All TSOs’ proposal for amendments of the methodology for Harmonised Allocation Rules for long-term transmission rights

Overview

This consultation is based on Article 6 of Commission Regulation (EU) 2016/1719 (FCA Regulation) and concerns the review of Harmonised Allocation Rules for long-term transmission rights (HAR) in accordance with Article 68(5) of these rules.

The previous public consultation on HAR ending 22 May, was found not to comply with FCA regulation on public consultations, as it did not contain a concrete text proposal of the amended methodology.
Therefore TSOs will conduct a new public consultation, that not only describes the principles of the proposed changes,  but contains a text proposal of the amended methodology.
The pricinples from which the the proposal has been drafted, are unchanged compared to the public consultation launched 11 April and 22 April.

The amendment proposal for HAR submitted to ACER 1 March contains general updates and several updates related to the introduction of LT FBA.
The 1 March submission will be complemented and merged with a new submission 1 August containing a proposal for setting collaterals and changed auction timings including contestation rules, which is the topic for this consultation.

Collaterals
With the introduction of LT FBA the LTTR auction dynamics change. In CCRs with LTFB-allocations, monthly and yearly auctions will be performed simultaneously. TSOs therfore agree adjusted rules for the collateral requirements are needed to reduce the required amount compared to the current regulation.

TSOs suggest to put a cap on the collaterals requirements for bids, thereby bearing some of the risk.
For the cap, TSOs propose the following shall apply:

• Calculation of the price cap for a specific border direction for the yearly auctions is to be done using the average DA market spreads from the previous 6 months. If the DA flow is in the opposite direction, the price spread used in calculating the average for the border direction is 0
• Calculation of the price cap for a specific border direction for the monthly auctions is to be done using the average DA market spreads from the previous month. If the DA flow is in the opposite direction, the price spread used in calculating the average for the border direction is 0
• The information on a price cap will be provided to MPs during the publication of the auction specification (final)

Payment obligations
Since additional financial risk is put on TSOs, who no longer requests 100% of the bid as collaterals, a penalty for failing to fulfil payment obligations is proposed:

• MPs have to fulfil their payment obligations for awarded bids within regular JAO payment procedure
• If an MP does not fulfil this obligation, JAO will immediately issue a reminder (dunning process) to the concerned MP (with max additional 3 working days to pay for the MP).
• If such dunning process is again not successful, the MP will lose all rights on awarded capacity from the day after the dunning process ended. JAO will collect collaterals from MPs, given in form of bank guarantee or cash deposit all open amounts, to balance open invoices.
• The concerned MP shall be excluded from all further auctions until all open amounts are balanced, but for a minimum duration of three months.
• If an MP for several times/for more than 3 times is involved in such a dunning process within the same year, JAO may terminate the paticipation agreenment of the MP.

Auction timings

Since for Long-term flow based auctions the capacity calculation process takes a longer time than for the ATC based auctions, TSOs had to propose certain changes in the allocation process to accommodate it.

One of these steps is that it would not be possible anymore to contest the auction results if an auction had to be re-run, so run for a second time.
Additionally to this, the usual timings of the contestation (dispute) have to be shortened (it is usually 2 days for allowing contestation+ 2 days for evaluation).
In the current version of HAR before the 4th WD after the provisional Auction results publication it is not possible to send in Returns. Since Returns can only be submitted if the results become firm. This will also need to be adapted.

Why your views matter

We are seeking input and feedback on the above proposed changes from relevant stakeholders, market participants, NRAs and NEMOs for the proposal for amendment of the methodology for Harmonised Allocation Rules.