Physical Transmission Rights (PTRs)
European Union Electricity Market Glossary




According to the Network Code on Forward Capacity Allocation (FCA) 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.


PTRs are often allocated in accordance with the 'UIOSI' (use-it-or-sell-it) principle.


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 exercise of PTRs as options is performed through a nomination process in accordance with applicable nomination rules.


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




Article 36 of the Network Code on Capacity Allocation


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.




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. 



Article 31(6) of the Network Code on Capacity Allocation


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.


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 ( 1Commission 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).


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)


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 (Article 38(7) of the Electricity Balancing Network Code).



Last Updated on Saturday, 06 May 2017 21:40


Copyright © 2009 - 2017 Michal Glowacki. All rights reserved.
The materials contained on this website are for general information purposes only and are subject to the disclaimer