this Regulation.

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Article 23

Committee procedure

The Commission shall be assisted by the committee set up

1.
by Article 46 of Directive 2009/…/EC.

2. Where reference is made to this paragraph, Article 5a(1)
to (4), and Article 7 of Decision 1999/468/EC shall apply,
having regard to the provisions of Article 8 thereof.

Article 24

Commission report

In its

this
The Commission shall monitor the implementation of
Regulation.
report under Article 47(6) of Directive
2009/…/EC, the Commission shall also report on the experi-
ence gained in the application of this Regulation. In particular
the report shall examine to what extent this Regulation has
been successful in ensuring non-discriminatory and cost-reflec-
tive network access conditions for cross border exchanges of
electricity in order to contribute to customer choice in a well

functioning internal market
in electricity 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 accompa-
nied by appropriate proposals and/or recommendations.

Article 25

Repeal

Regulation (EC) No 1228/2003 shall be repealed from … (*).
References made to the repealed Regulation shall be construed
as references to this Regulation and shall be read in accordance
with the correlation table in Annex II.

Article 26

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 Union.

It shall apply from … (*).

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

Done at, …

For the European Parliament

The President

…

For the Council

The President

…

(*) 18 months after the entry into force of this Regulation.

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

ANNEX I

1.

General Provisions

1.1. Transmission system operators (TSOs) shall endeavour to accept all commercial transactions, including those invol-

ving cross-border-trade.

1.2. When there is no congestion, there shall be no restriction of access to the interconnection. Where this is usually
the case, there need be no permanent general allocation procedure for access to a cross-border transmission service.

1.3. Where scheduled commercial transactions are not compatible with secure network operation, the TSOs shall alle-
viate congestion in compliance with the requirements of network operational security while endeavouring to ensure
that any associated costs remain at an economically efficient level. Curative re-dispatching or countertrading shall
be envisaged in case lower cost measures cannot be applied.

1.4.

If structural congestion appears, appropriate congestion management rules and arrangements defined and agreed
upon in advance shall be implemented immediately by the TSOs. The congestion management methods shall
ensure that the physical power flows associated with all allocated transmission capacity comply with network
security standards.

1.5. The methods adopted for congestion management shall give efficient economic signals to market participants and

TSOs, promote competition and be suitable for regional and Community-wide application.

1.6. No transaction-based distinction shall be applied in congestion management. A particular request for transmission

service shall be denied only when the following cumulative conditions are fulfilled:

(a) the incremental physical power flows resulting from the acceptance of this request imply that secure operation

of the power system may no longer be guaranteed, and

(b) the value in monetary amount attached to the request in the congestion management procedure is lower than

all other requests intended to be accepted for the same service and conditions.

1.7. When defining appropriate network areas in and between which congestion management is to apply, TSOs shall be
guided by the principles of cost-effectiveness and minimisation of negative impacts on the internal market in electri-
city. Specifically, TSOs shall not limit interconnection capacity in order to solve congestion inside their own control
area, save for the above-mentioned reasons and reasons of operational security (1). If such a situation occurs, this
shall be described and transparently presented by the TSOs to all the system users. Such a situation shall be toler-
ated only until a long-term solution is found. The methodology and projects for achieving the long-term solution
shall be described and transparently presented by the TSOs to all the system users.

1.8. When balancing the network inside the control area through operational measures in the network and through

re-dispatching, the TSO shall take into account the effect of those measures on neighbouring control areas.

1.9. By 1 January 2008, mechanisms for the intra-day congestion management of interconnector capacity shall be estab-
lished in a coordinated way and under secure operational conditions, in order to maximise opportunities for trade
and to provide for cross-border balancing.

1.10. The national regulatory authorities shall regularly evaluate the congestion management methods, paying particular
attention to compliance with the principles and rules established in this Regulation and these guidelines and with
the terms and conditions set by the regulatory authorities themselves under these principles and rules. Such evalua-
tion shall include consultation of all market participants and dedicated studies.

2.

Congestion management methods

2.1. Congestion management methods shall be market-based in order to facilitate efficient cross-border trade. For this
purpose, capacity shall be allocated only by means of explicit (capacity) or implicit (capacity and energy) auctions.
Both methods may coexist on the same interconnection. For intra-day trade continuous trading may be used.

(1) Operational security means ‘keeping the transmission system within agreed security limits’.

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2.2. Depending on competition conditions, the congestion management mechanisms may need to allow for both long

and short-term transmission capacity allocation.

2.3.

Each capacity allocation procedure shall allocate a prescribed fraction of the available interconnection capacity plus
any remaining capacity not previously allocated and any capacity released by capacity holders from previous
allocations.

2.4. TSOs shall optimise the degree to which capacity is firm, taking into account the obligations and rights of the
TSOs involved and the obligations and rights of market participants, in order to facilitate effective and efficient
competition. A reasonable fraction of capacity may be offered to the market at a reduced degree of firmness, but
the exact conditions for transport over cross-border lines shall, at all times, be made known to market participants.

2.5. The access rights for long and medium-term allocations shall be firm transmission capacity rights. They shall be

subject to the use-it-or-lose-it or use-it-or-sell-it principles at the time of nomination.

2.6. TSOs shall define an appropriate structure for the allocation of capacity between different timeframes. This may
include an option for reserving a minimum percentage of interconnection capacity for daily or intra-daily alloca-
tion. Such an allocation structure shall be subject to review by the respective regulatory authorities. In drawing up
their proposals, the TSOs shall take into account:

(a) the characteristics of the markets,

(b) the operational conditions, such as the implications of netting firmly declared schedules,

(c) the level of harmonisation of the percentages and timeframes adopted for the different capacity allocation

mechanisms in place.

2.7. Capacity allocation may not discriminate between market participants that wish to use their rights to make use of
bilateral supply contracts or to bid into power exchanges. The highest value bids, whether implicit or explicit in a
given timeframe, shall be successful.

2.8.

In regions where forward financial electricity markets are well developed and have shown their efficiency, all inter-
connection capacity may be allocated through implicit auctioning.

2.9. Other than in the case of new interconnectors which benefit from an exemption under Article 7 of this Regulation,

establishing reserve prices in capacity allocation methods shall not be allowed.

2.10. In principle, all potential market participants shall be permitted to participate in the allocation process without
restriction. To avoid creating or aggravating problems related to the potential use of dominant position of any
market player, the relevant regulatory and/or competition authorities, where appropriate, may impose restrictions in
general or on an individual company on account of market dominance.

2.11. Market participants shall firmly nominate their use of the capacity to the TSOs by a defined deadline for each time-
frame. That deadline shall be such that TSOs are able to reassign unused capacity for reallocation in the next rele-
vant timeframe — including intra-day sessions.

2.12. Capacity shall be freely tradable on a secondary basis, provided that the TSO is informed sufficiently in advance.
Where a TSO refuses any secondary trade (transaction), this must be clearly and transparently communicated and
explained to all the market participants by that TSO and notified to the regulatory authority.

2.13. The financial consequences of failure to honour obligations associated with the allocation of capacity shall be attrib-
uted to those who are responsible for such a failure. Where market participants fail to use the capacity that they
have committed to use, or, in the case of explicitly auctioned capacity, fail to trade on a secondary basis or give the
capacity back in due time, they shall
lose the rights to such capacity and pay a cost-reflective charge. Any
cost-reflective charges for the non-use of capacity shall be justified and proportionate. Likewise, if a TSO does not
fulfil its obligation, it shall be liable to compensate the market participant for the loss of capacity rights. No conse-
quential losses shall be taken into account for this purpose. The key concepts and methods for the determination of
liabilities that accrue upon failure to honour obligations shall be set out in advance in respect of the financial conse-
quences, and shall be subject to review by the relevant national regulatory authority or authorities.

3.

Coordination

3.1. Capacity allocation at an interconnection shall be coordinated and implemented using common allocation proce-
dures by the TSOs involved. In cases where commercial exchanges between two countries (TSOs) are expected to
affect physical flow conditions in any third-country (TSO) significantly, congestion management methods shall be
coordinated between all the TSOs so affected through a common congestion management procedure. National
regulatory authorities and TSOs shall ensure that no congestion management procedure with significant effects on
physical electric power flows in other networks is devised unilaterally.

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3.2. A common coordinated congestion management method and procedure for the allocation of capacity to the
market at least annually, monthly and day-ahead shall be applied by 1 January 2007 between countries in the
following regions:

(a) Northern Europe (i.e. Denmark, Sweden, Finland, Germany and Poland),

(b) North-West Europe (i.e. Benelux, Germany and France),

(c) Italy (i.e. Italy, France, Germany, Austria, Slovenia and Greece),

(d) Central Eastern Europe (i.e. Germany, Poland, Czech Republic, Slovakia, Hungary, Austria and Slovenia),

(e) South-West Europe (i.e. Spain, Portugal and France),

(f) UK, Ireland and France,

(g) Baltic states (i.e. Estonia, Latvia and Lithuania).

At an interconnection involving countries belonging to more than one region, the congestion management method
applied may differ in order to ensure the compatibility with the methods applied in the other regions to which
these countries belong. In that case, the relevant TSOs shall propose the method which shall be subject to review
by the relevant regulatory authorities.

3.3. The regions referred to in point 2.8 may allocate all interconnection capacity through day-ahead allocation.

3.4. Compatible congestion management procedures shall be defined in all these seven regions with a view to forming a
truly integrated internal market in electricity. Market participants shall not be confronted with incompatible regional
systems.

3.5. With a view to promoting fair and efficient competition and cross-border trade, coordination between TSOs within
the regions set out in point 3.2 shall include all the steps from capacity calculation and optimisation of allocation
to secure operation of the network, with clear assignments of responsibility. Such coordination shall include, in
particular:

(a) the use of a common transmission model dealing efficiently with interdependent physical

loop-flows and

having regard to discrepancies between physical and commercial flows,

(b) allocation and nomination of capacity to deal efficiently with interdependent physical loop-flows,

(c) identical obligations on capacity holders to provide information on their intended use of the capacity, i.e. nomi-

nation of capacity (for explicit auctions),

(d) identical timeframes and closing times,

(e) identical structure for the allocation of capacity among different timeframes (e.g. 1 day, 3 hours, 1 week, etc.)

and in terms of blocks of capacity sold (amount of power in MW, MWh, etc.),

(f) consistent contractual framework with market participants,

(g) verification of flows to comply with the network security requirements for operational planning and for real-

time operation,

(h) accounting and settlement of congestion management actions.

3.6. Coordination shall also include the exchange of information between TSOs. The nature, time and frequency of
information exchange shall be compatible with the activities set out in point 3.5 and the functioning of the electri-
city markets. That information exchange shall, in particular, enable the TSOs to make the best possible forecast of
the global network situation in order to assess the flows in their network and the available interconnection capaci-
ties. Any TSO collecting information on behalf of other TSOs shall give back to the participating TSO the results of
the collection of data.

4.

Timetable for market operations

4.1. The allocation of the available transmission capacity shall take place sufficiently in advance. Prior to each allocation,
the involved TSOs shall, jointly, publish the capacity to be allocated, taking into account where appropriate the
capacity released from any firm transmission rights and, where relevant, associated netted nominations, along with
any time periods during which the capacity will be reduced or not available (for the purpose of maintenance, for
example).

4.2. Having full regard to network security, the nomination of transmission rights shall take place sufficiently in
advance, before the day-ahead sessions of all the relevant organised markets and before the publication of the capa-
city to be allocated under the day-ahead or intra-day allocation mechanism. Nominations of transmission rights in
the opposite direction shall be netted in order to make efficient use of the interconnection.

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4.3.

Successive intra-day allocations of available transmission capacity for day D shall take place on days D-1 and D,
after the issuing of the indicated or actual day-ahead production schedules.

4.4. When preparing day-ahead network operation, the TSOs shall exchange information with neighbouring TSOs,
including their forecast network topology, the availability and forecasted production of generation units, and load
flows in order to optimise the use of the overall network through operational measures in compliance with the
rules for secure network operation.

5.

Transparency

5.1. TSOs shall publish all relevant data related to network availability, network access and network use, including a
report on where and why congestion exists, the methods applied for managing the congestion and the plans for its
future management.

5.2. TSOs shall publish a general description of the congestion management method applied under different circum-
stances for maximising the capacity available to the market, and a general scheme for the calculation of the inter-
connection capacity for the different timeframes, based upon the electrical and physical realities of the network.
Such a scheme shall be subject to review by the regulatory authorities of the Member States concerned.

5.3. The congestion management and capacity allocation procedures in use, together with the times and procedures for
applying for capacity, a description of the products offered and the obligations and rights of both the TSOs and the
including the liabilities that accrue upon failure to honour obligations, shall be
party obtaining the capacity,
described in detail and made available in a transparent manner to all potential network users by TSOs.

5.4. The operational and planning security standards shall form an integral part of the information that TSOs publish in
an open and public document. That document shall also be subject to review of the national regulatory authorities.

5.5. TSOs shall publish all relevant data concerning cross-border trade on the basis of the best possible forecast. In
order to fulfil that obligation the market participants concerned shall provide the TSOs with the relevant data. The
manner in which such information is published shall be subject to review by the regulatory authorities. TSOs shall
publish at least:

(a) annually: information on the long-term evolution of the transmission infrastructure and its impact on cross-

border transmission capacity;

(b) monthly: month and year-ahead forecasts of the transmission capacity available to the market, taking into
account all relevant information available to the TSO at the time of the forecast calculation (e.g. impact of
summer and winter seasons on the capacity of lines, maintenance of the network, availability of production
units, etc.);

(c) weekly: week-ahead forecasts of the transmission capacity available to the market, taking into account all rele-
vant information available to the TSOs at the time of calculation of the forecast, such as the weather forecast,
planned network maintenance work, availability of production units, etc.;

(d) daily: day-ahead and intra-day transmission capacity available to the market for each market time unit, taking
into account all netted day-ahead nominations, day-ahead production schedules, demand forecasts and planned
network maintenance work;

(e) total capacity already allocated, by market time unit, and all relevant conditions under which this capacity may
be used (e.g. auction clearing price, obligations on how to use the capacity, etc.), so as to identify any remaining
capacity;

(f) allocated capacity as soon as possible after each allocation, as well as an indication of prices paid;

(g) total capacity used, by market time unit, immediately after nomination;

(h) as closely as possible to real time: aggregated realised commercial and physical flows, by market time unit,
including a description of the effects of any corrective actions taken by the TSOs (such as curtailment) for
solving network or system problems;

(i) ex-ante information on planned outages and ex-post information for the previous day on planned and

unplanned outages of generation units larger than 100 MW.

5.6. All relevant information shall be available for the market in due time for the negotiation of all transactions (such as
the time of negotiation of annual supply contracts for industrial customers or the time when bids have to be sent
into organised markets).

5.7. The TSO shall publish the relevant information on forecast demand and on generation according to the timeframes
information necessary for the

referred to in points 5.5 and 5.6. The TSO shall also publish the relevant
cross-border balancing market.

5.8. When forecasts are published, the ex post realised values for the forecast information shall also be published in the

time period following that to which the forecast applies or at the latest on the following day (D+1).

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5.9. All information published by the TSOs shall be made freely available in an easily accessible form. All data shall also
be accessible through adequate and standardised means of information exchange, to be defined in close cooperation
with market participants. The data shall include information on past time periods with a minimum of two years, so
that new market entrants may also have access to such data.

5.10. TSOs shall exchange regularly a set of sufficiently accurate network and load flow data in order to enable load flow
calculations for each TSO in their relevant area. The same set of data shall be made available to the regulatory
authorities and to the Commission upon request. The regulatory authorities and the Commission shall ensure the
confidential treatment of this set of data, by themselves and by any consultant carrying out analytical work for
them on the basis of these data.

6.

Use of congestion income

6.1. Congestion management procedures associated with a pre-specified timeframe may generate revenue only in the
event of congestion which arises for that timeframe, except in the case of new interconnectors which benefit from
an exemption under Article 7 of this Regulation. The procedure for the distribution of these revenues shall be
subject to review by the regulatory authorities and shall neither distort the allocation process in favour of any party
requesting capacity or energy nor provide a disincentive to reduce congestion.

6.2. National regulatory authorities shall be transparent regarding the use of revenues resulting from the allocation of

interconnection capacity.

6.3. The congestion income shall be shared among the TSOs involved in accordance with criteria agreed between the

TSOs involved and reviewed by the respective regulatory authorities.

6.4. TSOs shall clearly establish beforehand the use they will make of any congestion income they may obtain and
report on the actual use of this income. Regulatory authorities shall verify that such use complies with this Regu-
lation and these guidelines and that the total amount of congestion income resulting from the allocation of inter-
connection capacity is devoted to one or more of the three purposes set out in Article 16(6) of this Regulation.

6.5. On an annual basis, and by 31 July each year, the regulatory authorities shall publish a report setting out the
amount of revenue collected for the 12-month period up to 30 June of the same year and the use made of the
revenues in question, together with verification that this use complies with this Regulation and these guidelines and
that the total amount of congestion income is devoted to one or more of the three prescribed purposes.

6.6. The use of congestion income for investment to maintain or increase interconnection capacity shall preferably be
assigned to specific predefined projects which contribute to relieving the existing associated congestion and which
may also be implemented within a reasonable time, particularly as regards the authorisation process.

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ANNEX II

CORRELATION TABLE

Regulation (EC) No 1228/2003

This Regulation

Article 1

Article 2

—

—

—

—

—

—

—

—

—

—

Article 3

Article 4

Article 5

Article 6

Article 7

Article 8

Article 9

Article 10

Article 11

Article 12

Article 13

Article 14

—

Article 15

Annex

Article 1

Article 2

Article 3

Article 4

Article 5

Article 6

Article 7

Article 8

Article 9

Article 10

Article 11

Article 12

Article 13

Article 14

Article 15

Article 16

Article 17

Article 18

Article 19

Article 20

Article 21

Article 22

Article 23

Article 24

Article 25

Article 26

Annex I

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STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

1. On 19 September 2007, the Commission presented a proposal for a Regulation of the European
Parliament and of the Council amending Regulation (EC) No 1228/2003 on conditions for access to
the network of cross-border exchanges in electricity, based on Article 95 of the Treaty, together in a
package with four other proposals concerning the internal energy market.

2. The Committee of the Regions and the European Economic and Social Committee delivered their

opinions on the complete package on 10 (1) and 22 April 2008 (2) respectively.

3. The European Parliament adopted its Opinion (3) at first reading on 18 June 2008, approving

32 amendments. The Commission did not present a modified proposal.

4. On 9 January 2009, the Council adopted its Common Position in accordance with Article 251 of the

Treaty, in the form of a recast Regulation.

II. OBJECTIVE OF THE PROPOSAL

5. The proposal

is part of the third internal energy market package, together with the Directive
concerning common rules for the internal market in electricity, the Regulation on conditions for
access to the natural gas transmission networks, the Directive concerning common rules for the
internal market in natural gas, and the Regulation establishing an Agency for the Cooperation of
Energy Regulators. It aims at contributing to achieving the objective of a well functioning internal
electricity market by introducing in particular:

— provisions aiming at an increased cooperation and coordination among transmission system
operators, inter alia through the establishment of a European Network of the Transmission Opera-
tors for Electricity (ENTSO for Electricity);

— improved transparency requirements.

III. ANALYSIS OF THE COMMON POSITION

6. General Remarks

6.1. The Council has considered it more effective, more transparent and coherent with Regulation (EC)
No 1228/2003 as well as more reader friendly to recast the provisions of the Regulation. However,
in doing this, the Council has as a general principle fully respected the amending proposal of the
Commission in the sense that it has not opened any other provision not being part of the Commis-
sion proposal, unless changes were necessary following from the changes introduced by the
Council to the proposal, changed references resulting from the renumbering of the Articles etc. To
the extent possible, the Council has followed the Commission's approach regarding an identical
treatment of the electricity and gas sectors.

The Commission has accepted all the changes introduced by the Council to its proposal.

6.2. Concerning the 32 amendments adopted by the European Parliament including one oral amendment, the

Council has followed the Commission in

— accepting the following seven amendments

— fully: 12;

— partly/in principle: 11, 15, 18, 24, 29, and 32;

and

— rejecting the following six amendments: 5, 13, 19, 26, 27 and 30, on grounds of substance,

consistency or form.

(1) OJ C 172, 5.7.2008, p. 55.
(2) OJ C 211, 19.8.2008, p. 23.
(3) Not yet published in the Official Journal.

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6.3. The Council has deviated from the Commission's position in

— accepting one amendment: 23 (partially)

and

— rejecting the following 18 amendments: 1, 2, 3, 4, 6, 7, 8, 9, 10, 14, 17, 20, 21, 22, 25, 28,

31, and the oral amendment.

7.

Specific Remarks

7.1. Regarding the EP amendments where the Council has deviated from the Commission position:

a) The Council has accepted amdt 23 partially because it considers that on certain conditions and
it should be possible to take congestion revenues into account when

with certain limits,
network tariffs are calculated.

b) The Council has rejected the 18 amendments listed above (point 6.3) on the following grounds:

i) The amendments are not necessary or do not have added value, mainly because the issues
are partly/sufficiently covered by other parts of the text, or the wording as proposed by the
Commission is sufficient: amdts 1, 2, 3, 4; amdts 7 and 8 are redundant; the issue of the
oral amdt is already covered by Art. 8(8 + 9).

ii) The amendment is introducing text which is not appropriate regarding the role of the regu-
latory authorities, i.a. because the tasks and powers of these authorities are set in the electri-
city Directive: amdt 9; amdt 10 (in addition, the Council has transferred the Article on
retail markets to the electricity Directive); amdts 20, 31.

iii) Amdt 6 because it is not for the Commission to draw up roadmaps regarding the transmis-

sion network.

iv) Amendments 14 and 21 introduce text which does not correspond to the role which the
Council is giving to the Agency; moreover, it is, for legal reasons, not appropriate that the
Agency adopts or approves network codes or takes decisions with a general scope.

v) Amdt 17 because the consultations (Art. 10) should be carried out by ENTSO; consultation

which the Agency has to do is covered by Art. 6.

vi) Amdt 22 is not appropriate because overregulation should be avoided.

vi) Amdt 25 because parallelism with the exemption procedure foreseen for gas (Art. 35 gas

Directive) should be kept.

vii) Amdt 28 goes beyond the scope of the Regulation and provides tasks for Member States

which should be the task of TSOs.

7.2 Concerning the Commission proposal, the Council has introduced certain other modifications (of

substance and/or of form); the main ones are set out below.

a) Certification of TSOs

The Council has considered it appropriate to transfer the part of the certification procedure
which sets out the role of the Commission in this procedure from the electricity Directive to a
new Article 3 of this Regulation.

b) Establishment and modification of network codes

The Council has considered it appropriate to set out more in detail the procedure for the estab-
lishment of network codes (Art. 6) and another — shorter — procedure for the modification of
network codes (Art. 7). These Articles have replaced Art. 2e of the Commission proposal. The
Council has given a clear role to the Agency which should develop non-binding framework
guidelines as a basis for the network codes to be established by ENTSO, review the draft
network codes and assess proposed modifications to the network codes.
If necessary, the
Commission may adopt those codes through the committee procedure in order to make them
binding (see also recital 6).

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c) Monitoring by the Agency

The Council has introduced two paragraphs setting out the monitoring role of the Agency with
respect to the implementation of the network codes by ENTSO (Art. 9(1)(subparas 2+3)).

d) Exemptions for new interconnectors

In regard to granting exemptions for new interconnectors between Member States (Art. 17), the
Council has considered it appropriate to involve the Agency only in those cases where the
national regulatory authorities concerned do not find an agreement or submit a joint request to
the Agency (para. 5). Moreover, Member States should have the possibility to provide, if they so
wish, that the formal decision on the exemption is taken by another relevant body of the
Member State, on the basis of the opinion of the regulator (para 6).

e) Retail markets

The Council has considered it appropriate to redraft the Article on retail markets, taking i.a. out
the cross-border reference, and transfer it from the Regulation (Art. 7a of the Commission
proposal) to the electricity Directive (new Article 40).

f) Other points

— The Council has considered it appropriate to use the term ‘network development plan’ instead
of ‘investment plan’ and to clarify that these plans are of a non-binding nature (Art. 8(3)(b)).

— In line with the recast format, the Council has introduced a new Article to repeal the current

legislative act (Art. 25).