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Opinion of the ACER

On 16 September 2015 Board of Regulators of Agency for the Cooperation of Energy Regulators approved the opinion prepared by Agency on the request of the President of Energy Regulatory Office. The Opinion was adopted by the ACER Director on 23 September and submitted to parties concerned. The adoption of the opinion commences a process aiming at establishing coordinated allocation methods on all borders between countries of Central-Eastern Europe region (CEE).

Subject of the opinion is compliance of the methods of cross-border transmission capacity allocation, used currently by the transmission systems operators in the CEE region, with the provisions of the Guidelines annexed to Regulation No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 and with the provisions of Regulation No 714/2009 itself. The request, containing full justification, was submitted to the Director of Agency on 2 December 2014, pursuant to Article 7 paragraph 4 of Regulation No 713/2009 of the European Parliament and Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators.

The draft opinion prepared by Agency was supported by all but one National Regulatory Authorities. The efficient cooperation among V4 regulators during the entire process is worth underlining.

Reasons for submitting the request

The request was submitted due to the doubts that arose during the national proceeding on the approval of cross-border capacity allocation methods, whether Auction Rules currently used in the CEE region are compliant with applicable provisions of the EU law. In particular, the doubts concerned the lack of cross-border capacity allocation procedure for commercial transactions between Austria and Germany in the case when vast amount of that trade is carried out via neighbouring grids, including the grid of PSE S. A.

In the opinion of President of ERO the only legal way to assess the compliance of the above-mentioned rules was to apply Article 7 paragraph 4 of Regulation No 713/2009, that is to request Agency for the opinion whether the decisions of CEE regulatory authorities, approving the methods of cross-border transmission capacity allocation comply with the provisions of the Guidelines annexed to Regulation No 714/2009 and with the provisions of Regulation No 714/2009 itself.

Fact-based justification of the ERO’s request was given by reports and analyses conducted by the transmission system operators from CEE region (Czech, Hungarian, Polish, Slovakian), by ACER (market monitoring reports of 2012 and 2013) and by independent consultant THEMA on behalf of the European Commission. It was also based on the data and information provided by Polish TSO. Those elaborations demonstrate that the problem of unplanned (unscheduled) flows, including loop-flows, has been worsening over time. This situation results from the lack of coordination of commercial transactions between Austria and Germany, constituting one Bidding Zone, with other CEE borders .

In the view of the President of ERO cross-border capacity allocation procedure shall be applied on all borders between all Member States in CEE region as a proper measure to reflect existing congestions. Excluding Austrian-German border from the obligation of introducing allocation procedure significantly affects not only power  flows  and  security  conditions  in  the neighbouring countries, but also causes the problem of lack of capacity available for market participants on the German-Polish border. This is due to the fact that available capacity is used for accommodating flows resulting from Austrian-German commercial transactions.

Moreover, in case when congestions occur and affect physical flow conditions in any other country, allocation rules do not give efficient economic signals to market participants and TSOs and do not promote competition. In parallel, we observe growing costs of remedial actions (cross-border re-dispatching), covered by Polish grid users, resulting from commercial transaction between other Member States. This mean that network congestion problems are not addressed with non-discriminatory market-based solutions.

President of ERO is of the view that Agency’s opinion will change the market.

29.10.2015

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