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Physical Transmission Rights (PTRs)

 

 

 

According to the Commission Regulation (EU) 2016/1719 of 26 September 2016 establishing a guideline on forward capacity allocation (FCA Regulation), Physical Transmission Rights (PTRs) are a sub-type of the broader category of Long Term Transmission Rights and mean rights entitling its holder to physically transfer a certain volume of electricity in a certain period of time between two bidding zones in a specific direction.

 

The above definition of PTRs is also reflected by the Harmonised allocation rules for long‐term transmission rights (HAR) as established in the Annex to the Decision of the Agency for the Cooperation of Energy Operators (ACER) No 03/2017 of 2 October 2017.

 

The PTRs are exercised through a nomination process in accordance with applicable nomination rules - see Article 36 of the FCA Regulation and Article 46 of the HAR (boxes below).

 

PTRs are often allocated in accordance with the 'UIOSI' (use-it-or-sell-it) principle. This formula is envisioned also by Article 45(1) of the HAR.

 

A PTR gives the holder the exclusive right to use a particular interconnection in one direction to transfer a predefined quantity of energy from one market hub to the other.

 

It is issued by Transmission System Operators (TSOs) or any owner of the interconnector, providing the holder the option to transport a certain volume of electricity in a certain period of time.

 

The UIOSI provision ensures that non-nominated capacity is made automatically available for the day-ahead allocation.

 

PTRs with the UIOSI principle are, with limited exceptions, the dominant type of Long Term Transmission Rights applied in the CORE Capacity Calculation Region (CCR).

 

According to Article 38(7) of the Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing if Physical Transmission Right holders use cross zonal capacity for the exchange of balancing capacity, the capacity shall be considered as nominated solely for the purpose of excluding it from the application of the use-it-or-sell-it (‘UIOSI’) principle. 

 

Participants in coupled markets will continue to be able to buy PTRs.

 

If market coupling is in place, the holder receives the difference between the day-ahead prices of the two concerned bidding zones in the direction of the transmission right.

 

In the case of market coupling, Physical Transmission Rights will enable the holder to nominate a flow on the relevant interconnector at the day ahead stage, however, if this nomination is for a flow from a higher priced zone to a low priced zone and the price difference is sufficient, the market coupling algorithm will reallocate the full interconnector capacity (including the nominated amount) to flow power from the low to the high priced zone (Commission Staff Working Document, Accompanying the document Report from the Commission, Interim Report of the Sector Inquiry on Capacity Mechanisms {C(2016) 2107 final}, 13.4.2016 SWD(2016) 119 final, p. 134, Commission Staff Working Document of 30.11.2016 Accompanying the document Report from the Commission Final Report of the Sector Inquiry on Capacity Mechanisms {COM(2016) 752 final} SWD(2016) 385 final, p. 181).

 

The rules for the forward capacity allocation in the European Internal Electricity Market ban the allocation of Physical Transmission Rights and Financial Transmission Rights (FTRs) in parallel at the same bidding zone border (Article 31(6) of the FCA Regulation).

 

On average, PTR auction prices on most borders continued to be below the recorded day-ahead price spreads in 2015 (ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity Market in 2015, September 2016, p. 37).

 

 

 

Article 36 of the FCA Regulation

 

General provisions for physical transmission rights nomination

 

1. Where TSOs issue and apply physical transmission rights on bidding zone borders, they shall enable physical transmission rights holders and/or their counterparties to nominate their electricity exchange schedules. Physical transmission rights holders may authorise eligible third parties to nominate their electricity exchange schedules on their behalf in line with the nomination rules in accordance with paragraph 3.

 

2. No later than 12 months after the entry into force of this Regulation, all TSOs issuing physical transmission rights on a bidding zone border shall submit to the relevant regulatory authorities' approval a proposal for nomination rules for electricity exchange schedules between bidding zones. The proposal shall be subject to consultation in accordance with Article 6. Nomination rules shall contain at least the following information:

(a) the entitlement of a physical transmission rights holder to nominate electricity exchange schedules;

(b) minimum technical requirements to nominate;

(c) description of the nomination process;

(d) nomination timings;

(e) format of nomination and communication.

 

3. All TSOs shall progressively harmonise the nomination rules on all bidding zone borders on which physical transmission rights are applied.

 

4. Physical transmission rights holders, their counterparties where applicable or an authorised third party acting on their behalf shall nominate all or part of their physical transmission rights between bidding zones in compliance with the nomination rules.

 

5. In case allocation constraints on interconnections between bidding zones have been included in the day-ahead capacity allocation process in accordance with Article 23(3) of Commission Regulation (EU) 2015/1222, they shall be taken into account in the proposal for nomination rules referred to in paragraph 2.

 

 

 

 

Article 31(6) of the FCA Regulation

 

The allocation of physical transmission rights and FTRs - options in parallel at the same bidding zone border is not allowed. The allocation of physical transmission rights and FTRs - obligations in parallel at the same bidding zone border is not allowed.

 

 

 

 

Harmonised Allocation Rules (Annex I to the ACER Decision 03/2017)

 

Article 45
General principles

 

1. Physical Transmission Rights shall be subject to the Use it or Sell It principle.

 

2. The holder of allocated Physical Transmission Rights may nominate the Physical Transmission Rights for its physical use in accordance with Article 46. The holder of allocated Financial Transmission Rights shall not be entitled to nominate them for physical delivery.

 

3. In case the Registered Participant does not nominate its Physical Transmission Rights, the Allocation Platform shall make the underlying Cross Zonal Capacity of the non‐nominated Physical Transmission Rights available for the relevant daily allocation. The Physical Transmission Right holders who do not nominate their Physical Transmission Rights for physical use of their rights or has not reserved its Physical Transmission Rights for the balancing services shall be entitled to receive remuneration in accordance with Article 48.

 

4. Holders of Financial Transmission Rights shall be subject to the remuneration rules in accordance with Article 48.

 

5. In case the Long Term Transmission Rights holder reserves its Physical Transmission Rights for the balancing services, such Cross Zonal Capacity shall be excluded from the application of the remuneration processes as detailed in Chapter 7. The process of notification of such reservation shall be subject to the relevant rules entered into force in accordance with the applicable national regulatory regime and published by the responsible Allocation Platform.

 

Article 46
Nomination of Physical Transmission Rights

 

1. Persons eligible to nominate Physical Transmission Rights shall fulfil the requirement described in applicable Nomination Rules. Eligible persons may be the following:

 

(a) the Physical Transmission Rights’ holder; or

 

(b) the person notified by the Physical Transmission Rights’ holder during the Nomination process to the respective TSOs in line with the relevant Nomination Rules; or

 

(c) the person authorised by the Physical Transmission Rights’ holder to nominate in line with the relevant Nomination Rules and notified to the Allocation Platform.

 

2. The Allocation Platform shall provide on its website an overview of the options listed in paragraph 1 of this Article which are applicable on each Bidding Zone border.

 

3. For the process of the notification of the eligible persons to the Allocation Platform in accordance with paragraph 1(c) of this Article the following criteria should be met:


(a) the eligible person shall have an EIC Code in order to allow its identification in the Rights Document; and

 

(b) the Physical Transmission Rights’ holder shall notify the eligible person to the Allocation Platform via the Auction Tool in accordance with the Information System Rules and at the latest one (1) hour before the sending of the Rights Document for a specific day.

 

4. The Allocation Platform shall not take into account notifications of eligible persons which do not meet the criteria in accordance with paragraph 3 of this Article when sending the Rights Document in respect of a day of delivery of electricity.

 

5. The Nomination shall be done in compliance with the Rights Document.

 

6. The Allocation Platform shall publish a list with the relevant Nomination Rules for the Bidding Zone borders on its website.

 

7. The long term nomination deadlines for respective Bidding Zone borders are set forth in the relevant Nomination Rules. The Allocation Platform shall publish information on its website on the long term nomination deadlines per Bidding Zone border. In case of any discrepancy between the deadlines published by the Allocation Platform and those of the valid and legally binding relevant Nomination Rules, the latter shall prevail and the Allocation Platform shall not be held liable for any damages due to such a discrepancy.

 

Article 47
Rights Document


1. The Rights Document shall contain the information about the volume in MW that eligible persons are entitled to nominate at specific Bidding Zone borders or subsets of interconnectors of Bidding Zone borders and directions and for hourly periods in case of Physical Transmission Rights. In case of Financial Transmission Rights Options the Rights Document shall contain the information about the volume in MW at specific Bidding Zone borders or subsets of interconnectors of Bidding Zone borders and directions and for hourly periods for which the holder is entitled to financial remuneration in accordance with Article 48. In case of Financial Transmission Rights Obligations, the Rights Document shall contain the information about the volume in MW at specific Bidding Zone borders and directions and for hourly periods for which the holder is entitled to receive or obliged to pay a financial remuneration in accordance with Article 48.


2. The Allocation Platform shall send the Rights Document daily and no later than at 1:00 p.m. on the second (2nd) day preceding the delivery day via the Auction Tool to the eligible person according to Article 46(1) a) and/or c).

 

Article 48
Remuneration of Long Term Transmission Rights holders for non‐nominated Physical Transmission Rights and Financial Transmission Rights

 

1. The Allocation Platform shall remunerate the Long Term Transmission Rights holder for the Long Term Transmission Rights which are reallocated at the relevant daily allocation. The Allocation Platform shall remunerate the Long Term Transmission Rights holder for each MW which was non‐nominated for the relevant hourly period in the case of Physical Transmission Rights and for all allocated MW per relevant hourly period in the case of Financial Transmission Rights. The remuneration shall be calculated in the case of Physical Transmission Rights as the difference between the volumes stated in the Rights Document and the final volumes nominated and accepted by the relevant TSO, in the case of Financial Transmission Rights as the volumes stated in the Rights Document, multiplied by a price, depending on the type of the day‐ahead allocation, as follows:

 

(a) in case of day‐ahead Implicit Allocation, including in case of fallback allocation for Implicit Allocation, the price shall be the Market Spread at the concerned Bidding Zone border for the concerned hourly period only in case the price difference is positive in the direction of the Long Term Transmission Rights of the day‐ahead Implicit Allocation in which that Cross Zonal Capacity was reallocated, and 0€/MWh, otherwise. If specified in the respective regional or border specific annexes, this price may be adjusted to reflect Allocation Constraints on interconnections between Bidding Zones as defined in Regulation (EU) 2015/1222, Article 23, paragraph 3, where these Allocation Constraints are included in the day‐ahead Cross Zonal Capacity allocation process.

 

(b) in case of day‐ahead Explicit Allocation different from fallback allocation for Implicit Allocation for Physical Transmission Rights, the price shall be the Marginal Price of the daily Auction at which that Physical Transmission Right was reallocated, for the concerned hourly period; and

 

(c) in case of fallback allocation of Implicit Allocation or Explicit Allocation where no reference price is calculated for the daily allocation timeframe the price for the Long Term Transmission Rights remuneration shall be the Marginal Price of initial Auction.

 

Where Financial Transmission Rights Obligations are in place, holders of such Rights shall be obliged to provide remuneration to the Allocation Platform if the price difference is negative in the direction of the Financial Transmission Rights Obligation. The remuneration shall be calculated as the volumes of Financial Transmission Rights Obligations stated in the Rights Document multiplied by a price, calculated in line with the principles of paragraph 1, considering that the price difference is negative.

 

2. The Allocation Platform shall compensate the Long Term Transmission Rights holder for the Financial Transmission Rights and non‐nominated Physical Transmission Rights which are not reallocated at the relevant daily allocation in accordance with CHAPTER 9 in case of the triggering event listed in Article 56.

 

3. The Allocation Platform shall compensate the Long Term Transmission Rights holder in accordance with Article 59(1) letter (a) and (b) for the Financial Transmission Rights and non‐ nominated Physical Transmission Rights which are not reallocated at the relevant daily allocation for other reasons than these mentioned in paragraph 2 of this Article.

 

 

  

  

 

 

 

IMG 0744

    Documentation    

 

 

 

 

 

Network Code on Forward Capacity Allocation (Commission Regulation (EU) 2016/1719 of 26 September 2016 establishing a guideline on forward capacity allocation - FCA Regulation), Article 31(6), Article 36

 

Decision of the Agency for the Cooperation of Energy Operators (ACER) No 03/2017 of 2 October 2017 on the electricity transmission system operators’ proposal for harmonised allocation rules for long-term transmission rights

 

Harmonised allocation rules for long‐term transmission rights in accordance with Article 51 of Commission Regulation (EU) 2016/1719 of 26 September 2016 establishing a Guideline on Forward Capacity Allocation (Annex I to the ACER Decision 03/2017)

 

ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity Market in 2015, September 2016, p. 37

 

Commission Staff Working Document, Accompanying the document Report from the Commission, Interim Report of the Sector Inquiry on Capacity Mechanisms {C(2016) 2107 final}, 13.4.2016 SWD(2016) 119 final, p. 134

 

Commission Staff Working Document of 30.11.2016 Accompanying the document Report from the Commission Final Report of the Sector Inquiry on Capacity Mechanisms {COM(2016) 752 final} SWD(2016) 385 final, p. 181

 

 

 

 

 

 

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    Links    

 

 

 

 

 

Joint Allocation Office

 

Financial Transmission Right (FTR)

 

Financial Transmission Rights Obligation

 

Financial Transmission Right Option

 

Forward Capacity Allocation Platform 

 

Capacity allocation

 

 

 

 

 

 

 

 

 

 

Last Updated on Monday, 11 June 2018 21:03
 

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