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Nomination of Physical Transmission Rights
European Union Electricity Market Glossary

 

 

 

Nomination of physical transmission rights means the notification of the use of long-term cross-zonal capacity by a physical transmission rights (PTRs) holder and its counterparty to the respective Transmission System Operators (TSOs) (Article 2(7) of the Commission Regulation (EU) 2016/1719 of 26 September 2016 establishing a guideline on forward capacity allocation (Network Code on Forward Capacity Allocation, known as FCA Regulation)).

 

According to Article 36(1) of the FCA Regulation:

“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”

 

PTRs are subject to the “use it or sell it principle”.

 

Pursuant to Article 32 of the FCA Regulation each PTRs holder is entitled to nominate all or part of its PTRs, in case where a nomination is not made by the deadline specified in the nomination rules, such holder is entitled to the remuneration (set according to the principles stipulated is Article 35 of the FCA Regulation - see box).

 

Harmonised Allocation Rules (HAR) refer to the above rules in Article 45(3), stipulating that in case the registered participant does not nominate its PTRs, the allocation platform makes the underlying cross zonal capacity of the non‐nominated PTRs available for the relevant daily allocation.

 

In the HAR the remuneration is envisioned not only for the PTRs holders who do not nominate their PTRs for physical use but also to those who have not reserved their PTRs for the balancing services.

 

HAR stipulate that in case the long term transmission rights holder reserves its PTRs for the balancing services, such cross zonal capacity is excluded from the application of the remuneration processes.

 

HAR expressly underline (Article 45(1) and (2)) that the right to nominate relates to PTRs only and the the holder of allocated financial transmission rights is not entitled to nominate them for physical delivery.

 

 

Nomination rules

 

 

Nomination rules are the rules with regard to the notification of use of long-term cross-zonal capacity by a PTRs holder and their counterparty, or an authorised third party, to the respective TSOs (Article 2(8) of the FCA Regulation).

 

Physical transmission rights holders, their counterparties where applicable or an authorised third party acting on their behalf nominate all or part of their physical transmission rights between bidding zone in compliance with the nomination rules (Article 36(4) of the FCA Regulation).

 

TSOs’ proposal for nomination rules is subject to approval of the relevant regulatory authorities.

 

The nomination rules must 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.

 

The deadline for the above submission is set at 12 months after the entry into force of the FCA Regulation.

 

FCA Regulation envisions that the nomination rules should be progressively harmonised on all bidding zone borders on which physical transmission rights are applied.

 

Principle description of the applicable nomination rules is contained in the HAR.

 

According to the HAR (Article 46) nomination of PTRs is subject to the following general rules:

 

1. persons eligible to nominate are the following:

(a) the PTRs’ holder; or

(b) the person notified by the PTRs’ holder during the nomination process to the respective TSOs in line with the relevant nomination rules; or

(c) the person authorised by the PTRs’ holder to nominate in line with the relevant nomination rules and notified to the allocation platform;

 

2. the allocation platform is required to provide on its website an overview of the above options which are applicable on each bidding zone border;

 

3. for the process of the notification of the eligible persons to the allocation platform the following criteria should be met:

 

(a) the eligible person must have an EIC Code in order to allow its identification in the rights document; and

 

(b) the PTRs’ holder is required to notify the eligible person to the allocation platform via the auction tool and at the latest one (1) hour before the sending of the fights document for a specific day;

 

4. the nomination must be done in compliance with the rights document.

 

The allocation platform is required to publish a list with the relevant nomination rules for the bidding zone borders on its website.

 

The relevant nomination rules set forth the long term nomination deadlines for respective bidding zone borders.  

 

The allocation platform publishes on its website information on the long term nomination deadlines per bidding zone border.

 

 

 

Network Code on Forward Capacity Allocation

 

Article 32
Physical transmission rights


1. Each physical transmission right holder shall be entitled to nominate all or part of its physical transmission rights pursuant to Article 36.


2. Where the physical transmission rights holders do not make a nomination by the deadline specified in the nomination rules, they shall be entitled to obtain remuneration in accordance with Article 35.

 

Article 35

Principles for long-term transmission rights remuneration

 

1. The relevant TSOs performing the allocation of transmission rights on a bidding zone border through the single allocation platform shall remunerate the long-term transmission rights holders in case the price difference is positive in the direction of the long-term transmission rights.


2. The holders of FTRs — obligations shall remunerate the relevant TSOs through the single allocation platform allocating transmission rights on a bidding zone border in case the price difference is negative in the direction of the FTRs — obligations.


3. The remuneration of long-term transmission rights in paragraphs 1 and 2 shall comply with the following principles:


(a) where the cross-zonal capacity is allocated through implicit allocation or another method resulting from a fallback situation in the day-ahead time frame, the remuneration of long-term transmission rights shall be equal to the market spread;


(b) where the cross-zonal capacity is allocated through explicit auction in the day-ahead time frame, the remuneration of long-term transmission rights shall be equal to the clearing price of the daily auction.


4. 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 Regulation (EU) 2015/1222, they may be taken into account for the calculation of the remuneration of long-term transmission rights pursuant to paragraph 3.

 

Article 36
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 Regulation (EU) 2015/1222, they shall be taken into account in the proposal for nomination rules referred to in paragraph 2.

 

 

 

 

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 2(7), Article 32, 35, 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), Article 45 - 48

 






 

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Last Updated on Thursday, 22 March 2018 13:16
 

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