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REMIT reporting - contracts for the resale of electricity and gas
REMIT Reporting Database

 

 

 

 

ACER's Frequently Asked Questions (FAQs) on REMIT transaction reporting

 

Question 1.1.28

 

Related documents: the answer to question no. 3.1.1 from Section II.3.1 of the document Frequently Asked Questions (FAQs) on REMIT Transaction Reporting


Having regard to the obligations imposed on the participants in the wholesale electricity and gas markets under Article 8(1) of Regulation (EU) no. 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (REMIT) as well as Commission Regulation (EU) no. 1348/2014 of 17 December 2014 on data reporting, implementing Article 8(2) and Article 8(6) of Regulation (EU) no. 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency (Implementing Regulation), given emerging new doubts as to interpretation, the participants in the wholesale electricity and gas markets in xxxxxx, who are members of the xxxxx Association of Energy Trading (hereinafter TOE), consider it necessary to ask ACER to explain the reporting practices regarding contract entered into by Seller (Party A) and Buyer (Party B), who under a single contract purchases electricity/gas meant for both further resale by the Buyer (Party B) and Buyer’s own purposes.


Under such contracts, after the end of a billing period, Buyer (Party B) shall determine the percentage of the electricity/gas volume allocated to further resale and how much of the total electricity/gas Buyer (Party B) consumed for own purposes.


The question considers the following types of contracts:


1. OTC without trade balancing service, based on a product listed on an organized market place (base, peak, etc.);


2. OTC without trade balancing service, not based on a product listed on an organized market place, e.g. schedule-based (but with volume and price determined by the time of conclusion of the contract);


3. OTC with trade balancing service, settled on the basis of electricity meter readings.
In the case of contracts described in Items 1 and 2, the total contract volume (the volume sold by Party A to Party B) is determined by the time of conclusion of the contract, but the share of the volume allocated to resale by Buyer (Party B) and the share of the volume allocated for Buyer’s own purposes remains unknown until after the service is provided.


In the case of contract described in Item 3, the total volume of sale is unknown when the contract is concluded. Instead, it is defined after the service is provided. Similarly, the breakdown of the total volume into the resold and own purposes becomes known only after the service is provided.


It is important to note that according to the Xxxx law, the entity reselling to end users, who are the customers purchasing electricity/gas in order to satisfy their own demand, has to purchase a specific number of certificates of origin (e.g. from renewable sources of energy, from cogeneration, energy efficiency certificates), proportionally to the volume supplied to such customers.


Moreover, the sale of electricity/gas for own purposes of the end user is subject to excise duty. The cost of such certificates of origin as well as the amount of excise duty are reflected in the price of electricity/gas sold to the end user, increasing it. Seller (Party A), who purchases electricity not for own purposes but for further resale, is not obliged to purchase a specific number of certificates of origin, and therefore such customer buys electricity at a price including neither the cost of certificates of origin nor the amount of excise duty.


For the above reasons, the discussed type of contract determines two different prices: Price X for electricity/gas to be further resold by Buyer (Party B), to which Seller (Party A) does not have to add the cost of purchasing certificates of origin or excise duty (lower price); and Price Y for electricity/gas to be consumed by Buyer (Party B), which includes the cost Seller (Party A) incurs in relation to purchasing certificates of origin and the amount of excise duty (higher price). Both Price X and Price Y are specified in the contract as fixed and uniform prices (i.e. they are not set down as a formula indicating separate constituents of the electricity/gas value, the value of certificates of origin and the amount of excise duty).


The above means that in the case of the contracts described in Items 1 and 2 above, even though the total sale volume is known when the contract is signed, the total price invoiced by Seller (Party A) and paid by Buyer (Party B) is known only after the delivery, since the total price depends on the way the volume is divided, according to the allocation and the application of Price X and Price Y to the respective parts of the volume. On the other hand, in the case of those contracts, the total value of the “black” energy sold (excluding the value of certificates of origin and excise duty) is known as early as at the time of concluding the contract, since the value is determined by Price X.


Therefore, it is necessary to obtain ACER guidelines, addressing the following question:


(i) Should the contract described above be reported in accordance with the electricity/gas price specified in the contract, excluding the cost of certificates of origin and excise duty (i.e. Price X) for the entire volume, irrespective of the allocation of the electricity/gas sold,


(ii) or should both prices (Price X and Price Y) resulting from such a contract be reported, broken down into the volume of energy allocated for further resale and separately for the energy allocated for consumer’s own purposes,


(iii) or should a part of contract including the volume of energy allocated for further resale according to the “black” energy price (Price X) be the only part subject to reporting, even though for this volume the contract stipulates the application of Price Y (including the cost of certificates of origin and excise duty)?


TOE members request that a binding interpretation of the presented question be issued by acknowledging that the reporting model proposed below is correct in the light of the REMIT Regulation and implementing regulations, and that no other model fully pursues the objectives of the Regulation.


In the opinion of the enquirers (PL Markets participants), the types of contracts described above are subject to reporting, according to the electricity/gas price determined for the part of contract subject to further resale (Price X), for the entire energy volume under the contract, irrespective of the allocation of energy, because the price is the “black” energy price with no additional constituents (the cost of certificates of origin, excise duty).


Therefore, the types of contracts described in Items 1–3 above shall be reported in the following manner:


1. The contract specified in Item 1 shall be reported as a standard contract (since its features correspond to the contract listed on an organized market place), in which the total amount of energy and the “black” energy price are known when the contract is signed.


2. The contract described in Item 2 shall be reported as a non-standard contract, in which the total amount of energy and the “black” energy price are known when the contract is signed (i.e. immediately in accordance with Table 1).


3. The contract described in Item 3 shall be reported as a non-standard contract, in which the “black” energy price and the volume shall be reported after the service is provided when the billing period has finished (i.e. the contract shall be reported according to Table 2 and executed according to Table 1).


The above stance is based on the answer to question no. 3.1.1 from Section II.3.1 of the document Frequently Asked Questions (FAQs) on REMIT Transaction Reporting, wherein the Agency points out that additional fees, taxes and costs shall not be subject to REMIT reporting. Moreover, it should be pointed out that the aim of the REMIT regulation is to provide objective and reliable information regarding the prices of electricity/gas on wholesale markets in the European Union.


Therefore, submitting reports in which, due to national specificities, any price constituents other than the price of electricity/gas itself such as additional taxes (e.g. excise duty) or other constituents related to the execution of state policy regarding renewable sources of energy or energy efficiency shall result in the submitted information not fulfilling the primary goal of such reporting, since it shall not provide reliable information on the price of electricity/gas on the wholesale market in Xxxx. Moreover, a report encompassing information on the price including all the derivatives mentioned above would make it impossible for the Agency to carry out simple and reliable evaluation of the relations between the prices of electricity/gas on separate state markets within the European Union, which would therefore negate the primary goal of the Regulation.

 

Answer

 

In our understanding there are at least two contracts subject to REMIT reporting:


(1)  Contract for the entire energy volume between Party A and Party B, and


(2)  Contract subject to further resale between Party B and other party


Therefore, the types of contracts described in Items 1–3 above shall be reported in the following manner:


1. The contract specified in Item 1 shall be reported as a standard contract (since its features correspond to the contract listed on an organized market place), in which the total amount of energy and the “black” energy price are known when the contract is signed.


2. The contract described in Item 2 shall be reported as a non-standard contract, in which the total amount of energy and the “black” energy price are known when the contract is signed (i.e. immediately in accordance with Table 1).


3. The contract described in Item 3 shall be reported as a non-standard contract, in which the “black” energy price and the volume shall be reported after the service is provided when the billing period has finished (i.e. the contract shall be reported according to Table 2 and executed according to Table 1).


If the total volume is partially allocated (resold) to another party it should be reported as a separate contract between Party B and the other party.

 

 

 

 

 

 

 

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ACER's Frequently Asked Questions (FAQs) on REMIT transaction reportingQuestion 1.1.28

 

 

 

 

 

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Last Updated on Monday, 14 August 2017 11:58
 

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