To establish whether tolling agreements are reportable under the REMIT reporting scheme they need to be assessed on a case by case basis.
The purpose of this assessment should, in particular, be the qualification whether the counterparties to such contracts enter into transactions for the delivery of the energy commodity or for the provision of services.
In principle, if there is no transaction between the two parties in relation to a wholesale energy product, then this would mean there are no reportable transactions under the reporting obligation of REMIT.
Tooling agreements in this sense are understood as contracts allowing for the conversion of a fuel into electricity between one party and another under the following main rules:
- the fuel that is nominated to the party converting the fuel remains in the ownership of the party requiring the electricity and the resultant electricity belongs to this same party,
- there is no transfer of title of either commodity and the financial settlement of the agreement relates to the availability of the converting party to convert the fuel.
- one counterparty (Party A) nominates a volume of its own gas to another (Party B), the converter (i.e. a power station), the resultant electricity is scheduled into the account of Party A,
- on a regular basis Party A makes a payment to Party B based on the availability of Party B.
Legal basis:
- Article 3(1)(a)(vi) of the Commission Implementing Regulation (EU) No 1348/2014,
- ACER's Frequently Asked Questions (FAQs) on REMIT transaction reporting, Question 3.1.16 (see box).
ACER's Frequently Asked Questions (FAQs) on REMIT transaction reporting
Question 3.1.16
Implementing Acts – Article 3(1)(a)(vi) - Other contracts for the supply of electricity or natural gas with a delivery period longer than two days where delivery is in the Union irrespective of where and how they are traded, in particular regardless of whether they are auctioned or continuously traded.
Tolling agreements allow for the conversion of a fuel into electricity between one party and another. The fuel that is nominated to the party converting the fuel remains in the ownership of the party requiring the electricity and the resultant electricity belongs to this same party. There is no transfer of title of either commodity and the financial settlement of the agreement relates to the availability of the converting party to convert the fuel.
Party A nominates a volume of its own gas to Party B, the converter (i.e. a power station). The resultant electricity is scheduled into the account of Party A. On a regular basis Party A will make a payment to Party B based on the availability of Party B.
Answer
If there is no transaction between the two parties in relation to a wholesale energy product, then this would mean there are no reportable transactions under the reporting obligation of REMIT. Market participants should assess if they enter into transactions for the delivery of the energy commodity or for the provision of services.