Bidding strategy consisting in predetermined intent of covering possible shortages in the balancing electricity market can be qualified as a market manipulation.

 

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The reference price for baseload generation under the UK FIT CfD contracts scheme (implementation thereof is intended in summer 2014 already) will initially be calculated from the two reference prices each year; one set every six months, however, the concrete set of indices and their weightings are yet to be confirmed, thus financial assessments are still not viable.

Moreover, the longer term intention is to move in that regard to year-ahead forward prices and the  unknown mechanics of this transition adds to the investors' risks.

 
Pursuant to analysis performed on the occasion of the UK energy market reform, capacity instruments will most likely not be a financial instrument for the purposes of the Markets in Financial Instruments Directive (2004/39/EC)("MiFID"). Such instruments would not be within scope of European Market Infrastructure Regulation (EMIR) as well. 
 

 

The intended UK capacity market, the major milestones thereof have been recently revealed, appears to reflect the key points of the European Commission' recent consultation on State aid criteria to be applied to capacity mechanisms.

 

 

Capacity mechanisms attempt to ensure that electricity undertakings (often suppliers) assume the responsibility to provide or pay for generation capacity which they would not otherwise do, or at least not to the same extent, considering only their own commercial interests. According to the European Commission’s stance it is possible that such a mechanism constitutes a public service obligation and involve State aid. The above notwithstanding, UK prepares for capacity auctions from 2014 for delivery of capacity in the winter of 2018/19, if needed.

 

 

Considering the lapsing deadlines set by the Commission Regulation (EU) 2016/631 of 14 April 2016 establishing a network code on requirements for grid connection of generators (NC RfG) it may be useful, particularly for energy market participants carrying out significant investments in or the refurbishments of the generation fleet, to take account of some NC RfG notification requirements that may occur important.

 

 

Is there still a room for Central Dispatch Model is the EU Internal Electricity System? 

 

In the recent Recommendation No 03/2015 of 20 July 2015 on the Network Code on Electricity Balancing, the European overseer of electricity markets - the Agency for the Cooperation of Energy Regulators (ACER) - departs from its earlier stance expressed in the Framework Guidelines on Balancing (which acknowledged the parallel existence of central dispatch and self-dispatch arrangements of European electricity markets when drafting the Network Code on Electricity Balancing) and nominates the Self-Dispatching Model to be "the primary dispatching model to be applied by TSOs for determining generation and consumption schedules".

 

Consequently, Central Dispatch has been allowed for Transmission System Operators only as an exemption, provided the relevant authorities' approval has been granted.

 

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While negotiating any agreements with electricity transmission system operators it is necessary to take account of provisions of the draft ENTSO-E Network Code on Electricity Balancing.

It is only non-binding draft now - some may say. Never mind...

 

 

Who will pay for market spread? 

 

 

In order to give adequate incentives for Balance Responsible Parties (BRPs), the draft Code Balancing Code asserts that BRP aggravating imbalances shall not be priced less (for shortage) respectively more (for surplus) than the weighted average price for Frequency Restoration Reserve (FRR) and Replacement Reserve (RR) in the relevant area, in order to reflect the local imbalance situation.

 

 

Network Code on Forward Capacity Allocation - ENTSO-E final proposal of 1 October 2013 made important business choices with respect to the role of transmission system operators in the secondary trading.

 

Attachments:
Download this file (Business resume on transmission rights - ENTSO-E final proposal of 1 October 201)Business resume on transmission rights - ENTSO-E final proposal of 1 October 201[Business Resume on transmission rights - ENTSO-E final proposal for Network Code on Forward Capacity Allocation of 1 October 2013]28 kB

 

Do the review of existing bidding zones increase the electricity generators' costs and risks?

 

 

The issue whether the generator is synchronously connected to the grid will be among the main criteria for differentiation of the legal status of power producers in the Internal Electricity Market.

Therefore specific requirements for non-synchronously connected Power Generating Modules (so-called Power Park Modules) are introduced.

 

 

The Draft Network Code Requirements for Grid Connection Applicable to all Generators (NC RfG) being the first EU action on addressing how generators should be equipped in the Internal Electricity Market contains 53 requirements of which 44 are of mandatory nature.

It is a regulatory issue whether the costs of meeting these requirements should be allocated to ancillary services and collected via grid tariffs or internalised in market prices for electricity.

 

 

The future shape of the European balancing market is not an obvious choice, since the surveys highlighted the great diversity of arrangements throughout Europe in that regard.

Although the balancing can be perceived as a technical only market, its design in many respects will influence on economic decisions in many connected areas.

 

 

I'm quite surprised by the remark of Alberto Pototschnig, the ACER’s Director, made in the foreword to Consolidated Annual Activity Report for Year 2018 of the Agency for the Cooperation of Energy Regulators (14 June 2019, p. 18).

 

I have never expected such words from the head of the European Agency.

 

What exactly was said, then? Here you have a citation:

 

“With the growing number of complex and contentious decisions taken by the Agency, the number of appeals has also increased. The need to defend its decisions in front of the Board of Appeal or the General Court, or to defend the rulings of the Board of Appeal in front of the General Court, put additional strain on the Agency’s resources, especially considering that the appellants typically use law firms to litigate their cases, while the Agency cannot afford such support. However, it is undisputable that the possibility of judicial or quasi-judicial review of regulatory decision is an essential part of modern and proper regulation. The issue is rather again one of resources on the Agency’s side. However, what I find regrettable is that some of these appeals have been lodged by national regulatory authorities which had participated in forming the Agency’s decision. In fact, all the decisions appealed so far were adopted following a favourable opinion of the Board of Regulators, which is based on a large (two-third) majority of its members, who represent national regulators. Therefore, while the legal right of all those affected, including national regulatory authorities, to appeal an Agency’s decision is, again, undisputable, the very governance of the Agency, with the key role of national regulatory authorities in the decision-making process, might suggest that national regulatory authorities should accept the democratic deliberation process in the Board of Regulators, even when they dissent from it, and do not seek to overturn the Agency’s decision, to which the Board of Regulators has contributed, by resorting to the judicial review”.

 

To make a long story short: I strongly disagree with you Mr Pototschnig in this part of your statement:

 

“national regulatory authorities should accept the democratic deliberation process in the Board of Regulators, even when they dissent from it, and do not seek to overturn the Agency’s decision, to which the Board of Regulators has contributed, by resorting to the judicial review”.

 

Why? Because decisions not only need to be made by a majority of votes cast, it would be much better if they were also reasonable and just and if they are the ACER should not be afraid of the judicial review.

 

And, further, since the minority should not be bullied by others.

 

Is there any further need to deliberate this issue? I do not think so.

 

 

 

 

Although in April the focus is on the GDPR, the Electricity Directive also deserves some attention.

 

 

Charge point operators supplying electric vehicles with a charging service are final customers and do not require registration as Distribution System Operators (DSOs).