Long Term Transmission Rights Secondary Trading in the European Union Internal Electricity Market encompasses the trading of Long Term Transmission Rights (LTTRs) through which a market participant is able to buy or sell LTTRs, which were initially allocated by the allocation platform(s).
Transfer of long-term transmission rights
1. Long-term transmission rights holders shall be entitled to transfer all or part of their long-term transmission rights to other market participants in accordance with the harmonised allocation rules.
2. The rules on admissibility and a list of market participants registered with the single allocation platform and eligible to transfer long-term transmission rights shall be published on the single allocation platform.
3. Long-term transmission rights holders shall notify the transfer of long-term transmission rights, directly or indirectly through a third party, to the single allocation platform in accordance with the harmonised allocation rules.
4. Market participants acquiring those long-term transmission rights shall confirm, in accordance with the harmonised allocation rules, directly or indirectly through a third party, to the single allocation platform the notification sent by the previous long-term transmission rights holder.
Hence, LTTRs holders are entitled to transfer all or part of their LTTRs through secondary trading to other market participants according to the corresponding allocation rules.
Also Article 14(6) of the European Commission Proposal of 30 November 2016 for a Regulation of the European Parliament and of the Council on the internal market for electricity (being part of the so-called Winter Energy Package) stipulates that capacity "shall be freely tradable on a secondary basis, provided that the transmission system operator is informed sufficiently in advance. Where a transmission system operator refuses any secondary trade (transaction), this shall be clearly and transparently communicated and explained to all the market participants by that transmission system operator and notified to the regulatory authority".
According to the procedure envisioned in Article 44 of the Network Code on Forward Capacity Allocation (FCA) and Article 42(2) of the Harmonised Allocation Rules (HAR), LTTRs holders transferring their LTTRs through secondary trading must notify the Single Allocation Platform (SAP) while the acquirer of the LTTRs must confirm to the allocation platforms the notification sent by the previous holder.
The notification of the transfer must be delivered to the no later than at 12:00 p.m. on the second (2nd) day preceding the day of delivery.
The HAR stipulate, among others, firmness provisions as well as the compensation rules (i.e. the rules according to which each Transmission System Operator responsible for the bidding zone border where LTTRs have been allocated, compensates market participants for curtailing the LTTRs).
The formal requirement for market participants before being entitled to participate in the auction(s) or perform secondary trading is to register with the SAP created according to the Forward Capacity Allocation Network Code and to meet all eligibility requirements under the corresponding allocation rules.
The Forward Capacity Harmonised Allocation Rules envisage that the SAP is required to publish a list of registered participants eligible to transfer LTTRs.
Article 43 of the HAR stipulates that “all rights and obligations resulting from the HAR” are transferred together with the LTTR.
The only exception is the payment obligation of the original LTTR holder regarding the allocation of LTTR.
ACER's Q&As on REMIT
Are transfers of transport capacity between a market participant and an end user with a site which does not have the capacity to consume more than 600 GWh/year to be reported, although the gas delivery contracts themselves are not to be reported?
The Agency believes that usually for a consumption unit with a maximum technical capacity of less than 600 GWh/year a supply contract will normally be a contract with a single delivery point to the customer and without any transfer of transport capacity. The threshold refers to the supply of electricity contracts and not to the transportation contracts. If the transfer of transport capacity relates to a wholesale energy product it has to be reported pursuant to Article 3(1)(b)(i) and (ii) of Commission Implementing Regulation (EU) No 1348/2014.
Single Allocation Platform is intended to serve, moreover, as a contact center for market participants in order to perform the transfer of LTTRs.
SAP provides a communication platform (the “notice board”), on which market participants are able to indicate to other market participants their interest to transfer or purchase LTTRs, which have been initially allocated by allocation platforms.
It is noteworthy, in the light of the HAR (Article 44), the notice board serves as ancillary tool only and is not used for the purposes of evidencing contracts.
The notice board only facilitates the exchange of information between the registered participants regarding their interest in buying and/or selling Long Term Transmission Rights.
The HAR clearly states that “no agreements may be concluded via this notice board”.
Moreover, any notices published via the notice board by the registered participants “shall not be considered as an evidence for a valid and effective contract for the transfer of 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 - HAR)
Transfer of Long Term Transmission Rights
1. Long Term Transmission Right holder(s) may transfer some or all of their Long Term Transmission Rights to another Registered Participant once the Auction results in respect of those rights are final. Regardless of how the transfer was concluded, it shall be notified to the Allocation Platform following the process pursuant to Article 42 and via the Auction Tool according to a format specified on the Allocation Platform’s website.
2. The minimum volume of Long Term Transmission Rights that may be transferred shall be one (1) MW over one (1) hour.
Process of the transfer
1. The transferor shall send a notification, directly or indirectly through an authorised third party, of the transfer to the Allocation Platform via the Auction Tool with the following information:
(a) the EIC codes of the transferor and transferee;
(b) the time period of the transfer including the start and end dates and hours; and
(c) the volume (MW) of the transferred Long Term Transmission Right in whole MW(s) defined per hour.
2. The notification of the transfer shall be delivered to the Allocation Platform no later than at 12:00 p.m. on the second (2nd) day preceding the day of delivery.
3. In order to be able to transfer the Long Term Transmission Rights the following requirements shall be fulfilled:
(a) the transferor and transferee have a valid and effective Participation Agreement with the Allocation Platform at least for transfer of Long Term Transmission Rights; the transferor holds the concerned Long Term Transmission Rights at the time of the notification of the transfer;
(b) the transferor has fulfilled or secured its financial obligations pursuant to this Allocation Rules regardless whether the transferor transfers all or only part of its Long Term Transmission Rights and even in the case of multiple transfers among several Registered Participants; and
(c) the transferor has delivered the notification of the transfer before the deadline pursuant to paragraph 2 of this Article.
4. The Allocation Platform shall issue without undue delay an acknowledgement of receipt of the notification to the transferor. Where the notification fulfils the requirements pursuant to paragraph 3 of this Article the Allocation Platform shall inform the transferee about the notification of the transfer.
5. In the event that the acknowledgement is not sent by the Allocation Platform, the concerned notification shall be deemed not to have been submitted.
6. The notification of transfer shall be confirmed by the transferee within four (4) hours upon receiving the transfer information from the Allocation Platform and no later than at 12:00 p.m. the second (2nd) day preceding the day of delivery.
7. In the event that the transferee does not confirm the transfer by the deadline pursuant to paragraph 6, the Allocation Platform shall automatically cancel the process of the transfer notification.
8. The Allocation Platform shall then issue without undue delay to the transferor and the transferee a second acknowledgement via the Auction Tool stating either:
(a) that the transfer notification has been accepted and is effective; or
(b) that the transfer notification has been rejected including the reason(s).
9. If for any technical reason the acknowledgement is not sent by the Allocation Platform, the concerned transfer is deemed not to have been submitted.
10. The Transferor shall not be entitled to withdraw the transfer notification once the transferee has accepted it. The transferee may initiate another transfer to transfer the Long Term Transmission Rights further.
11. In the event of Auction Tool failure, a fallback procedure pursuant to Chapter 8 shall apply. If the process of the transfer notification cannot be completed in accordance with this Article due to an IT system and/or fallback procedure failure, Registered Participants shall not be entitled to claim any financial compensation from the Allocation Platform.
Legal consequences of the transfer
All rights and obligations resulting from these Allocation Rules, with exception of the payment obligation of the original Long Term Transmission Right holder regarding the allocation of Long Term Transmission Right pursuant to Article 62(1), shall be transferred together with the Long Term Transmission Right.
1. The notice board shall facilitate only the exchange of information between the Registered Participants regarding their interest in buying and/or selling Long Term Transmission Rights. No agreements may be concluded via this notice board. Use of the notice board is free of charge.
2. Any notices published via the notice board by the Registered Participants shall not be considered as an evidence for a valid and effective contract for the transfer of Long Term Transmission Rights.
3. The Allocation Platform shall not be held liable for the accuracy and completeness of the information published by a Registered Participant on the notice board.
4. The Allocation Platform may delete from the notice board any information it considers not relevant for the purpose of the notice board. In case of such a deletion, the Allocation Platform shall provide the reasons for the deletion to the respective Registered Participant.
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), Articles 41 - 44
ACER's Q&As on REMIT, Question III.3.33
Proposal of 30 November 2016 for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), COM(2016) 861 final 2016/0379 (COD), Article 14(6)