Case T‑606/20

Austrian Power Grid AG

v

Agency for the Cooperation of Energy Regulators

Judgment of the General Court (Second Chamber, Extended Composition), 15 February 2023

(Energy – Internal market in electricity – Framework for the implementation of the European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation – Procedure for the adoption of terms, conditions and methodologies – Rejection of the joint proposal of the system operators – Competence of ACER – Error of law – Rights of the defence – Obligation to state reasons)

1. Action for annulment – Natural or legal persons – Conditions of admissibility – Decision of the Agency for the Cooperation of Energy Regulators (ACER) adopting a methodology for the implementation of a European platform for the exchange of balancing energy – Act establishing ACER providing for an internal appeal against the ACER decision – Action for annulment brought against the ACER decision after exhaustion of the internal appeal procedure – Inadmissibility

   (Art. 263, fifth para., TFEU; European Parliament and Council Regulation 2019/942, recital 34 and Arts 28(1) and 29)

   (see paragraphs 21-25)

2. Acts of the institutions – Choice of legal basis – Criteria – Application of the rules in force at the time of adoption of the act

   (European Parliament and Council Regulation 2019/942, Art. 6(10); Commission Regulation 2017/2195, Art. 5(7))

   (see paragraphs 36-38)

3. EU agencies – Agency for the Cooperation of Energy Regulators (ACER) – Powers – Scope – Adoption of a methodology for the implementation of a European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation – Adoption of the methodology at the joint request of the national regulatory authorities – Inclusion – Scope – Competence of ACER not limited solely to points of disagreement between those authorities

   (European Parliament and Council Regulations No 713/2009, Art. 8, and 2019/942, Art. 6(10); Commission Regulation 2017/2195, Arts 5(7) and 21)

   (see paragraphs 41-55, 60)

4. EU agencies – Agency for the Cooperation of Energy Regulators (ACER) – Powers – Scope – Adoption of a methodology for the implementation of a European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation – Consideration of amended versions of proposals submitted by transmission system operators during the consultation phase – Admissibility

   (Art. 4(3) TEU; European Parliament and Council Regulation 2019/942, Art. 6(11); Commission Regulation 2017/2195, Art. 5(7) and 21)

   (see paragraphs 67, 68)

5. Energy – Electricity balancing – Regulation 2017/2195 – European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation – Designation of the entities entrusted with the functions required for the operation of the platform – Designation of a consortium of transmission system operators – Admissibility – Conditions – Compliance with the additional requirements laid down by the regulation

   (Commission Regulation 2017/2195, Art. 21(1), (2) and (3)(c) and (e))

   (see paragraphs 78-81, 86, 91-94)

6. Energy – Electricity balancing – Regulation 2017/2195 – European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation – Functions required for the operation of the platform – Concept – Capacity management – Inclusion – Possibility for transmission system operators to entrust a separate entity with that function – Admissibility – Consequences

   (Commission Regulation 2017/2195, Arts 21(1), (2) and (3)(a), (c) and (e), and 37)

   (see paragraphs 102-116, 120-122, 124, 131-136)

7. EU agencies – Agency for the Cooperation of Energy Regulators (ACER) – Powers – Scope – Adoption of a methodology for the implementation of a European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation – Obligation imposed by ACER on transmission system operators to submit a proposal for modification of the methodology before its approval – Admissibility

   (European Parliament and Council Regulation 2019/942, Art. 6(10), second subpara., point (b); Commission Regulation 2017/2195, Art. 5(7) and 21(3)(e) and (4))

   (see paragraphs 148-152)

8. EU agencies – Agency for the Cooperation of Energy Regulators (ACER) – Appeal procedure – Appeal before the Board of Appeal of ACER – Requirement of impartiality – Scope – Challenge – Burden of proof

   (Art. 6(1) TEU; Charter of Fundamental Rights of the European Union, Art. 41(1); European Parliament and Council Regulation 2019/942, recital 34 and Arts 26(2) and 28(4))

   (see paragraphs 158-166)

9. EU agencies – Agency for the Cooperation of Energy Regulators (ACER) – Appeal procedure – Appeal before the Board of Appeal of ACER – Request for production of documents – Appraisal power of the Board of Appeal – Obligations of the applicant – Identification of the documents requested and provision of evidence as to their usefulness for the purposes of the proceedings

   (Charter of Fundamental Rights of the European Union, Arts 41(2)(b) and 42; European Parliament and Council Regulations No 1049/2001 and 2019/942, Arts 28 and 29)

   (see paragraphs 178-182)

10. EU agencies – Agency for the Cooperation of Energy Regulators (ACER) – Appeal procedure – Appeal before the Board of Appeal of ACER – Obligation to state reasons for decisions – Scope

    (Art. 296, second para., TFEU; Charter of Fundamental Rights of the European Union, Article 41(2)(c); European Parliament and Council Regulation No 713/2009, Art. 19)

    (see paragraphs 190-196)

11. EU agencies – Agency for the Cooperation of Energy Regulators (ACER) – Appeal procedure – Appeal before the Board of Appeal of ACER – Appeal against a decision of ACER adopting a methodology for the implementation of a European platform for the exchange of balancing energy – Scope of review – Assessment of complex technical and economic factual elements – Review of legality not limited to the assessment of manifest errors of assessment

    (European Parliament and Council Regulation No 713/2009, Arts 18 and 19)

    (see paragraphs 200-202)

Résumé

The General Court confirms the enhanced powers of the European Union Agency for the Cooperation of Energy Regulators (ACER) to take individual decisions on cross-border issues

Thus, ACER is entitled to modify the proposals of the transmission system operators in order to ensure their compliance with EU energy law, without being bound by any points of agreement between the competent national regulatory authorities

European Commission Regulation 2017/2195 on electricity balancing ( 1 ) provides for the implementation of several European platforms for the exchange of balancing energy. Those platforms include, first, the European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation (‘the aFRR platform’) and, secondly, the European platform for the exchange of balancing energy from frequency restoration reserves with manual activation (‘the mFRR platform’). ( 2 )

In accordance with the procedure set out in Regulation 2017/2195, ( 3 ) all transmission system operators (‘TSOs’) have submitted for approval by the national regulatory authorities (‘the NRAs’) ( 4 ) common methodology proposals for the implementation of the aFRR platform and the mFRR platform.

Following a joint request by the NRAs, the EU Agency for the Cooperation of Energy Regulators (ACER), under that regulation, ( 5 ) took a decision on those proposals, as amended following exchanges and consultations between ACER, the NRAs and the TSOs. Thus, ACER adopted two decisions, one on the aFRR methodology and the other on the mFRR methodology (‘the ACER decisions’), to which the methodologies in question, as amended and approved by ACER, were attached as an annex.

Austrian Power Grid, ČEPS, a.s., Polskie sieci elektroenergetyczne S.A., Red Eléctrica de España SA, RTE Réseau de transport d’électricité, Svenska kraftnät, TenneT TSO BV and TenneT TSO GmbH brought an action ( 6 ) before the Board of Appeal of ACER (‘the Board of Appeal’) against those decisions. Their appeals having been dismissed, they brought two actions before the General Court seeking annulment of the decisions of the Board of Appeal, in so far as they concern them, of certain provisions of the ACER decisions and of the methodologies attached to them.

Those actions were dismissed by the Court (Second Chamber, Extended Composition), which, on that occasion, ruled, first, on the division of competences between ACER and the NRAs in the context of the adoption of the aFRR and mFRR methodologies and, secondly, on the functions required for the operation of the aFRR and mFRR platforms under Regulation 2017/2195.

Findings of the Court

As a preliminary point, the Court declares the actions for annulment inadmissible in so far as they are directed against the ACER decisions and their annexes. In that regard, it notes that, in accordance with the fifth paragraph of Article 263 TFEU and the act establishing ACER, namely Regulation 2019/942, ( 7 ) the applicants, as non-privileged parties, ( 8 ) may only seek annulment before the Court of the decisions adopted by the Board of Appeal, but not of the ACER decisions and their annexes. Consequently, the Court is limited, in the present case, to reviewing the legality of the decisions of the Board of Appeal, in particular in so far as they confirm in their entirety the ACER decisions and the aFRR and mFRR methodologies attached thereto.

In accordance with the determination made above, the Court continues its analysis on the merits. In the first place, it rejects the applicants’ argument that the Board of Appeal erred in law by failing to find that ACER had exceeded the limits of its competence in adopting the decisions concerned.

On that point, the Court notes that, under Article 6(10) of Regulation 2019/942 and Article 5(7) of Regulation 2017/2195, as applicable at the time of the adoption of the decisions of the Board of Appeal, ACER is competent to decide or adopt individual decisions on regulatory issues or problems having an effect on cross-border trade or on the security of the cross-border network, such as the aFRR and mFRR methodologies, where, as in the present case, the NRAs make a joint request to that effect. In the Court’s view, it does not follow from those provisions that ACER’s competence is limited to points of disagreement between the authorities concerned.

That literal interpretation is supported by the context and the objectives pursued by the regulation of which those provisions form part. In that regard, the explanatory memorandum of the proposed Regulation 2019/942 and the previously applicable Regulation No 713/2009 ( 9 ) indicate a clear intention of the EU legislator to make decision-making on cross-border issues more efficient and expeditious by strengthening ACER’s individual decision-making powers in a way that is consistent with the maintenance of the central role of NRAs in the field of energy regulation, in accordance with the principles of subsidiarity and proportionality. It is also clear from the preamble of Regulation 2019/942 ( 10 ) that ACER was established to fill the regulatory vacuum at EU level and to contribute to the efficient functioning of the internal markets in electricity and natural gas.

Therefore, the purpose and context of the relevant provisions of Regulations 2019/942 and 2017/2195, as well as the specific circumstances of the present case, confirm that ACER is empowered to decide on the development of the aFRR and mFRR methodologies, in case of a joint request from the NRAs to do so. Similarly, as ACER has been granted its own decision-making powers to enable it to carry out its regulatory functions independently and effectively, it is entitled to modify the TSOs' proposals in order to ensure their compliance with EU energy law, without being bound by any points of agreement between the competent NRAs.

It follows that the Board of Appeal of ACER did not err in law in upholding ACER’s competence to rule on points in the aFRR and mFRR methodologies that were agreed between the NRAs.

In the second place, the Court rejects the applicants’ claims that the Board of Appeal erred in law by finding that the inclusion of the capacity management function among the functions required for the operation of the aFRR and mFRR platforms had not been imposed on the TSOs by ACER, but resulted directly from the application of Regulation 2017/2195.

The Court makes clear from the outset that that inclusion is decisive in assessing whether the proposals developed by the TSOs had to comply with the additional requirements set out in Regulation 2017/2195 ( 11 ) where, as in the present case, the TSOs envisage designating several entities to perform the different functions required. In that regard, it notes that, in accordance with that regulation, the proposed methodologies submitted by the TSOs must include the definition of the functions required for the operation of the aFRR and mFRR platforms. ( 12 ) While it follows from Regulation 2017/2195 that those platforms are to include at least the activation optimisation function and the TSO-TSO settlement function, ( 13 ) it is not excluded that another function, such as capacity management, is also considered to be required for the operation of those platforms, in particular if the addition of such a function appears to be necessary to ensure a high-level design of that platform in line with common governance principles and business processes.

An interpretation of the notion of function required for the operation of the aFRR and mFRR platforms, in the light of the context and objectives pursued by Regulation 2017/2195, suggests that it is a function which, both technically and legally, appears to be necessary for the efficient and safe establishment and operation of those platforms.

In the Court’s view, the capacity management function meets such a condition of necessity. From a legal point of view, Regulation 2017/2195 requires TSOs to update continuously available cross-zonal transmission capacity for the purpose of balancing energy exchange or imbalance compensation. Technically, as is evident from the proposed aFRR and mFRR methodologies developed in the present case, the continuous updating of that capacity, which underpins the capacity management function, is an essential input to the activation optimisation function. Moreover, the capacity management function has been added to the platforms by the TSOs themselves, in order for them to meet the requirements of a high-level design in terms of efficiency and safety required by Regulation 2017/2195.

In the light of the above considerations in particular, the decisions of the Board of Appeal are upheld.

( 1 ) Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing (OJ 2017 L 312, p. 6).

( 2 ) Articles 20 and 21 of Regulation 2017/2195, respectively.

( 3 ) Article 20(1) and Article 21(1) of Regulation 2017/2195.

( 4 ) Article 5(1) and (2)(a) of Regulation 2017/2195.

( 5 ) Article 5(7) of Regulation 2017/2195.

( 6 ) Under Article 28 of Regulation (EU) 2019/942 of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators (OJ 2019 L 158, p. 22).

( 7 ) Recital 34, Article 28(1) and Article 29 of Regulation 2019/942.

( 8 ) The privileged parties are the parties referred to in the first and second paragraphs of Article 19 of the Statute of the Court of Justice, namely the Member States, the EU institutions, the States other than the Member States which are parties to the Agreement on the European Economic Area, and the EFTA Surveillance Authority referred to in that agreement.

( 9 ) Regulation (EC) No 713/2009 of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators (OJ 2009 L 211, p. 1).

( 10 ) Recital 10 of Regulation 2019/942, previously recital 5 of Regulation No 713/2009.

( 11 ) Article 20(3)(e)(i) to (iii) and Article 21(3)(e)(i) to (iii) of Regulation 2017/2195.

( 12 ) Article 20(3)(c) and Article 21(3)(c) of Regulation 2017/2195.

( 13 ) Article 20(2) and Article 21(2) of Regulation 2017/2195.