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.
ACER's Frequently Asked Questions (FAQs) on REMIT transaction reporting
Question 3.1.1
a) If invoice data are required for phase 2 what invoice details will be used for reporting on non-standard contracts? Will the market participant have to use the preliminary invoice (before agreement and payment) or will he need to be reported based upon the final invoice details (agreed and paid by the counterparty)?
b) What price information is required in Table 1 data field 35 and Table 2 data field 15? Does the price need to include all components (basic price (Grundpreis/Leistungspreis), energy price (Arbeitspreis) including grid charge (Netznutzung), green tax (Ökosteuer), VAT (Mehrwertsteuer), concession fee (Konzessionsabgabe), renewable fee (KWK- und EEG-Umlage), surcharge for structuring) or just a specific part?
Answer
On page 20 of the TRUM, under the “Clarification of outright volume and price and reporting frequency for transactions executed within the framework of non-standard contracts“ the Agency clarifies that transactions executed under the framework of a non-standard contract have to be reported once the delivered quantity and the price are known, but still using Table 1 of the Annex to the Implementing Acts.
Still, the TRUM clarifies that ”As far the Agency is aware, details of transactions executed within the framework of non-standard contracts specifying at least an outright volume and price are available to both parties to the contract by the invoicing date at the latest.”
In Annex II to the TRUM, the Agency used the term “billing cycle” and “invoicing date” to indicate that this is the last point in time that price and quantity can be discovered. In addition, Annex II to the TRUM indicates that transactions executed within the framework of non-standard contracts can be reported on a monthly basis:
“The Agency understands that the billing cycle industry standards refer to calendar months and therefore twelve transactions per year (if the executions take place every month of the year) are expected to be reported no later than 30 days after the discovery of price and quantity. However, nothing prevents market participant from reporting the details of transactions executed within the framework of non-standard contracts on a more frequent basis even if the Agency would not expect it.”
Market participants should not understand the terms “billing cycle” and “invoicing date” as an indication that under REMIT they have to report the components of their invoices which include taxes, costs and adjustments not in the scope of REMIT.
Market participants should report the energy price for the energy delivered in the period of time the reported execution/contract refers to.
With regard to the energy price, market participants reporting transactions executed within the framework of non-standard contracts on a monthly basis should report the energy price as considered in contract.
If the price is fix, that price will be reported. If the price is fixed by a fixing index, a price formula, a strike price or anything else as defined in the contract, then that energy price has to be reported to the Agency.
With regard to the energy delivered, market participants should report the energy delivered as indicated in the execution report.
The Agency understands that invoices may cover several months: the current month plus some adjustments from previous months (these can sometimes go back up to 18 months in the past). Market participants have to report only the energy delivered in the period of time the execution report refers to without any adjustments from the past.
The Agency understands that the reporting of the energy delivered in the previous month may be over/under estimated and it recommends market participants to consider an amendment to the execution reports already reported in order to avoid that the discrepancy between the reported volume (or price) and the new information acquired may cause false positive signals to the market monitoring activity of the Agency and/or the National Regulatory Authorities.
|
|
Documentation |
ACER's Frequently Asked Questions (FAQs) on REMIT transaction reporting, Question 1.1.28, Question 3.1.1
|
|
Links |
