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European Commission’s proposal for a Regulation on the internal market for electricity EURELECTRIC proposals for amendments June 2017

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Page 1: European Commission’s proposal for a Regulation on the ... · CLEAN ENERGY PACKAGE\Amendments\Electricity Regulation Dépôt légal: D/2017/12.105/34 EURELECTRIC is the voice of

European Commission’s proposal for aRegulation on the internal market forelectricityEURELECTRIC proposals for amendments

June 2017

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Market, Retail and DSO CommitteeContacts:

Blandine MALVAULT, Advisor – [email protected] RENAUD, Advisor Market Design and Market Integration –

[email protected]

\\DCFILE08SRV\2017-Horizontal Issues\01. CLEAN ENERGY PACKAGE\Amendments\Electricity Regulation

Dépôt légal: D/2017/12.105/34

EURELECTRIC is the voice of the electricity industry in Europe.

We speak for more than 3,500 companies in power generation, distribution, and supply.

We Stand For:

Carbon-neutral electricity by 2050

We have committed to making Europe’s electricity cleaner. To deliver, we need to make use of all low-carbon technologies: more renewables, butalso clean coal and gas, and nuclear. Efficient electric technologies in transport and buildings, combined with the development of smart grids and amajor push in energy efficiency play a key role in reducing fossil fuel consumption and making our electricity more sustainable.

Competitive electricity for our customers

We support well-functioning, distortion-free energy and carbon markets as the best way to produce electricity and reduce emissions cost-efficiently.Integrated EU-wide electricity and gas markets are also crucial to offer our customers the full benefits of liberalisation: they ensure the best use ofgeneration resources, improve security of supply, allow full EU-wide competition, and increase customer choice.

Continent-wide electricity through a coherent European approach

Europe’s energy and climate challenges can only be solved by European – or even global – policies, not incoherent national measures. Such policiesshould complement, not contradict each other: coherent and integrated approaches reduce costs. This will encourage effective investment to ensurea sustainable and reliable electricity supply for Europe’s businesses and consumers.

EURELECTRIC. Electricity for Europe.

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1

Considerations

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 1

Whereas

(48) Member States and the EnergyCommunity Contracting Parties shouldclosely cooperate on all matters concerningthe development of an integrated electricitytrading region and should take no measuresthat endanger the further integration ofelectricity markets or security of supply ofMember States and Contracting Parties.

(48) Member States and, the EnergyCommunity Contracting Parties and otherthird countries which are part of thesynchronous grid of Continental Europe andexclusively interconnected with EU or EEAcountries should closely cooperate on allmatters concerning the development of anintegrated electricity trading region andshould take no measures that endanger thefurther integration of electricity markets orsecurity of supply of Member States andContracting Parties.

Justification

Cooperation between the European Union and Switzerland with regard to electricity should takeutmost consideration of the physical reality of electricity grids in Continental Europe; the highdegree of interconnection and the integration of Switzerland in the Internal electricity marketshould be reflected through close cooperation with the EU. Switzerland is part of the synchronousgrid of Continental Europe and is very well interconnected with its neighbouring EU MemberStates. The Swiss electricity industry and its assets have played a major role for the creation andthe development of the Internal electricity market and in increasing security of supply, systemstability and risk preparedness and continue to do so.

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Definitions

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 2

Article 2 – paragraph 2(v)

'strategic reserve' means a capacitymechanism in which resources are onlydispatched in case day-ahead and intradaymarkets have failed to clear, transmissionsystem operators have exhausted theirbalancing resources to establish anequilibrium between demand and supply,and imbalances in the market during periodswhere the reserves were dispatched aresettled at the value of lost load.

'strategic reserve' means a capacitymechanism in which resources are onlydispatched in case day-ahead and intradaymarkets have failed to clear, transmissionsystem operators have exhausted theirbalancing resources to establish anequilibrium between demand and supply,and imbalances in the market during periodswhere the reserves were dispatched aresettled at the value of lost load. Strategicreserves should not serve to contract newgeneration capacity into the system.

Justification

Strategic reserves can be a solution to address short-term adequacy issues provided their recourseremains exceptional, their size is limited, they are not used to contract new capacities into thesystem and their impact on the energy market is minimised. The definition should recognise thatstrategic reserves shall not promote new generation capacity which is explicitly recognised in DGCOMP sector inquiry into capacity mechanisms.

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RES market integration – Balancing responsibility

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 3

Article 4 – paragraph 2

Member States may provide for derogationfrom balance responsibility in respect of:

(a) demonstration projects;

(b) generating installations using renewableenergy sources or high-efficiencycogeneration with an installed electricitycapacity of less than 500 kW;

(c) installations benefitting from supportapproved by the Commission under UnionState aid rules pursuant to Articles 107 to109 TFEU, and commissioned prior to [OP:entry into force]. Member States may,subject to Union state aid rules, incentivizemarket participants which are fully or partlyexempted from balancing responsibility toaccept full balancing responsibility againstappropriate compensation.

Member States shall provide for derogationfrom balance responsibility to installationsbenefitting from support approved by theCommission under Union State aid rulespursuant to Articles 107 to 109 TFEU, andcommissioned prior to [OP: entry into force].Member States may, subject to Union stateaid rules, incentivize market participantswhich are fully or partly exempted frombalancing responsibility to accept fullbalancing responsibility against appropriatecompensation.

Justification

While keeping existing exemptions, there should be no new or additional exemption frombalancing responsibility: any injection of energy into the network should be measured andallocated to a balance responsible party.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 4

Article 4 – paragraph 3

From 1 January 2026, point (b) of paragraph2 shall apply only to generating installationsusing renewable energy sources or high-efficiency cogeneration with an installedelectricity capacity of less than 250 kW.

Deleted

Justification

While keeping existing exemptions, there should be no new or additional exemption frombalancing responsibility.

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Free formation of energy prices

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 5

Article 9 - paragraph 1

There shall be no maximum limit of thewholesale electricity price unless it is set atthe value of lost load as determined inaccordance with Article 10. There shall be nominimum limit of the wholesale electricityprice unless it is set at a value of minus 2000€ or less and, in the event that it is oranticipated to be reached, set at a lowervalue for the following day

This provision shall apply, inter alia, tobidding and clearing in all timeframes andinclude balancing energy and imbalance pricesignal

There shall be no maximum limit of thewholesale electricity price unless it is set ator above the value of lost load as determinedin accordance with Article 10. In stronglyinterconnected markets, the level oftechnical price limits should be the sameamong all bidding zones and markets. Thereshall be no minimum limit of the wholesaleelectricity price. This provision shall apply,inter alia, to bidding and clearing in alltimeframes and include balancing energy andimbalance price signal

Justification

Energy prices should reflect market fundamentals, including scarcity in terms of time and location.Barriers to free price formation, including price caps and floors, should be removed.

It should also be underlined that when energy markets are coupled (e.g. day-ahead, intraday andbalancing markets), the technical price limit, if any, should be the same among all bidding zonesand markets. A different technical price limit in coupled and strongly interconnected markets maygenerate unintended-effects, such as electricity flowing in the opposite direction of the electricitysystem requirement thus not being able to meet consumers’ demand.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 6

Article 10 - paragraph 1

Member States shall establish a singleestimate of the Value of Lost Load (VoLL) fortheir territory, expressed in €/MWh. Thatestimate shall be reported to theCommission and made publically available.Member States may establish different VoLLper bidding zone if they have several biddingzones in their territory. In establishing VoLL,Member States shall apply the methodologydeveloped pursuant to Article 19(5).

Member States shall establish one or moreestimates of the Value of Lost Load (VoLL) fortheir territory, expressed in €/MWh. Theseestimates shall be reported to theCommission and made publically available. Inestablishing VoLL, Member States shall applythe methodology developed pursuant toArticle 19(5) in accordance with marketfundamentals.

Justification

Member States may see a need to establish more than one estimate of a VOLL, but this is notnecessarily restricted to the existence of more than one bidding zone in the country. Also differentconsumer categories or duration of outage may result in different estimates of VOLL. Therefore,Member States should be able to establish one or more estimates of VOLL, suing the methodologydeveloped pursuant to Art 19 (5) and in accordance with market fundamentals, such as theexistence of different consumer categories.

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RES market integration – Market-based dispatch and curtailment

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 7

Article 11 – paragraph 2

When dispatching electricity generatinginstallations, transmission system operatorsshall give priority to generating installationsusing renewable energy sources or high-efficiency cogeneration from smallgenerating installations or generatinginstallations using emerging technologies tothe following extent:

(a) generating installations using renewableenergy sources or high-efficiencycogeneration with an installed electricitycapacity of less than 500 kW; or

(b) demonstration projects for innovativetechnologies.

Deleted

Justification

Market-based dispatching of all generation and demand response shall be the rule.

However, in order not to damage the investment environment in the sector, EURELECTRICwelcomes Article 11.4 where existing exemptions (including those granted by contractual terms)are kept. Nevertheless, a mechanism may be developed where market participants accept optingout of priority dispatch against appropriate compensation.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 8

Article 11 – paragraph 3

Where the total capacity of generatinginstallations subject to priority dispatchunder paragraph 2 is higher than 15 % ofthe total installed generating capacity in aMember State, point (a) of paragraph 2shall apply only to additional generatinginstallations using renewable energysources or high-efficiency cogeneration withan installed electricity capacity of less than250 kW.

From 1 January 2026, point (a) of paragraph2 shall apply only to generating installationsusing renewable energy sources or high-efficiency cogeneration with an installedelectricity capacity of less than 250 kW or, ifthe threshold under the first sentence of thisparagraph has been reached, of less than125 kW.

Deleted

Justification

The “Clean Energy Package” should be amended in order not to incentivise the development ofnew priority of dispatch provisions, specifically in markets or regions where it currently does notapply. Furthermore, there should be no new or additional exemptions, namely specific provisionsbased on the size of the projects or the type of technologies. Until the implementation of the newmarket design outlined by the Commission, the existing market rules for dispatching andbalancing should prevail.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 9

Article 11 – paragraph 4

Generating installations using renewableenergy sources or high-efficiencycogeneration which have beencommissioned prior to [OP: entry into force]and have, when commissioned, been subjectto priority dispatch under Article 15 (5) ofDirective 2012/27/EU of the EuropeanParliament and of the Council or Article 16(2) Directive 2009/28/EC of the EuropeanParliament and of the Council shall remainsubject to priority dispatch. Priority dispatchshall no longer be applicable from the datewhere the generating installation is subjectto significant modifications, which shall bethe case at least where a new connectionagreement is required or the generationcapacity is increased.

Generating installations using renewableenergy sources or high-efficiencycogeneration which have beencommissioned prior to [OP: entry into force]and have, when commissioned, been subjectto priority dispatch under Article 15 (5) ofDirective 2012/27/EU of the EuropeanParliament and of the Council or Article 16(2) Directive 2009/28/EC of the EuropeanParliament and of the Council shall remainsubject to priority dispatch. Priority dispatchshall no longer be applicable from the datewhere the generating installation is subjectto significant modifications, which shall bethe case at least where a new connectionagreement is required or the generationcapacity is increased.

Market participants subject to prioritydispatch may receive a compensation, inaccordance with Union State aid rules, ifthey accept to comply with market basedrules.

Justification

In order not to damage the investment environment in the sector, existing exemptions (includingthose granted by contractual terms) should be kept.

We support the fact that generation facilities currently exempted from balancing responsibilitiesor that were granted with priority of dispatch/access may require compensation to accept newroles in the electricity market. Therefore, EURELECTRIC encourages the development of theseincentive schemes, where market participants may voluntarily accept new responsibilities.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 10

Article 12 – paragraph 2

The resources curtailed or redispatched shallbe selected amongst generation or demandfacilities submitting offers for curtailment orredispatching using market-basedmechanisms and be financially compensated.Non-market-based curtailment orredispatching of generation or redispatchingof demand response shall only be usedwhere no market-based alternative isavailable, where all available market-basedresources have been used, or where thenumber of generation or demand facilitiesavailable in the area where suitablegeneration or demand facilities for theprovision of the service are located is too lowto ensure effective competition. Theprovision of market-based resources shall beopen to all generation technologies, storageand demand response, including operatorslocated in other Member States unlesstechnically not feasible.

The resources curtailed or redispatched shallbe selected amongst generation, storage ordemand facilities submitting offers forcurtailment or redispatching using market-based mechanisms and be paid, whilemaking sure the payment framework avoidscounterproductive incentives.

Non-market-based curtailment orredispatching of generation or redispatchingof demand response shall only be usedwhere no market-based alternative isavailable, where all available market-basedresources have been used, or where thenumber of generation or demand facilitiesavailable in the area where suitablegeneration or demand facilities for theprovision of the service are located is too lowto ensure effective competition. Theprovision of market-based resources shall beopen to all generation technologies, storageand demand response, including operatorslocated in other Member States unlesstechnically not feasible.

Justification

Redispatch and curtailment management shall be technology neutral and based only on marketmechanisms. Then, there is no need to introduce positive discrimination for RES and CHP.

A market-based mechanism would provide the relevant price signals to trigger flexibility solutions,including storage and demand response, thus potentially increasing market competition andsystem efficiency. Based on a bidding process, all market players shall be activated and paidaccordingly (including any lost support). In addition, redispatch and curtailment management arenot purely national concerns and should hence encompass a cross border dimension.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 11

Article 12 – paragraph 4

Subject to requirements relating to themaintenance of the reliability and safety ofthe grid, based on transparent and non-discriminatory criteria defined by thecompetent national authorities, transmissionsystem operators and distribution systemoperators shall:

(a) guarantee the capability of transmissionand distribution networks to transmitelectricity produced from renewable energysources or high-efficiency cogeneration withminimum possible curtailment orredispatching. That shall not preventnetwork planning from taking into accountlimited curtailment or redispatching wherethis is shown to be more economicallyefficient and does not exceed 5 % ofinstalled capacities using renewable energysources or high-efficiency cogeneration intheir area;

(b) take appropriate grid and market-relatedoperational measures in order to minimisethe curtailment or downward redispatchingof electricity produced from renewableenergy sources or high-efficiencycogeneration.

Subject to requirements relating to themaintenance of the reliability and safety ofthe grid, based on transparent and non-discriminatory market based criteria definedby the competent national authorities,transmission system operators anddistribution system operators shall:

(a) guarantee the capability of transmissionand distribution networks to transmitelectricity produced using the most cost-effective remedial actions, includingcurtailment or redispatching.

(b) take appropriate grid and market-relatedoperational measures in order to optimisethe curtailment or redispatching according tocost benefit analysis.

Justification

Redispatch and curtailment management shall be technological neutral and only based on marketmechanisms, except when curtailment has been deal through connection agreements. Then, thereis no need to introduce positive discrimination for RES and CHP.

A market-based mechanism would provide the relevant price signals to trigger flexibility solutions,including storage and demand response, thus potentially increasing market competition andsystem efficiency. Based on a bidding process, all market players shall be activated and paidaccordingly (including any lost support). In addition, redispatch and curtailment management arenot purely national concerns and should hence encompass a cross border dimension.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 12

Article 12 – paragraph 5

Where non-market-based downwardredispatching or curtailment is used, thefollowing principles shall apply:

(a) generating installations using renewableenergy sources shall only be subject todownward redispatching or curtailment ifno other alternative exists or if othersolutions would result in disproportionatecosts or risks to network security;

(b) generating installations using high-efficiency cogeneration shall only be subjectto downward redispatching or curtailmentif, other than curtailment or downwardredispatching of generating installationsusing renewable energy sources, no otheralternative exists or if other solutions wouldresult in disproportionate costs or risks tonetwork security;

(c) self-generated electricity fromgenerating installations using renewableenergies or high-efficiency cogenerationwhich is not fed into the transmission ordistribution network shall not be curtailedunless no other solution would resolvenetwork security issues;

(d) downward redispatching or curtailmentunder letters a to c shall be duly andtransparently justified. The justification shallbe included in the report under paragraph 3.

Deleted

Justification

Non-market based curtailment should be an exception where market-based mechanisms are notfunctioning. In the meantime it is opportune to reinforce the network structure in order to avoidnon-market based curtailment. Market-based mechanisms must ensure that all commercial offersare exhausted before any form of non-market based measures is used. A lack of competition couldin theory justify the use of non-market-based measures as a last resort. Particular attentionshould be paid on how to carefully and transparently define how to measure the correct level ofcompetition and suitable generation and demand facilities to provide such services.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 13

Article 12 – paragraph 6

Where non-market based curtailment orredispatching is used, it shall be subject tofinancial compensation by the systemoperator requesting the curtailment orredispatching to the owner of the curtailedor redispatched generation or demandfacility. Financial compensation shall at leastbe equal to the highest of the followingelements:

(a) additional operating cost caused by thecurtailment or redispatching, such asadditional fuel costs in case of upwardredispatching, or backup heat provision incase of downward redispatching orcurtailment of generating installations usinghigh-efficiency cogeneration;

(b) 90 % of the net revenues from the sale ofelectricity on the day-ahead market that thegenerating or demand facility would havegenerated without the curtailment orredispatching request. Where financialsupport is granted to generating or demandfacilities based on the electricity volumegenerated or consumed, lost financialsupport shall be deemed part of the netrevenues.

Where non-market based curtailment orredispatching is used, it shall be subject topayment by the system operator requestingthe curtailment or redispatching to theowner of the curtailed or redispatchedgeneration or demand facility. Financialsettlement shall encompass the followingelements:

(a) additional operating cost caused by thecurtailment or redispatching, such asadditional fuel costs in case of upwardredispatching, or backup heat provision incase of downward redispatching orcurtailment of generating installations usinghigh-efficiency cogeneration;

(b) the difference between revenues fromthe sale of electricity on the day-aheadmarket and the operating costs of theenergy that the generating or demand facilitywould have injected without the curtailmentor redispatching request. Where financialsupport is granted to generating or demandfacilities based on the electricity volumegenerated or consumed, lost financialsupport shall be deemed part of the netrevenues.

Justification

Redispatch and curtailment management shall only be based on market mechanisms. Non-marketcurtailment should be an exception. In non-market decision making processes, generation ordemand shall be fully financial compensated for the lost revenues opportunity (incl. energycomponent and incentives) and for any additional costs. Such compensation mechanism shouldhowever avoid the risk of manipulation or counter-productive incentives.

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Bidding zone configuration review process

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 14

Article 13 - paragraph 4

The transmission system operatorsparticipating in the bidding zone review shallsubmit a proposal to the Commissionregarding whether to amend or maintain thebidding zone configuration. Based on thatproposal, the Commission shall adopt adecision whether to amend or maintain thebidding zone configuration, [no later than 6months after entry into force of thisRegulation, specific date to be inserted byOP] or by six months after the conclusion ofthe bidding zone configuration launched inaccordance with points (a), (b) or (c) ofArticle 32(1) of Regulation (EU) 2015/1222,whichever comes later.

The transmission system operatorsparticipating in the bidding zone review shallsubmit a proposal to the Commission andMember States of the Capacity CalculationRegion regarding whether to amend ormaintain the bidding zone configuration.Based on that proposal, where there is noagreement between Member States and/orMember State neighbours in the CapacityCalculation Region, the Commission shalladopt a decision whether to amend ormaintain the bidding zone configuration byclearly showing the issues at stake togetherwith an assessment of all available solutionson an equal basis, [no later than 6 monthsafter entry into force of this Regulation,specific date to be inserted by OP] or by sixmonths after the conclusion of the biddingzone configuration launched in accordancewith points (a), (b) or (c) of Article 32(1) ofRegulation (EU) 2015/1222, whichever comeslater.

Justification

BZ configuration is just one of the available tools and its impact on market efficiency and liquidityas well as on the long-term value of existing assets whose revenues are price-based shouldtherefore be considered with due care not to create undue uncertainty. The proposal to introducea supranational decision-making process should take place only if there is no agreement betweenthe MS (and/or other relevant neighbours) on the capacity calculation region especially wherethere is an impact on cross-border trade. Furthermore, this intervention shall be based on 1) aclear identification of the issue at stake and 2) an assessment of all available solutions on an equalfooting. Measures other than BZ delineation - such as increased counter-trading, cross-borderredispatch and investments - should be included in the conclusions as options to be consideredalongside the BZ review.

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Capacity calculation and allocation principles

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 15

Article 14 (new subparagraph)

The costs of remedial actions should beshared among TSOs based on the ‘polluter-pays principle’, where the “polluter” shouldbe defined as the transmission systemoperators of areas generating unscheduledflows and the transmission system operatorof the congested asset in proportion to thecontribution of unscheduled and scheduledflows, respectively, to the overload

Justification

The principles included in Art. 14 of the Electricity Regulation on capacity calculation are welcome.They reflect the recent ACER Recommendation on the common capacity calculation. By forcingTSOs to explore the most efficient congestion management options from a system perspective,those principles should allow for a more efficient use of the existing electricity infrastructure.

However, to allow an effective implementation of such principles, it is crucial to complement thisparagraph with a provision on sharing of re-dispatching and countertrading costs. This will ensurethat TSOs get the right financial incentives and economic signals to maximise cross-bordercapacities and to ensure non-discrimination between internal and cross-border trade. We suggestthis provision to use the “polluter pay principle” as mentioned by ACER in its Recommendation No02/2016, and recognise additional work is required anyway to define which TSO should beconsidered as “polluter”.

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Network charges

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 16

Article 16 - paragraph 1

Charges applied by network operators foraccess to networks, including charges forconnection to the networks, charges for useof networks, and, where applicable, chargesfor related network reinforcements, shall betransparent, take into account the need fornetwork security and flexibility and reflectactual costs incurred insofar as theycorrespond to those of an efficient andstructurally comparable network operatorand are applied in a non-discriminatorymanner. In particular, they shall be appliedin a way which does not discriminatebetween production connected at thedistribution level and production connectedat the transmission level, either positively ornegatively. They shall not discriminateagainst energy storage and shall not createdisincentives for participation in demandresponse. Without prejudice to paragraph 3,those charges shall not be distance-related.

Charges applied by network operators foraccess to networks, including charges forconnection to the networks, charges for useof networks, and, where applicable, chargesfor related network reinforcements, shall betransparent, take into account the need fornetwork security and flexibility and reflectactual costs incurred insofar as theycorrespond to those of an efficient andstructurally comparable network operatorand are applied in a non-discriminatorymanner. Grid tariffs should also not includeunrelated costs supporting other policyobjectives, such as taxes and levies, as thiswould distort production, consumption andinvestment decisions. In particular, they shallbe applied in a way which does notdiscriminate between production connectedat the distribution level and productionconnected at the transmission level, eitherpositively or negatively. They shall notdiscriminate against energy storage and shallnot create disincentives for participation indemand response. Without prejudice toparagraph 3, those charges shall not bedistance-related.

Justification

Those principles should be complemented by the following key missing element: grid tariffs shouldalso not include unrelated costs supporting other policy objectives, such as taxes and levies, as thiswould distort production, consumption and investment decisions. Should this happen, such taxesand levies should not be scattered across the tariff components and be charged/collected viaclearly defined and separate mechanisms in order to provide transparency to both markets andconsumers.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 17

Article 16 - paragraph 3

Where appropriate, the level of the tariffsapplied to producers and/or consumersshall provide locational signals at Unionlevel, and take into account the amount ofnetwork losses and congestion caused, andinvestment costs for infrastructure.

Grid tariffs shall not be distance-related andshall not provide locational signal. Onlyconnection charges may be distance relatedin order to be cost-reflective and givelocational signals.

Justification

To provide a level-playing field within each bidding zone, grid tariffs shall not be distance relatedand provide locational signals since the distance of a consumer from the network is not a costdriver for the operation of the network. Only connection charges, in order to be cost-reflective andgive locational signals, may be distance related

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 18

Article 16 - paragraph 8

Regulatory authorities shall provideincentives to distribution system operators toprocure services for the operation anddevelopment of their networks and integrateinnovative solutions in the distributionsystems. For that purpose regulatoryauthorities shall recognise as eligible andinclude all relevant costs in distributiontariffs and introduce performance targets inorder to incentivise distribution systemoperators to raise efficiencies, includingenergy efficiency, in their networks.

Regulatory authorities shall provideincentives to distribution system operators toprocure and develop services for theoperation and development of theirnetworks and integrate innovative solutionsin the distribution systems. For that purposeregulatory authorities shall recognise aseligible and include all relevant costs indistribution tariffs. These include, amongothers, Research and Development, pilotproject implementation and the launch ofnew technologies, as well as servicecontracts with market operators thatnetwork operators award for the operationand development of their networks. TheRegulatory authorities may introduceperformance targets in order to incentivisedistribution system operators to raiseefficiencies, including energy efficiency, intheir networks. The fundamental goal ofinnovative solutions is to improveefficiencies and quality of service. In thedevelopment phase of innovation, on theother hand, no cost efficiency requirementsshould apply.

Justification

EURELECTRIC appreciates that the Commission recognises the need for innovation in thedistribution networks in art. 16 (8), but believes that in order to ensure that DSOs are able to coverthe costs for innovation, such proposal should be complemented by an explanation of what it ismeant by “relevant costs” incurred by DSOs to achieve those principles.

NRAs should incentivise DSOs to raise efficiencies. Yet, NRAs should be flexible in choosing theirregulatory tools as performance targets are only one possibility of many. In fact, most EuropeanNRAs already apply regulatory tools with the aim to raise efficiencies. The introduction of the lastcaption is based on the ground that regulators should acknowledge that innovative grids willnecessarily invest in OPEX and CAPEX and that new technologies may not always be successfuland fail. A regulation that burdens the risk of failure only on DSOs causes DSOs to avoid the risk ofinnovation. Therefore it is justified to share the risk of innovation, because in the end DSOs willalso share the benefits of innovation with the customers.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 19

Article 16 - paragraph 9

[OP: please add specific date – three monthsafter entry into force] the Agency shallprovide a recommendation addressed toregulatory authorities on the progressiveconvergence of transmission and distributiontariff methodologies. That recommendationshall address at least:

(a) the ratio of tariffs applied toproducers and to consumers;(b) the costs to be recovered by tariffs;(c) time differentiated network tariffs;(d) locational signals;(e) the relationship between transmissionand distribution tariffs, includingprinciplesrelating to non-discrimination;(f) methods to ensure transparency in thesetting and structure of tariffs;(g) groups of network users subject totariffs, including tariff exemptions.

[OP: please add specific date – twelvemonths after entry into force] and followingstakeholder consultation, the Agency shallprovide a non-binding recommendationaddressed to regulatory authorities on theprogressive convergence of transmission anddistribution tariff methodologies. Thatrecommendation shall address at least:

(a) the ratio of tariffs applied toproducers and to consumers;(b) the costs to be recovered by tariffs;(c) time differentiated network tariffs;(d) locational signals;(e) the relationship betweentransmission and distribution tariffs,including principlesrelating to non-discrimination;(f) methods to ensure transparency inthe setting and structure of tariffs;(g) groups of network users subject totariffs, including tariff exemptions.

Justification

ACER should provide, respecting the principle of subsidiarity, a non-binding recommendationassessing the need for progressive convergence of transmission and distribution tariff structures.Such recommendation should provide guidance to NRAs to implement high-level principles listedunder Art. 16. However, it seems unrealistic to foresee only 3 months for ACER to issue suchrecommendation based on sufficient stakeholders’ involvement.

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Use of congestion income

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 20

Article 17 - paragraph 2

Any revenues resulting from the allocation ofinterconnection capacity shall be used for thefollowing purposes:

(a) guaranteeing the actual availabilityof the allocated capacity;

(b) and/or (b) maintaining or increasinginterconnection capacities throughnetwork investments, in particular innew interconnectors.

If the revenues cannot be efficiently used forthe purposes set out in points (a) and/or (b)of the first subparagraph, they shall beplaced on a separate internal account linefor future use on these purposes.

Any revenues resulting from the allocation ofinterconnection capacity shall be used for thefollowing purposes:

(a) guaranteeing the actual availabilityof the allocated capacity in all timeframes;

(b) maintaining or increasinginterconnection capacities throughnetwork investments, in particular innew interconnectors,

(c) and/or performing remedial actionssuch as cross-border or internalredispatching and countertrading.

If the revenues cannot be efficiently used forthe purposes set out in points (a) and/or (b)of the first subparagraph in the foreseeablefuture, they may be used for the reductionof tariffs.

Justification

Any revenues resulting from the allocation of interconnections shall be used for guaranteeing theactual availability of the allocated capacity and/or maintaining or increasing interconnectioncapacities through network investments. It should however be recognised that maintaininginterconnection capacities can also be ensured through redispatching and countertrading.Furthermore, if the revenues cannot be efficiently used for the purposes set out above and there isno foreseeable prospect to do so in the future, congestion income may still be used for thereduction of tariffs. We support that TSOs shall report on the actual use of the congestion income.

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Resource adequacy & capacity mechanisms

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 21

Article 18 - paragraph 1

Member States shall monitor resourceadequacy within their territory based on theEuropean resource adequacy assessmentpursuant to Article 19.

Member States shall monitor resourceadequacy within their territory based on acombination of resource adequacyassessments with different geographicalscopes: European pursuant to Article 19,regional and national following the samemethodology and assumptions.

Justification

A move towards a European/regional approach to security of supply is welcome as it will allowdeveloping a common forecast of reliable and firm capacity provided by all assets (generation,demand response and storage) as well as potential cross-border contribution. The European mid-term adequacy assessment performed by ENTSO-E shall be factored in but shall however not beconsidered as the only binding factor for MS to introduce security of supply measures (e.g.capacity mechanisms). On the contrary, several adequacy assessments with differentgeographical scope (European, regional, national) and granularity in the underlying assumptionsshould be taken into account by MS.

There is indeed a trade-off between the geographical scope covered by the system adequacyassessment and the granularity of the risk factors and scenarios considered in this probabilisticassessment. Both aspects are complementary and important to ensure (i) consistency of theresults between Member States (wide geographical scope, implying less granularity) and (ii)improved relevance of the assessments (restricted geographical scope, allowing more detailedgranularity and finer analysis of risk factors). This explains why resource adequacy assessmentswith different geographic scopes should be considered when monitoring security of supply.

Should the outcome of a national adequacy assessment substantially differ from the regional one,MS shall explain these differences. This allows a more informed decision making process to ensuresystem adequacy. Consistency in terms of methodology and assumptions between the differentlevels of assessments should be ensured.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 22

Article 20 - paragraph 1

When applying capacity mechanismsMember States shall have a reliabilitystandard in place indicating their desiredlevel of security of supply in a transparentmanner.

Member States shall have a reliabilitystandard in place indicating their desiredlevel of security of supply in a transparentmanner.

Justification

All Member States should define and publicly disclose their desired level of SoS target based onharmonised metrics - and not only the Member States that apply capacity mechanisms. While thechoice of adequacy metrics should be harmonised, each country should be free to set its desiredlevel of adequacy.

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 23

Article 21 - paragraph 1

Mechanisms other than strategic reservesshall be open to direct participation ofcapacity providers located in anotherMember State provided there is a networkconnection between that Member State andthe bidding zone applying the mechanism.

Capacity mechanisms shall be open to directparticipation of capacity providers located inanother Member State provided there is anetwork connection between that MemberState and the bidding zone applying themechanism.

Justification

Cross-border participation should apply to all types of mechanisms aimed at ensuring security ofsupply, including strategic reserves.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 24

Article 21 - paragraph 5

Capacity providers shall be able to participatein more than one mechanism for the samedelivery period. They shall be subject to non-availability payments in case of non-availability, and subject to two or more non-availability payments where there isconcurrent scarcity in two or more biddingzones where the capacity provider iscontracted.

Capacity providers shall be able to participatein more than one mechanism when:

a) entry capacity is determined ex-anteaccording to Art. 21.6;

b) or, for the same capacity, thosemechanisms do not targetoverlapping time frames for scarcityor overlapping periods of obligation.They shall be subject to non-availability payments in case of non-availability, and subject to two ormore non-availability paymentswhere there is concurrent scarcity intwo or more bidding zones wherethe capacity provider is contracted

Justification

EURELECTRIC generally advocates for a principle of exclusivity (no double commitments orearnings) in capacity mechanisms targeting overlapping time frames for scarcity or overlappingperiods of obligation. When capacity derating is not determined ex-ante, enabling multiplecommitments could require developing a complex set of arrangements between nationalauthorities to establish what capacity is committed where and the likelihood of contributing tosecurity of supply in each. Penalties would need to be sufficient to avoid capacity providers“overcommitting” themselves and receiving overcompensation relative to their (lack of) actualcontribution to security of supply in case of common scarcity in committed markets.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 25

Article 23 - paragraph 4

Generation capacity for which a finalinvestment decision has been made after[OP: entry into force] shall only be eligible toparticipate in a capacity mechanism if itsemissions are below 550 gr CO2/kWh.Generation capacity emitting 550 grCO2/kWh or more shall not be committed incapacity mechanisms 5 years after the entryinto force of this Regulation.

Deleted

Justification

Market-based mechanisms such as carbon markets are the most cost-effective and efficient toolfor mitigating greenhouse gas emissions and stimulating investments in low carbon technologiesand energy efficiency. Only the combination of an effectively reformed EU ETS and improved EUelectricity market design can lead to sustainable and credible carbon price signals to driveinvestments to mature low carbon technologies.

The CO2 EPS in capacity mechanisms should be removed as it weakens the EU ETS and could haveunintended consequences on competitiveness, decarbonisation and security of supply. Suchmarket interventions also undermine investors’ confidence. The impact of an EPS will not belimited to baseload coal and lignite. In some countries, the CO2 EPS will impact peaking plants,including flexible gas-fired power plant. Those plants, while playing a crucial role to ensure SoSand backing up renewables, run few hours per year, thus having a limited contribution to CO2

emissions.

The CO2 EPS for capacity mechanisms should therefore be removed from the ElectricityRegulation.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 26

Article 23 - paragraph 5

Where the European resource adequacyassessment has not identified a resourceadequacy concern, Member States shall notapply capacity mechanisms.

Should the outcome of a national resourceadequacy assessment substantially differfrom the European one, Member States shallexplain these differences before applyingcapacity mechanisms.

Justification

The European mid-term adequacy assessment performed by ENTSO-E shall be factored in but shallhowever not be considered as the only binding factor for MS to introduce security of supplymeasures (e.g. capacity mechanisms). Should the outcome of a national adequacy assessmentsubstantially differ from the European one, Member States shall explain these differences.

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 27

Article 23 paragraph 6 (new)

Where implemented, capacity mechanismsshall be well designed: market-based,technology-neutral, open to existing andnew assets, open to cross-borderparticipation

Justification

The Regulation should rather establish principles for the implementation and design of capacitymechanisms as part of the electricity market design. This would facilitate a European coordinatedapproach on capacity mechanism as demonstrated in the DG COMP final report on the sectorenquiry.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 28

Article 24

Member States applying capacitymechanisms on [OP: entry into force of thisRegulation] shall adapt their mechanisms tocomply with Articles 18, 21 and 23 of thisRegulation.

Member States applying capacitymechanisms on [OP: entry into force of thisRegulation] shall publish a timeline foradopting measures to adapt theirmechanisms to comply with Articles 18, 21and 23 of this Regulation.

Justification

Whereas existing capacity mechanisms implemented before or under the Energy andEnvironmental State Aid Guidelines (EEAG) must be respected to avoid negative impact oninvestment decisions, EURELECTRIC would welcome transitional measures by MS to adapt in areasonable timeframe those mechanisms towards a design compatible with the EEAG.

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Regional Operational Centres

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 29

Article 38 - paragraph 2

Regional operational centres shall adoptbinding decisions addressed to thetransmission system operators in respect ofthe functions referred to in points (a), (b), (g)and (q) of Article 34(1). Transmission systemoperators shall implement the bindingdecisions issued by the regional operationalcentres except in cases when the safety ofthe system will be negatively affected.

Regional operational centres shall adoptbinding decisions addressed to thetransmission system operators in respect ofthe functions referred to in points (a), (b), (g)and (q) of Article 34(1). Transmission systemoperators shall implement the bindingdecisions issued by the regional operationalcentres except in cases when the safety ofthe system will be negatively affected.Should this be the case, the involved TSO(s)shall systematically report on themotivations for this decision and thealternative measure. This report shall bepublicly disclosed no later than one weekafter declining the recommendation. Every 6months, TSOs shall publish a comprehensivereport presenting all cases whererecommendations of the ROC where notapplied, and detailing proposals forimproving the procedures of the ROC.

Justification

While we support the fact that TSOs may derogate from ROC recommendation/binding decision incases where the safety of the system will be negatively affected, full transparency and reportingon this choice shall be ensured. Such justification is already foreseen under Art. 39.4 in the case ofthe revision of a recommendation that is not followed by a TSO.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 30

Article 34 - paragraph 1 (new)

(r) provide advice on grid projects to includein the regional investment plan

Justification

By formally establishing the proposed task the ROC will be incentivized to develop and form aregional perspective on grid development. The ROC thereby will add a unique regional perspectiveto the national views of TSOs allowing for a well-informed decision on the regional investmentplan.

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 31

Article 43 - paragraph 2

Regional operational centres shall submit tothe Agency and to the regulatory authoritiesof the system operation region the dataresulting from their continuous monitoring atleast annually.

Regional operational centres shall submit tothe Agency and to the regulatory authoritiesof the system operation region the dataresulting from their continuous monitoring atleast annually. Upon request of the Agencyor any of the regulatory authorities of thesystem operation region, the regionaloperational centres shall submit a report ofthe outcomes of binding decisions. Regionaloperational centres shall submit a report tothe Agency and the regulatory authorities ofthe system operation region whenever abinding decision negatively affected systemsecurity.

Justification

While we support the fact that TSOs may derogate from ROC recommendation/binding decision incases when the safety of the system will be negatively affected, full transparency and reporting onthis choice shall be ensured towards the market and the NRAs.

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DSO representation at European level

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 32

Article 49

Distribution system operators which are notpart of a vertically integrated undertakingor which are unbundled according to theprovisions of Article 35 [recast of Directive2009/72/EC as proposed by COM(2016)864/2], shall cooperate at Union levelthrough a European Entity for Distributionsystem operators ("EU DSO entity"), in orderto promote the completion and functioningof the internal market in electricity, and topromote optimal management and acoordinated operation of distribution andtransmission systems. Distribution systemoperators who wish to participate in the EUDSO entity shall become registered membersof the entity.

Distribution system operators shallcooperate at Union level through a EuropeanEntity for Distribution system operators ("EUDSO entity"), in order to promote thecompletion and functioning of the internalmarket in electricity, and to promote optimalmanagement and a coordinated operation ofdistribution and transmission systems.Distribution system operators who wish toparticipate in the EU DSO entity shall becomeregistered members of the entity or choose aproxy of EU or other Associations of theirchoosing. The EU DSO entity shall deal onlywith issues which require Union regulations;all others will be handled on national level.

Justification

Since the decisions of the DSO entity apply to all DSOs (also smaller ones), EURELECTRIC suggeststo ensure inclusivity of all DSOs in Europe, therefore recommending that the membership criteriais widened to include all type of DSOs in Europe.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 33

Article 51 – paragraph 1

The tasks of the EU DSO entity shall be thefollowing:

(a) coordinated operation and planning oftransmission and distribution networks;

(b) integration of renewable energyresources, distributed generation and otherresources embedded in the distributionnetwork such as energy storage;

(c) development of demand response;

(d) digitalisation of distribution networksincluding deployment of smart grids andintelligent metering systems;

(e) data management, cyber security anddata protection;

(f) participation in the elaboration of networkcodes pursuant to Article 56.

In addition the EU DSO entity shall:

(a) cooperate with ENTSO for electricity onthe monitoring of implementation of thenetwork codes and guidelines which arerelevant to the operation and planning ofdistribution grids and the coordinatedoperation of the transmission anddistribution networks and which are adoptedpursuant to this Regulation;

(b) cooperate with ENTSO for electricity andadopt best practices on the coordinatedoperation and planning of transmission anddistribution systems including issues such asexchange of data between operators andcoordination of distributed energy resources;

(c) work on identifying best practices on theareas identified in paragraph 1 and for theintroduction of energy efficiencyimprovements in the distribution network;

(d) adopt an annual work programme and an

The tasks of the EU DSO entity shall beselected appropriately and can include thefollowing:

(a) coordinated operation and planning oftransmission and distribution networks;

(b) integration of renewable energyresources, distributed generation and otherresources embedded in the distributionnetwork such as energy storage;

(c) development of demand response;

(d) digitalisation of distribution networksincluding deployment of smart grids andintelligent metering systems;

(e) data management, cyber security anddata protection;

(f) participation in the elaboration of networkcodes pursuant to Article 56.

In addition the EU DSO entity shall:

(a) cooperate with ENTSO for electricity onthe monitoring of implementation of thenetwork codes and guidelines which arerelevant to the operation and planning ofdistribution grids and the coordinatedoperation of the transmission anddistribution networks and which are adoptedpursuant to this Regulation;

(b) cooperate with ENTSO for electricity andadopt best practices on the coordinatedoperation and planning of transmission anddistribution systems including issues such asexchange of data between operators andcoordination of distributed energy resources;

(c) adopt an annual work programme and anannual report;

(d) operate in full compliance withcompetition rules.

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annual report;

(e) operate in full compliance withcompetition rules.

Justification

The DSO entity should be comprised of national DSO technical experts focused purely on technicallegislative drafting and providing advice to the European institutions. Its main objective would beto ensure harmonisation of national rules at EU level where there are verifiable efficiency gains forthe operation of the distribution networks and benefit for consumers. EU DSO entity should notengage in lobbying activities, therefore the tasks should be selected appropriately. Theinterlinkages between a) Art. 51 listing the tasks of the EU DSO entity and b) Art. 55 listing newareas for network codes should be carefully assessed and looked at together in order to ensureconsistency. As far as the new proposed areas for network codes are concerned, EURELECTRICquestions whether addressing the new areas actually requires a brand new set of NCs andguidelines, or if an expansion of the current NCs and guidelines would be sufficient.

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Network codes

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 34

Article 55 – paragraph 1

The Commission is empowered to adoptdelegated acts in accordance with Article 63concerning the establishment of networkcodes in the following areas:

(a) network security and reliability rulesincluding rules for technical transmissionreserve capacity for operational networksecurity;

(b) network connection rules;

(c) third-party access rules;

(d) data exchange and settlement rules;

(e) interoperability rules;

(f) operational procedures in an emergency;

(g) capacity-allocation and congestion-management rules including curtailment ofgeneration and redispatch of generation anddemand;

(h) rules for trading related to technical andoperational provision of network accessservices and system balancing;

(i) transparency rules;

(j) balancing rules including network-relatedreserve power rules;

(k) rules regarding harmonised transmissionand distribution tariff structures andconnection charges including locationalsignals and inter-transmission systemoperator compensation rules; and

(l) energy efficiency regarding electricitynetworks;.

(m) rules for non-discriminatory,transparent provision of non-frequencyancillary services, including steady statevoltage control, inertia, fast reactive currentinjection, black-start capability;

The Commission is empowered to adoptdelegated acts in accordance with Article 63concerning the establishment of networkcodes in the following areas:

(a) network security and reliability rulesincluding rules for technical transmissionreserve capacity for operational networksecurity;

(b) network connection rules;

(c) third-party access rules;

(d) data exchange and settlement rules;

(e) interoperability rules;

(f) operational procedures in an emergency;

(g) capacity-allocation and congestion-management rules including curtailment ofgeneration and redispatch of generation anddemand;

(h) rules for trading related to technical andoperational provision of network accessservices and system balancing;

(i) transparency rules;

(j) balancing rules including network-relatedreserve power rules;

(k) rules regarding harmonised transmissiontariff structures and connection chargesincluding locational signals and inter-transmission system operator compensationrules; and

(l) energy efficiency regarding electricitynetworks;.

(m) cyber security rules.

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(n) demand response, includingaggregation, energy storage, and demandcurtailment rules;

(o) cyber security rules; and

(p) rules concerning regional operationalcentres.

Justification

EURELECTRIC questions whether addressing the new areas actually requires a brand new set ofNCs and guidelines, or if an expansion of the current NCs and guidelines would be sufficient assome of the proposed NCs go very much into MS’s competencies. For example distribution tariffsare a matter of national regulation and as such they should not be subject to a network code.EURELECTRIC opposes development of technology specific NCs such as non-frequency ancillaryservices and demand response.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 35

Article 55 – paragraph 2

2. The Commission shall, after consulting theAgency, the ENTSO for Electricity and theother relevant stakeholders, establish apriority list every three years, identifying theareas set out in paragraph 1 to be included inthe development of network codes. If thesubject-matter of the network code isdirectly related to the operation of thedistribution system and less relevant for thetransmission system, the Commission mayrequire the EU DSO entity for electricityinstead of the ENTSO for Electricity toconvene a drafting committee and submit aproposal for a network code to the agency.

2. The Commission shall, after consulting theAgency, the ENTSO for Electricity, the EUDSO entity and the other relevantstakeholders, establish a priority list everythree years, identifying the areas set out inparagraph 1 to be included in thedevelopment of network codes. If thesubject-matter of the network code isdirectly related to the operation of thedistribution system and less relevant for thetransmission system, the Commission mayrequire the EU DSO entity for electricityinstead of the ENTSO for Electricity toconvene a drafting committee and submit aproposal for a network code to the agency.

Justification

The EU DSO entity should be in an equal position with ENTSO-E in the establishing of a priority listfor Network Codes together with ACER, considering that the listed Network Codes might have astrong DSO impact, and the EU DSO entity is heavily involved in the development of the decidedNetwork Codes.

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Regional Operational Centres tasks (Annex 1)

Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 36

Annex 1 7.1.b

Regional operational centres shall determinethe reserve capacity requirements for thesystem operation region. The determinationof reserve capacity requirements shall:

a) pursue the general objective tomaintain operational security in themost cost effective manner;

b) be performed at the day-aheadand/or intraday timeframe;

c) determine the overall amount ofrequired reserve capacity for thesystem operation region;

d) define minimum reserve capacityrequirements for each type ofreserve capacity;

e) take into account possiblesubstitutions between differenttypes of reserve capacity with theaim to minimise the costs ofprocurement;

f) set out the necessary requirementsfor the geographical distribution ofrequired reserve capacity, if any.

Regional operational centres shall determinethe reserve capacity requirements for thesystem operation region. The determinationof reserve capacity requirements shall:

a) pursue the general objective tomaintain operational security in themost cost effective manner;

b) determine the overall amount ofrequired reserve capacity for thesystem operation region;

c) define minimum reserve capacityrequirements for each type ofreserve capacity;

d) take into account possiblesubstitutions between differenttypes of reserve capacity with theaim to minimise the costs ofprocurement;

e) set out the necessary requirementsfor the geographical distribution ofrequired reserve capacity, if any.

Justification

Performing sizing of balancing capacity reserves only at the day-ahead and intra-day time frameis too ambitious given current practices and should rather be performed on various lead times.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 37

Annex 1 8.1.

Regional operational centres shall supportthe transmission system operators of thesystem operation region in determining theamount of balancing capacity that needs tobe procured. The determination of theamount of balancing capacity shall:

a) be performed at the day-aheadand/or intraday timeframe;

b) take into account possiblesubstitutions between differenttypes of reserve capacity with theaim to minimise the costs ofprocurement;

c) take into account the volumes ofrequired reserve capacity that areexpected to be provided by balancingenergy bids, which are not submittedbased on a contract for balancingcapacity.

Regional operational centres shall supportthe transmission system operators of thesystem operation region in determining theamount of balancing capacity that needs tobe procured. The determination of theamount of balancing capacity shall:

a) be performed according to the rulesas referred in Art. 32, 33 and 34 ofthe Electricity Balancing Guideline

b) take into account possiblesubstitutions between differenttypes of reserve capacity with theaim to minimise the costs ofprocurement;

c) take into account the volumes ofrequired reserve capacity that areexpected to be provided by balancingenergy bids, which are not submittedbased on a contract for balancingcapacity.

d) Be performed in a way ensuring thatcross-border capacity allocation isalways the result of a market basedprocess.

Justification

Where economically efficient, a move towards regional balancing capacity procurement iswelcome to allow the system to grasp the potential economic benefits of exchanging balancingreserves. Performing regional balancing capacity procurement only at the day-ahead and intra-day time frame is too ambitious given current practices. Those tasks should be performedaccording to the rules already defined in Electricity Balancing guideline. In addition, whereregional balancing capacity procurement is in place, cross border capacity allocation must be theoutcome of the markets and should not involve reservation of cross-border transmission capacityby TSOs.

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Text proposed by Commission Amendment proposal by EURELECTRIC

Amendment 38

Annex 1 8.2.

Regional operational centres shall supportthe transmission system operators of thesystem operation region in procuring therequired amount of balancing capacitydetermined in accordance with point 8.1. Theprocurement of balancing capacity shall:

a) be performed at the day-aheadand/or intraday timeframe;

b) take into account possiblesubstitutions between differenttypes of reserve capacity with theaim to minimise the costs ofprocurement.

Regional operational centres shall supportthe transmission system operators of thesystem operation region in procuring therequired amount of balancing capacitydetermined in accordance with point 8.1. Theprocurement of balancing capacity shall:

a) be performed according to the rulesas referred in Art. 32, 33, 34 of theElectricity Balancing Guideline

b) take into account possiblesubstitutions between differenttypes of reserve capacity with theaim to minimise the costs ofprocurement.

c) Be performed in a way ensuring thatcross-border capacity allocation isalways the result of a market basedprocess.

Justification

Where economically efficient, a move towards regional balancing capacity procurement iswelcome to allow the system to grasp the potential economic benefits of exchanging balancingreserves. Performing regional balancing capacity procurement only at the day-ahead and intra-day time frame is too ambitious given current practices. Those tasks should be performedaccording to the rules already defined in Electricity Balancing guideline. In addition, whereregional balancing capacity procurement is in place, cross border capacity allocation must be theoutcome of the markets and should not involve reservation of cross-border transmission capacityby TSOs.

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EURELECTRIC pursues in all its activities the application ofthe following sustainable development values:

Economic Development

Growth, added-value, efficiency

Environmental Leadership

Commitment, innovation, pro-activeness

Social Responsibility

Transparency, ethics, accountability

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Union of the Electricity Industry - EURELECTRIC aisblBoulevard de l’Impératrice, 66 - bte 2B - 1000 Brussels • BelgiumTel: + 32 2 515 10 00 • Fax: + 32 2 515 10 10VAT: BE 0462 679 112 • www.eurelectric.orgEU Transparency Register number: 4271427696-87