Technical profile

Approval of allocation rules for cross-border transport capacity valid for the year 2017

Resolution 530/2016/R/eel

September 30, 2016

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With Resolution 530/2016/R/eel, the Italian Regulatory Authority for Electricity Gas and Water approves the 2017 Harmonised Auctions Rules (HAR), that is, the valid rules for the allocation in 2017 of annual and monthly rights to the utilisation of transmission (in short: transport capacity) on the interconnection grid with foreign countries, in favor of harmonisation of the rules at European level.

The HAR shall be adopted by the Authority within the voluntary and early implementation of the European Forward Capacity Allocation Regulation (FCA Regulation), adopted by the Comitology procedure on 30th October 2015 and published in the EU Official Journal of 26th September 2016 (EU Regulation 2017/1719). The HAR have been developed by the Transmission System Operator (TSO), including Terna, as part of the European Network of Transmission System Operators for Electricity (ENTSOE), consulted in April and May 2016, and then submitted to the Authority by TERNA for approval.   In particular, the HAR valid for 2017 provide for the evolution, in European key, of the firmness regime [1] of the capacity rights (rules by which the market operator, who has bought the rights, is compensated economically as a result of the need of the TSO to reduce the already allocated capacity for security reasons), with particular reference to the specific rules for the Italian borders (included in Annex 6 Regional Specific Annex: Italian Border). Such changes:
  • extend the new regime of reimbursement to the market spread (in the past a reimbursement was given at the auction price) also to the Italian- Austria border (the regime had already been introduced in 2016 as an experiment on the borders with France and Slovenia);
  • introduce an annual cap (in place of the monthly one) on the border with Austria, France and Slovenia in case of compensation for the cross-border capacity use rights;
  • maintain the previous system (reimbursement at the auction price) wherever market coupling is not in force, with particular reference to the borders of Switzerland (where, however, the FCA Rules would still not be applicable because Switzerland is not a EU member) and Greece.   In summary, 530/2016/R/eel regulation requires full alignment with the provisions of the future FCA Regulation for the borders where market coupling is already active. In order to maintain the risk profile for the Italian system combined with the new firmness regime, the TSO operating on the northern border will aim to reshape the volumes allocated to the border in the annual and monthly auctions, still aiming at maximising, as a whole, volumes of interconnection capacity made available to the market as provided for by Regulation (EC) no.714/2009.

The HAR for 2017 supersede the Allocation Rules for Forward Capacity Allocation regulation approved with Resolution 483/2015/R/eel, only valid for 2016.    

This sheet is for disclosure purposes only; it is not a measure.

[1] The firmness regime adopted in FCA Regulation primarily provides that a market operator, in the hours when capacity reductions are needed, is compensated by the TSOs at a price equal to the difference of the hourly prices of the involved markets (so-called market spread compensation, which differs from traditional compensation 'at the auction price' according to which the price of compensation takes place at the price originally paid by the operator to purchase the right); in order to limit the financial risk of the TSO's involved, the FCA Regulation provides that for each border such compensation is permitted up to an amount equal to the total of congestion income collected, on that same border, by the TSO on an annual basis (so-called annual cap).