Cross-border exchanges in electricity

SUMMARY OF:

Regulation (EC) No 714/2009 — conditions for access to the network for cross-border exchanges in electricity

WHAT IS THE AIM OF THE REGULATION?

It aims to lay down rules for cross-border exchanges in electricity with a view to improving competition and harmonisation in the EU’s single market for electricity.

KEY POINTS

Certification of transmission system operators (TSOs)

National regulatory authorities send the European Commission notification of decisions concerning the certification of a transmission system operators (TSO)*. The Commission has 2 months to deliver its opinion to the national regulatory authority. The authority then adopts the final decision concerning the certification of the TSO.

European Network of Transmission System Operators for Electricity (ENTSOE)

The ENTSOE is responsible for managing the electricity transmission system and for allowing the trading and supply of electricity across borders in the EU.

Tasks of the ENTSOE

The ENTSOE is responsible for drawing up and/or adopting:

network codes*, upon request from the Commission, and based on guidelines prepared by the Agency for the Cooperation of Energy Regulators (ACER) or the Commission;
common network operation tools;
a 10-year network development plan;
recommendations relating to the coordination of technical cooperation between EU TSOs;
an annual work programme;
an annual report;
annual summer and winter generation supply outlooks.

ACER reviews all network codes developed by ENTSOE. If it is satisfied that it meets the guidelines, ACER submits it to the Commission recommending its adoption.

Regional cooperation of transmission system operators

TSOs must establish regional cooperation within the ENTSOE and publish a regional investment plan every 2 years, on which investments may be based.

Inter-transmission system operator compensation mechanism and charges for access to the networks

TSOs receive compensation for costs incurred as a result of hosting cross-border flows of electricity on their networks. The compensation is paid by the operators of national transmission systems from which cross-border flows originate. The costs are established on the basis of forecasted costs. Charges for access to networks are also applied by network operators.

General principles of congestion management

Network congestion* problems are to be addressed with non-discriminatory solutions based on mechanisms which give economic signals to the market participants and TSOs. Once capacity is allocated, it can only be ‘curtailed’ by a TSOs in emergency situations once all other reasonable alternatives have been exhausted to deal with the issue. In the event of curtailment of allocated capacity, compensation must be paid to market participants except in cases of force majeure.

Rules for new interconnectors

New interconnectors* may request a temporary exemption from the general rules governing the use of congestion revenues, the unbundling* of distribution systems and TSOs and third-party access. Exemption would be on the condition that:

the investment increases competition in electricity supply;
the investment would not take place without the exemption;
the interconnection must be owned by a natural or legal person separate from the relevant TSOs;
charges are levied on users of the interconnection;
the exemption must not adversely affect competition or the effective functioning of the internal market, or the efficient functioning of the regulated system to which the interconnector is linked.

There is a general obligation to make available to market participants the maximum possible capacity of interconnectors for cross-border flows, while respecting safety standards related to the secure operation of the network.

National regulatory authorities send the Commission draft decisions concerning the exemption of a new interconnector from all or part of the following rules:

ownership unbundling,
tariff regulation,
third-party access,
use of congestion revenues.

The Commission has 2 months to request the national regulatory authority to amend or withdraw the exemption. The authority then adopts the final decision concerning the exemption.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 3 March 2011. It repeals Regulation (EC) No 1228/2003 with effect from 2 March 2011.

KEY TERMS

Transmission system operator (TSO): companies responsible for the networks used to transmit electricity.

Network codes:

These include rules and procedures relating, for example, to:
- network security and reliability;
- data exchanges;
- capacity allocation and congestion management;
- trading related to network access services and system balancing;
- transparency;
- harmonised transmission tariff structures;
- energy efficiency regarding electricity networks.
Network codes are adopted by comitology. They take the form of binding Commission regulations.

Congestion: bottlenecks, which can arise where an interconnection linking national transmission networks cannot accommodate all physical flows resulting from international trade requested by market participants. This can be due to a lack of capacity of the interconnectors and/or the national transmission systems concerned. Pricing mechanisms are used to relieve congestion.

Interconnector: a transmission line, which spans the border between 2 EU countries and connects their national transmission systems.

Unbundling: unbundling is the separation of ownership of the energy transmission and distribution networks. This ensures that they are independent in terms of organisation and decision-making.

MAIN DOCUMENT

Regulation (EC) 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 (OJ L 211, 14.8.2009, pp. 15-35)

Successive amendments to Regulation (EC) No 714/2009 have been incorporated in the original text. This consolidated version is of documentary value only.