Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the internal market for electricity (recast) - Hoofdinhoud

Council of the European Union

Brussels, 5 November 2018 (OR. en)

5834/5/18

Interinstitutional File: REV 5

2016/0379(COD) i

ENER 37 ENV 57 CLIMA 19 COMPET 58 CONSOM 22 FISC 47 CODEC 128

NOTE

From: General Secretariat of the Council

To: Permanent Representatives Committee

No. Cion doc.: 15135/1/16 ENER 418 ENV 758 CLIMA 169 COMPET 637 CONSOM 301 FISC 221 IA 131 CODEC 1809 REV 1

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  ADD 1 REV 1 + ADD 2 REV 1

Subject: Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the internal market for electricity (recast)

• I. 

  INTRODUCTION

• 1. 

  On 30 November 2016, the Commission submitted a set of proposals as “Clean Energy for

  All Europeans” package, in order to provide a stable legislative framework, necessary for

  the energy transition. Two legislative files, based on article 194(2) of the Treaty, discuss the

  common rules for the internal market in electricity.

• 2. 

  In the European Parliament, these proposals were referred to the Industry, Research and

  Energy Committee (ITRE) which appointed on 25 January 2017 Mr. Krišjānis Kariņš as

  rapporteur. The ITRE Committee voted on its report on 21 February 2018.

II. STATE OF PLAY

• 3. 

  The TTE (Energy) Council adopted, on 18 December 2017, a general approach on the abovementioned

  proposal. The first informal trilogue, based on the Council general approach, took

  place on 27 June 2018, the second and third based on revised mandates was held on 11

  September 2018 and 18 October. The trilogues and technical meetings in between allowed

  the co-legislators to advance significantly and propose compromise suggestions. Moreover, a

  broad mandate was also given to the technical meetings to make progress on the entire

  Regulation.

• 4. 

  Till present, the main areas of discussions were articles regarding the subject-matter and the

  scope (article 1); principles regarding the operation of electricity markets (article 3); dayahead

  and intraday markets, trade on day-ahead and intraday markets, forward markets,

  technical bidding limits and value of lost load (articles 6-10); measures to address congestion

  and congestion management, definition of the bidding zones, capacity allocation (articles 13-

  14); resource adequacy, reliability, capacity mechanisms (articles 18-24) and the Regional

  Security Coordinators (articles 32-44).

• 5. 

  During September and October the Energy Working Party has pursued its examination of the

  Presidency's compromise proposals. Furthermore, in order to prepare the fourth informal

  trilogue, several technical meetings with the EP have taken place.

III. REVISED MANDATE

• 6. 

  In view of the fourth informal trilogue scheduled for 13 November 2018, the basis for the

  discussion will be the fourth-column table contained in Annex I to this note that sets out in the

  4th column textual proposals 'provisionally agreed' in second trilogue or 'provisionally agreed

  in TM' (technical meetings) which await to be provisionally confirmed at the fourth trilogue.

  The Presidency also indicates additional compromise proposals.

  In Annex II, consolidated version of Article 13 was included to facilitate the reading of the

  compromise on this article.

• 7. 

  Paragraphs 'provisionally agreed' in trilogues or technical meetings (in TM) till now are:

  • Recitals in lines: 46-51 • Article 1 - (all) • Article 2 - (line 109) • Article 3 - (lines: 112-123, 126-129) • Article 6 - (all) • Article 8 - (line 184) • Article 9 - (lines 189-190) • Article 10 - (line 192-193) • Article 25 - (line 470) • Article 27 - (line 485-486, 496-498) • Article 28 - (line 505) • Articles 32 to 33 (all) • Article 34 - (lines 549-550, 555-575 • Article 35 to 44 (all) • Annex - (all without lines 948-951)

• 8. 

  Additional compromise proposals not yet seen by Coreper are the following:

  • Recital 44 (line 58) • Article 2 (line 76, 98 ) • Article 13 (all) (consolidated version of the compromise is found in Annex II) • Article 14 (all) • Article 18 (lines 338-344, 346-349) • Article 18a (lines 353-354) • Article 20 (line 395) • Article 21 (line 406) • Article 23 (lines 433-443, 449-458)

• 9. 

  Compromise proposals indicated in the 4th column of articles: 5 (all), 7 (lines: 177-180), 9

  (lines: 186,187), 27 (lines: 481, 493), were already seen by Coreper. However, the discussion

  with the European Parliament is not yet finalised.

• 10. 

  Regarding other European Parliament's amendments, the Presidency proposes to maintain the

  Council's general approach at this stage of negotiations.

• 11. 

  In the fourth column, bold italics indicates text proposed by the EP; bold indicates texts of the

  Council general approach added to the Commission proposal and compromise texts proposed

  by the Presidency in response to the EP amendments; bold and underlined (or bold italics

  and underlined) indicates new text elements, diverging from the previous document (5834/18

  REV 4) and strikethrough indicates deletions.

IV. CONCLUSION

  The Permanent Representatives Committee is invited to agree on a revised mandate for the

fourth informal trilogue on 13 November 2018, on the basis of the text included in Annex I

and Annex II.

___________________ ANNEX I

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the internal market for electricity

(recast)

• 1. 

  COMISSION PROPOSAL EP PLENARY TEXT COUNCIL GENERAL Compromise proposals

  APPROACH (doc. ) (COD 2016/0379 - doc.

  15135/1/16 REV 1 + ADD 1 REV 1)

• 2. 

  THE EUROPEAN THE EUROPEAN N.B. any compromise proposals for the

  PARLIAMENT AND THE PARLIAMENT AND THE recitals are provisional, and without COUNCIL OF THE COUNCIL OF THE prejudice to any alignment with the content EUROPEAN UNION, EUROPEAN UNION, of the Articles that may prove necessary. Having regard to the Treaty on Having regard to the Treaty on the Functioning of the the Functioning of the European European Union, and in Union, and in particular Article particular Article 194 (2) 194 (2) thereof, thereof, Having regard to the proposal Having regard to the proposal from the European Commission, from After transmission of the draft the European Commission, legislative act to the national After transmission of the draft parliaments, legislative act to the national Having regard to the opinion of parliaments, the European Economic and Having regard to the opinion of Social Committee, the European Economic and Having regard to the opinion of Social Committee, the Committee of the Regions, Having regard to the opinion of Acting in accordance with the the Committee of the Regions, ordinary legislative procedure, Acting in accordance with the Whereas: ordinary legislative procedure, Whereas:

ANNEX I TREE.2.B EN

• 3. 

  (1) Regulation (EC) No (1) Regulation (EC) No

  714/2009 of the European 714/2009 of the European Parliament and of the Council Parliament and of the Council 1 has been substantially amended has been substantially amended several times. Since further several times. Since further amendments are to be made, amendments are to be made, that that Regulation should be recast Regulation should be recast in in the interests of clarity. the interests of clarity.

• 4. 

  (2) The Energy Union aims (2) The Energy Union aims at at providing consumers – providing consumers –

  household and business – household and business – with secure, sustainable, safe, secure, sustainable, competitive and affordable competitive and affordable energy. Historically, the energy. Historically, the electricity system was electricity system was dominated by vertically dominated by vertically integrated, often publicly integrated, often publicly owned, owned, monopolies with large monopolies with large centralised nuclear or fossil fuel centralised nuclear or fossil fuel power plants. The internal power plants. The internal market in electricity, which has market in electricity, which has been progressively been progressively implemented implemented since 1999, aims since 1999, aims to deliver a real to deliver a real choice for all choice for all consumers in the consumers in the Union , both Union , both citizens and citizens and businesses, new businesses, new business business opportunities and more opportunities and more crosscross-border trade, so as to border trade, so as to achieve achieve efficiency gains, efficiency gains, competitive competitive prices and higher prices and higher standards of standards of service, and to service, and to contribute to contribute to security of supply security of supply and and sustainability. The internal sustainability. The internal

1 Regulation (EC) No 714/2009 i of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 i (OJ L 211, 14.8.2009, p. 15).

ANNEX I TREE.2.B EN

market in electricity has market in electricity has increased competition, in increased competition, in particular at the wholesale particular at the wholesale level, level, and cross-border trade. It and cross-border trade. It remains the foundation of an remains the foundation of an efficient energy market. efficient energy market.

• 5. 

  (3) Europe's energy system (3) Europe's energy system is is in the middle of its most in the middle of its most

  profound change in decades and profound change in decades and the electricity market is at the the electricity market is at the heart of that change. The heart of that change. [ ] This common goal to decarbonise change creates and facilitates the energy system creates new new opportunities and opportunities and challenges for challenges for market market participants. At the participants. At the same time, same time, technological technological developments developments allow for new allow for new forms of forms of consumer participation consumer participation and and cross-border cooperation. cross-border cooperation.

ANNEX I TREE.2.B EN

• 6. 

  (3a) This Regulation is establishing rules to ensure the functioning of the internal energy market while

  integrating a limited number of requirements related to the development of renewable forms of energy and environmental policy, in particular specific rules for certain renewable power generating facilities, concerning balancing responsibility, dispatch and redispatch as well as a threshold for CO2 emissions of new generation capacity where it is subject to a capacity mechanism.

• 7. 

  (4) State interventions, often

  designed in an uncoordinated (4) State interventions, often manner, have led to increasing designed in an uncoordinated distortions of the wholesale manner, have led to increasing electricity market, with distortions of the wholesale negative consequences for electricity market, with negative investments and cross-border consequences for investments trade. and cross-border trade.

ANNEX I TREE.2.B EN

• 8. 

  (5) In the past, electricity AM 1

  customers were purely passive, (5) In the past, electricity (5) In the past, electricity often buying electricity at customers were purely passive, customers were purely passive, regulated prices which had no often buying electricity at regulated often buying electricity at direct relation to the market. In prices which had no direct relation regulated prices which had no the future, customers need to be to the market. In the future, direct relation to the market. In enabled to fully participate in customers need to be enabled to the future, customers need to be the market on equal footing fully participate in the market on enabled to fully participate in the with other market participants. equal footing with other market market on equal footing with To integrate growing shares of participants and be empowered to other market participants. To renewable energy, the future manage their energy consumption. integrate growing shares of electricity system should make To integrate growing shares of renewable energy, the future use of all available sources of renewable energy, the future electricity system should make flexibility, particularly demand electricity system should make use use of all available sources of response and storage. To of all available sources of flexibility, particularly demand achieve effective flexibility, particularly demand side response and storage. [ ] It also decarbonisation at lowest cost, solutions and storage, and of needs to encourage energy it also needs to encourage digitalisation through the efficiency.

  energy efficiency. integration of innovative technologies with the electricity system. To achieve effective decarbonisation at lowest cost, it also needs to encourage energy efficiency. The achievement of the internal energy market through the effective integration of renewable energy can drive investments in the long term and can contribute to delivering the objectives of the Energy Union and the 2030 climate and energy framework.

ANNEX I TREE.2.B EN

• 9. 

  (6) More market integration (6) More market integration and the change towards a more and the change towards a more volatile electricity production volatile electricity production requires increased efforts to requires increased efforts to

  coordinate national energy coordinate national energy policies with neighbours and to policies with neighbours and to use the opportunities of crossuse the opportunities of crossborder electricity trade. border electricity trade.

• 10. 

  (7) Regulatory frameworks (7) Regulatory frameworks have developed, allowing have developed, allowing

  electricity to be traded across electricity to be traded across the the Union. That development Union. That development has has been supported by the been supported by the adoption adoption of several network of several network codes and codes and guidelines for the guidelines for the integration of integration of the electricity the electricity markets. Those markets. Those network codes network codes and guidelines and guidelines contain contain provisions on market provisions on market rules, rules, system operation and system operation and network network connection. To ensure connection. To ensure full full transparency and increase transparency and increase legal legal certainty, the main certainty, the main principles of principles of market functioning market functioning and capacity and capacity allocation in the allocation in the balancing, balancing, intraday, day ahead intraday, day ahead and forward and forward market timeframes market timeframes should also should also be adopted pursuant be adopted pursuant to the to the ordinary legislative ordinary legislative procedure procedure and incorporated in a and incorporated in a single act. single act.

ANNEX I TREE.2.B EN

• 11. 

  (7a) The Balancing Guideline establishes in its Article 13 a

  process where transmission system operators are able to delegate all or part of their tasks to a third party. The delegating transmission system operators should remain responsible for ensuring compliance with the obligations in this Regulation. Likewise, Member States should be able to assign tasks and obligations to a third party. Such assignment should be limited to tasks and obligations executed at national level (such as imbalance settlement). The limitations to the assignment should not lead to unnecessary changes to the existing national arrangements. However, transmission system operators should remain responsible for the tasks entrusted to them pursuant to Article 40 of the [recast Electricity Directive].

ANNEX I TREE.2.B EN

• 12. 

  (7b) The Balancing Guideline established in its Articles 18,

  30 and 32 that the pricing method for standard and specific products for balancing energy should create positive incentives for market participants in keeping and/or helping to restore the system balance of their imbalance price area, reduce system imbalances and costs for society. Such pricing approach should strive for an economically efficient use of demand response and other balancing resources subject to operational security limits. The pricing method used in the procurement of balancing capacity should strive for an economically efficient use of demand response and other balancing resources subject to operational security limits.

ANNEX I TREE.2.B EN

• 13. 

  (7c) The integration of balancing energy markets should facilitate the efficient functioning of the intraday market in order to provide the possibility for market

  participants to balance themselves as close as possible to real time as set with the balancing energy gate closure times defined in Article 24 of the Balancing Guideline. Only the imbalances remaining after the end of the intraday market should be balanced by transmission system operators with the balancing market. The Balancing Guideline foresees in its Article 53 the harmonisation of the imbalance settlement period to 15 minutes in Europe. Such harmonisation should support intraday trading and foster the development of a number of trading products with same delivery windows.

ANNEX I TREE.2.B EN

• 14. 

  (7d) In order to enable transmission system operators to procure and use balancing capacity in an efficient, economic and market-based manner, there is a need to foster market integration. In this regard, the Balancing Guidelines established in its Title IV three methodologies through which transmission system operators may allocate cross-zonal capacity for the exchange of balancing capacity and sharing of reserves, when supported on the basis of a cost-benefit analysis: the cooptimisation process, the market-based allocation process and the allocation based on an economic

  efficiency analysis. The cooptimisation allocation process should be performed on a dayahead basis whereas the market-based allocation process could be performed where the contracting is done not more than one week in advance of the provision of the balancing capacity and the allocation based on an economic efficiency analysis where the contracting is done more than one week in

ANNEX I TREE.2.B EN

advance of the provision of the balancing capacity on the conditions that the volumes allocated are limited and that an assessment is done every year. Once a methodology for the allocation process of crosszonal capacity is approved by the relevant regulatory authorities, early application of the methodology by two or more transmission system operators could take place to gain experience and allow for a smooth application by more transmission system operators in the future. The application of such a methodology, where existing, should nevertheless be harmonised by all transmission system operators in order to foster market integration.

ANNEX I TREE.2.B EN

• 15. 

  (7e) The Balancing Guideline establishes in its Title V that

  the general objective of imbalance settlement is to ensure that balance responsible parties support the system's balance in an efficient way and to incentivise market participants in keeping and/or helping to restore the system balance. To make balancing markets and the overall energy system fit for the integration of increasing shares of variable renewables, imbalance prices should reflect the real-time value of energy.

ANNEX I TREE.2.B EN

• 16. 

  (7f) The guideline on capacity allocation and congestion management sets out detailed guidelines on cross-zonal capacity allocation and congestion management in the day-ahead and intraday markets, including the requirements for the

  establishment of common methodologies for determining the volumes of capacity simultaneously available between bidding zones, criteria to assess efficiency and a review process for defining bidding zones. Articles 32 and 34 set out rules on review of bidding zone configuration, Articles 41 and 54 set out harmonised limits on maximum and minimum clearing prices for day-ahead and intraday timeframes, Article 59 sets out rules on intraday cross-zonal gate closure times, whereas Article 74 of the guideline sets out rules on redispatching and countertrading cost sharing methodologies.

ANNEX I TREE.2.B EN

• 17. 

  (7g) The guideline on forward capacity allocation sets out detailed rules on crosszonal capacity allocation in the forward markets, on the establishment of a common methodology to determine long-term cross-zonal capacity, on the establishment of a single allocation platform at European level offering long-term transmission rights, and on the possibility to return long-term transmission rights for subsequent forward capacity allocation or transfer long-term transmission rights between market participants. Article 30 of the guideline sets out rules on forward hedging products.

ANNEX I TREE.2.B EN

• 18. 

  (7h) The network code on requirements for generators 2 sets out the requirements for grid connection of powergenerating

  facilities, namely synchronous power-generating modules, power park modules and offshore power park modules, to the interconnected system. It, therefore, helps to ensure fair conditions of competition in the internal electricity market, to ensure system security and the integration of renewable electricity sources, and to facilitate Union-wide trade in electricity. Articles 66 and 67 of the network code set out rules for emerging technologies in electricity generation.

• 19. 

  (8) Core market principles (8) Core market principles should set out that electricity should set out that electricity prices are to be determined prices are to be determined

  through demand and supply. through demand and supply. Those prices should signal Those prices should signal when when electricity is needed, electricity is needed, providing providing market-based market-based incentives for incentives for investments into investments into flexibility flexibility sources such as sources such as flexible flexible generation, generation, interconnection, interconnection, demand demand response or storage. response or storage.

2 Commission Regulation (EU) 2016/631 of 14 April 2016 establishing a network code on requirements for grid connection of generators.

ANNEX I TREE.2.B EN

• 20. 

  (9) The decarbonisation of (9) While decarbonisation of the electricity sector, with the electricity sector, with

  renewable energy becoming a renewable energy becoming a major part of the market, is a major part of the market, is one core objective of the Energy of the goals of the Energy Union. As the Union moves Union [ ] it is crucial that the towards the decarbonisation of market removes existing barriers the electricity sector and to cross-border trade and increasing penetration of encourages investments into renewable energy sources, it is supporting infrastructure, for crucial that the market removes example, more flexible existing barriers to cross-border generation, interconnection, trade and encourages demand response and storage. investments into supporting To support this shift to variable infrastructure, for example, and distributed generation, and more flexible generation, to ensure that energy market interconnection, demand principles are the basis for the response and storage. To Union's electricity markets of support this shift to variable and the future, a renewed focus on distributed generation, and to short-term markets and scarcity ensure that energy market pricing is essential. principles are the basis for the Union's electricity markets of the future, a renewed focus on short-term markets and scarcity pricing is essential.

ANNEX I TREE.2.B EN

• 21. 

  (10) Short-term markets will AM 2

  improve liquidity and (10) Short-term markets will (10) Short-term markets will competition by enabling more improve liquidity and competition improve liquidity and resources to participate fully in by enabling more resources to competition by enabling more the market, especially those that participate fully in the market, resources to participate fully in are more flexible. Effective especially those that are more the market, especially those that scarcity pricing will encourage flexible. Effective scarcity pricing are more flexible. Effective market participants to be will encourage market participants scarcity pricing will encourage available when the market most to react to market signals and to market participants to be needs it and ensures that they be available when the market most available when the market most can recover their costs in the needs it and ensures that they can needs it and ensures that they wholesale market. It is therefore recover their costs in the wholesale can recover their costs in the critical to ensure that, as far as market. It is therefore critical to wholesale market. It is therefore possible, administrative and ensure that administrative and critical to ensure that, as far as implicit price caps are removed implicit price caps are removed to possible, administrative and to allow scarcity prices to allow scarcity pricing. When fully implicit price caps are removed increase up to the value of lost embedded in the market structure, to allow scarcity prices to load. When fully embedded in short-term markets and scarcity increase up to the value of lost the market structure, short-term pricing will contribute to the load. When fully embedded in markets and scarcity pricing removal of other market distortive the market structure, short-term will contribute to the removal measures, such as capacity markets and scarcity pricing will of other measures, such as mechanisms, to ensure security of contribute to the removal of capacity mechanisms, to ensure supply. At the same time, scarcity other measures, such as capacity security of supply. At the same pricing without price caps on the mechanisms, to ensure security time, scarcity pricing without wholesale market should not of supply. At the same time, price caps on the wholesale jeopardize the possibility for scarcity pricing without price market should not jeopardize reliable and stable prices for final caps on the wholesale market the possibility for reliable and customers, in particular should not jeopardize the stable prices for final households, SMEs and industrial possibility for reliable and stable customers, in particular consumers. prices for final customers, in households and SMEs. particular households and SMEs.

ANNEX I TREE.2.B EN

• 22. 

  (11) Derogations to (11) Subject to Union State fundamental market principles aid rules pursuant to Articles such as balancing 107, 108 and 109 derogations to responsibility, market-based fundamental market principles dispatch, or curtailment and such as balancing responsibility, redispatch reduce flexibility market-based dispatch, or [ ] signals and act as barriers to the redispatch reduce flexibility

  development of solutions such signals and act as barriers to the as storage, demand response or development of solutions such aggregation. While derogations as storage, demand response or are still necessary to avoid aggregation. While derogations unnecessary administrative are still necessary to avoid burden for certain actors, in unnecessary administrative particular households and burden for certain actors, in SMEs, broad derogations particular households and SMEs, covering entire technologies are broad derogations covering not consistent with the entire technologies are not objective of achieving marketconsistent with the [ ] aim of based and efficient achieving market-based and decarbonisation and should thus efficient decarbonisation be replaced by more targeted process and should thus be measures. replaced by more targeted measures.

• 23. 

  (12) The precondition for AM 3 (12) The precondition for effective competition in the (12) The precondition for effective competition in the internal market in electricity is effective competition in the internal internal market in electricity is non-discriminatory and market in electricity is nonnon-discriminatory and

  transparent charges for network discriminatory, transparent and transparent charges for network use including interconnecting adequate charges for network use use including interconnecting lines in the transmission including interconnecting lines in lines in the transmission system. system. The available capacity the transmission system. The Uncoordinated curtailments of of those lines should be set at available capacity of those lines interconnector capacities the maximum levels consistent should be set at the maximum increasingly limit the exchange with the safety standards of levels consistent with the safety of electricity between Member secure network operation. standards of secure network States and have become a

  operation.

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serious obstacle to the development of a functioning internal market in electricity. The available capacity of [ ] interconnectors should therefore be set at the maximum level consistent with the safety standards of secure network operation including respecting (n-1) security. However, there are some limitations to setting the capacity level in a meshed grid. The level of unscheduled flows should not go beyond what could be expected in a bidding zone without structural congestions. Further, foreseeable problems for ensuring grid security might occur, for example in case of grid maintenance. Also case-by-case grid security issues might occur. Limitations beyond that level can only be accepted for a limited transitional phase which is necessary to adapt the current physical situation in the grids to use the maximum capacity of the interconnectors. The new target benchmark, and if applicable, the linear trajectory towards this level, should ensure that a minimum

ANNEX I TREE.2.B EN

share of the interconnector capacity is being available for trade or used in the capacity calculation respectively. Loop flows should only be taken into account for calculating capacity to the extent that they would exist without internal congestion. Whereas certain clearly circumscribed limitations in cross-zonal capacity may be justifiable, a clear minimum threshold needs to be put in place, preventing excessive use of derogation possibilities and giving a predictable capacity value for market participants. Where a flow-based approach is used, this threshold should determine the minimum share of the thermal capacity of an interconnector to be used as an input for coordinated capacity allocation under the capacity calculation and congestion management guideline.

• 24. 

  (13) It is important to avoid (13) It is important to avoid distortion of competition distortion of competition

  resulting from the differing resulting from the differing safety, operational and planning safety, operational and planning standards used by transmission standards used by transmission system operators in Member system operators in Member States. Moreover, there should States. Moreover, there should be transparency for market be transparency for market

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participants concerning participants concerning available available transfer capacities and transfer capacities and the the security, planning and security, planning and operational standards that affect operational standards that affect the available transfer capacities. the available transfer capacities.

• 25. 

  (14) To efficiently steer (14) To efficiently steer necessary investments, prices necessary investments, prices also need to provide signals also need to provide signals where electricity is most where electricity is most needed. needed. In a zonal electricity In a zonal electricity system, system, correct locational correct locational signals require signals require a coherent, a coherent, objective and reliable objective and reliable determination of bidding zones determination of bidding zones via a transparent process. In via a transparent process. In order to ensure efficient order to ensure efficient operation and planning of the operation and planning of the Union electricity network and to Union electricity network and provide effective price signals to provide effective price for new generation capacity, signals for new generation demand response or

  capacity, demand response or transmission infrastructure, transmission infrastructure, bidding zones should reflect bidding zones should reflect structural congestion. In structural congestion. In particular, cross-zonal capacity particular, cross-zonal capacity should not be reduced in order to should not be reduced in order resolve internal congestion. to resolve internal congestion.

• 26. 

  (14a) To reflect the divergent principles of optimising

  bidding zones without jeopardizing liquid markets and grid investments two options should be foreseen to overcome congestions. Member States can choose

ANNEX I TREE.2.B EN

between a bidding zone split or measures such as grid reinforcement and grid optimisation. The starting point for such a decision should be the identification of long term structural congestions either by the transmission system operator of a Member State or by the bidding zone review. Member States should try to find a common solution first on how to best address congestions. In that course the Member States might adopt multinational or national action plans to overcome congestions. At the end of the implementation of this action plan, Member States should have a possibility to choose whether to opt for a split or whether to opt for covering remaining congestions with remedial actions for which they bear the costs. In the latter case they shall not be split against their will, as long as the level of minimum capacity benchmark is reached. The minimum level of capacity that should be used in capacity calculation should be a percentage of the capacity of a critical network element after respecting operational

ANNEX I TREE.2.B EN

security limits in contingency situation and taking account of the reliability margin. The capacity of the critical network elements should not take into account internal congestions or flows leaving and entering the same bidding zones without being scheduled. A Commission decision on the bidding zone configuration should be possible as a measure of last resort and only amend the bidding zone configuration in those Member States which have opted for a split or which have not reached the minimum level of the benchmark. For Member States adopting an action plan to overcome congestions with measures, a phase-in period for the opening of interconnectors should apply. To this end, Member State should agree on a linear trajectory the starting point of which is the capacity allocated at this border before the implementation of the action plan.

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• 27. 

  (15) Efficient decarbonisation (15) Efficient [ ] market of the electricity system via integration requires

  market integration requires systematically abolishing systematically abolishing barriers to cross-border trade to barriers to cross-border trade to overcome market fragmentation overcome market fragmentation and to allow Union energy and to allow Union energy customers to fully benefit from customers to fully benefit from the advantages of integrated the advantages of integrated electricity markets and electricity markets and competition. competition.

• 28. 

  (16) This Regulation should (16) This Regulation should lay down basic principles with lay down basic principles with regard to tarification and regard to tarification and

  capacity allocation, whilst capacity allocation, whilst providing for the adoption of providing for the adoption of guidelines detailing further guidelines detailing further relevant principles and relevant principles and methodologies, in order to methodologies, in order to allow allow rapid adaptation to rapid adaptation to changed changed circumstances. circumstances.

• 29. 

  (17) The management of (17) The management of congestion problems should congestion problems should provide correct economic provide correct economic signals signals to transmission system to transmission system operators operators and market and market participants and participants and should be should be based on market based on market mechanisms. mechanisms.

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• 30. 

  (18) In an open, competitive (18) In an open, competitive market, transmission system market, transmission system

  operators should be operators should be compensated for costs incurred compensated for costs incurred as a result of hosting crossas a result of hosting crossborder flows of electricity on border flows of electricity on their networks by the operators their networks by the operators of the transmission systems of the transmission systems from from which cross-border flows which cross-border flows originate and the systems where originate and the systems where those flows end. those flows end.

• 31. 

  (19) Payments and receipts (19) Payments and receipts resulting from compensation resulting from compensation between transmission system between transmission system operators should be taken into operators should be taken into account when setting national account when setting national network tariffs. network tariffs.

• 32. 

  (20) The actual amount (20) The actual amount payable for cross-border access payable for cross-border access to the system can vary to the system can vary

  considerably, depending on the considerably, depending on the transmission system operator transmission system operator involved and as a result of involved and as a result of differences in the structure of differences in the structure of the the tarification systems applied tarification systems applied in in Member States. A certain Member States. A certain degree degree of harmonisation is of harmonisation is therefore therefore necessary in order to necessary in order to avoid avoid distortions of trade. distortions of trade.

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• 33. 

  (21) There should be rules on (21) There should be rules on the use of revenues flowing the use of revenues flowing from from congestion-management congestion-management

  procedures, unless the specific procedures, unless the specific nature of the interconnector nature of the interconnector concerned justifies an concerned justifies an exemption exemption from those rules. from those rules.

• 34. 

  (22) To provide for a level (22) To provide for a level playing field between all playing field between all market market participants, network participants, network tariffs tariffs should be applied in a should be applied in a way way which does not which does not discriminate discriminate between between production connected at production connected at the the distribution-level with regard distribution-level with regard to to the production connected at the production connected at the the transmission level, either transmission level, either positively or negatively. They positively or negatively. They should not discriminate against should not discriminate against energy storage, and should not energy storage, and should not create disincentives for

  create disincentives for participation in demand response participation in demand or represent an obstacle to response or represent an improvements in energy obstacle to improvements in efficiency. energy efficiency.

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• 35. 

  (23) In order to increase (23) In order to increase

  transparency and comparability transparency and comparability in tariff-setting where binding in tariff-setting where binding harmonization is not seen as harmonization is not seen as adequate, recommendations on adequate, [ ] best practice tariff methodologies should be report on tariff methodologies issued by the European Agency should be issued by the for the Cooperation of Energy European Agency for the Regulators established by Cooperation of Energy [recast of Regulation (EC) No Regulators established by [recast 713/2009 as proposed by of Regulation (EC) No 713/2009 i COM(2016) 863 i/2] ("the as proposed by COM(2016) Agency"). 863/2] ("the Agency").

• 36. 

  (24) To better ensure optimum (24) To better ensure optimum

  investment in the transinvestment in the trans-European European grid and address the grid and address the challenge challenge where viable where viable interconnection interconnection projects cannot projects cannot be built for lack be built for lack of prioritisation of prioritisation at national level, at national level, the use of the use of congestion rents congestion rents should be should be reconsidered and reconsidered and only allowed contribute [ ] to guarantee in order to guarantee availability and maintain or availability and maintain or increase interconnection increase interconnection capacities. capacities.

• 37. 

  (25) In order to ensure (25) In order to ensure optimal

  optimal management of the management of the electricity electricity transmission network transmission network and to and to allow trading and allow trading and supplying supplying electricity across electricity across borders in the borders in the Union , a Union, a European Network of European Network of Transmission System Operators Transmission System Operators for Electricity (the ENTSO for for Electricity (the ENTSO for Electricity), should be Electricity), should be established. The tasks of the established. The tasks of the ENTSO for Electricity should be ENTSO for Electricity should carried out in compliance with

ANNEX I TREE.2.B EN

be carried out in compliance Union's competition rules which with Union's competition rules remain applicable to the which remain applicable to the decisions of the ENTSO for decisions of the ENTSO for Electricity. The tasks of the Electricity. The tasks of the ENTSO for Electricity should be ENTSO for Electricity should well-defined and its working be well-defined and its working method should ensure method should ensure efficiency, transparency and the efficiency, transparency and the representative nature of the representative nature of the ENTSO for Electricity. The ENTSO for Electricity. The network codes prepared by the network codes prepared by the ENTSO for Electricity are not ENTSO for Electricity are not intended to replace the necessary intended to replace the national network codes for nonnecessary national network cross-border issues. Given that codes for non-cross-border more effective progress may be issues. Given that more achieved through an approach at effective progress may be regional level, transmission achieved through an approach system operators should set up at regional level, transmission regional structures within the system operators should set up overall cooperation structure, regional structures within the whilst ensuring that results at overall cooperation structure, regional level are compatible whilst ensuring that results at with network codes and nonregional level are compatible binding ten-year network with network codes and nondevelopment plans at Union binding ten-year network level. Member States should development plans at Union promote cooperation and level. Member States should monitor the effectiveness of the promote cooperation and network at regional level. monitor the effectiveness of the Cooperation at regional level network at regional level. should be compatible with Cooperation at regional level progress towards a competitive should be compatible with and efficient internal market in progress towards a competitive electricity. and efficient internal market in electricity.

ANNEX I TREE.2.B EN

• 38. 

  (26) A robust medium to AM 4

  long-term Union level resource (26) A robust methodology for (26) A robust medium to longadequacy assessment should be the long-term Union level resource term Union level resource carried out by the ENTSO for adequacy assessment should be adequacy assessment should be Electricity to provide an carried out by the ENTSO for carried out by the ENTSO for objective basis for the Electricity to provide an objective Electricity to provide an assessment of adequacy basis for the assessment of objective basis for the concerns. The resource adequacy concerns at the Union, assessment of adequacy adequacy concern that capacity regional and Member State level concerns. In order to provide mechanisms address should be and the biding zone levels. The this objective basis for all based on the EU assessment. resource adequacy concern that types of capacity mechanisms, capacity mechanisms address the resource adequacy should be based on the EU assessment shall reflect in its assessment. Capacity mechanisms scenarios and sensitivities the should be allowed to be introduced different types of capacity only if the Union level resource mechanisms. The resource adequacy assessment, conducted adequacy concern that capacity by the ENTSO-E, has identified mechanisms address should be adequacy concerns or if a positive based on [ ] a well coordinated decision concerning the national and European implementation plan has been resource adequacy assessment.

  received from the Commission. 39. (27) The medium to long-term AM 5 (27) The medium to long-term

  resource adequacy assessment (27) The methodology for the resource adequacy assessment (from 10 year-ahead to yearlong-term resource adequacy (from 10 year-ahead to yearahead) set out in this regulation assessment (from 10 year-ahead to ahead) set out in this regulation has a different purpose than the year-ahead) set out in this has a different purpose than the seasonal outlooks (six months regulation has a different purpose seasonal outlooks (six months ahead) as set out in Article 9 than the seasonal outlooks (six ahead) as set out in Article 9 [Regulation on risk months ahead) as set out in Article [Regulation on risk preparedness preparedness as proposed by 9 [Regulation on risk preparedness as proposed by COM(2016) COM(2016) 862 i]. Medium- to as proposed by COM(2016) 862 i]. 862]. Medium- to long-term long-term assessments are Medium- to long-term assessments assessments are mainly used to mainly used to assess the need are mainly used to identify assess the need for capacity for capacity mechanisms adequacy concerns whereas mechanisms whereas seasonal

ANNEX I TREE.2.B EN

whereas seasonal outlooks are seasonal outlooks are used to alert outlooks are used to alert to risks used to alert to risks that might to short-term risks that might occur that might occur in the following occur in the following six in the following six months that are six months that are likely to months that are likely to result likely to result in a significant result in a significant in a significant deterioration of deterioration of the electricity deterioration of the electricity the electricity supply situation. supply situation. In addition, supply situation. In addition, [ ] In addition, Regional Regional Coordination Centres Regional Security Operational Centres also carry also carry out regional adequacy Coordinators also carry out out regional adequacy assessments as defined in European regional adequacy assessments assessments as defined in legislation on electricity as defined in European European legislation on transmission system operation. legislation on electricity electricity transmission system These are very short-term adequacy transmission system operation. operation. These are very shortassessments (from weak-ahead to These are very short-term term adequacy assessments day-ahead) used in the context of adequacy assessments (from (from weak-ahead to daysystem operation. weak-ahead to day-ahead) used ahead) used in the context of in the context of system system operation. operation.

• 40. 

  (28) Prior to introducing (28) Prior to introducing capacity mechanisms, Member capacity mechanisms, Member States should assess regulatory States should assess regulatory distortions contributing to the distortions contributing to the related resource adequacy related resource adequacy concern. They should be concern. They should be

  required to adopt measures to required to adopt measures to eliminate the identified eliminate the identified distortions including a timeline distortions including a timeline for their implementation. for their implementation. Capacity mechanisms should Capacity mechanisms should only be introduced for the only be introduced for the [ ] residual concerns that cannot be concerns that cannot be addressed through removing addressed through removing such distortions. such distortions.

ANNEX I TREE.2.B EN

• 41. 

  AM 6

  (28a) Member States should introduce capacity mechanisms only as a last resort, where adequacy concerns cannot be addressed through the removal of existing market distortions. Before introducing a capacity mechanism which operates within the electricity market and therefore is market-distortive, Member States should evaluate whether strategic reserves would be sufficient to address their adequacy concerns. Strategic reserves are less distortive since they operate only outside the market and only in rare cases when markets can no longer clear. Strategic reserves can avoid financial consequences to market operators that cannot fulfil their balancing responsibilities and that would consequently bear significant cost.

• 42. 

  (29) Member States intending (29) Member States intending to introduce capacity to introduce capacity

  mechanisms should derive mechanisms should derive resource adequacy targets resource adequacy targets following a transparent and following a transparent and verifiable process. Member verifiable process. Member States should have the freedom States should have the freedom to set their own desired level of to set their own desired level of security of supply. security of supply.

ANNEX I TREE.2.B EN

• 43. 

  (30) Main principles of (30) Main principles of capacity mechanisms should be capacity mechanisms should be laid down, building on the laid down. Capacity mechanisms environmental and energy State already in place should be aid principles and the findings reviewed in light of these of DG Competition's Sector principles. In case the European Inquiry on capacity and the national resource mechanisms. Capacity adequacy assessment reveals the mechanisms already in place absence of any adequacy should be reviewed in light of concern, no new capacity these principles. In case the mechanism should be

  European resource adequacy established and no new capacity assessment reveals the absence commitments under mechanisms of any adequacy concern, no already in place should be made. new capacity mechanism The application of the State aid should be established and no control rules pursuant to Articles new capacity commitments 107 to 109 TFUE must be under mechanisms already in complied with at all times. place should be made. The application of the State aid control rules pursuant to Articles 107 to 109 TFUE must be complied with at all times.

• 44. 

  (31) Detailed rules for AM 7

  facilitating effective cross(31) Detailed rules for facilitating (31) Detailed rules for border participation in capacity effective cross-border participation facilitating effective crossmechanisms other than reserve in capacity mechanisms other than border participation in capacity schemes should be laid down. strategic reserves should be laid mechanisms other than reserve Transmission system operators down in this Regulation. schemes should be laid down. across the borders should Transmission system operators Transmission system operators facilitate interested generators across the borders should facilitate across the borders should wanting to participate in the participation of interested facilitate interested generators capacity mechanisms in other generators in capacity mechanisms wanting to participate in Member States. Therefore, they in other Member States. Therefore, capacity mechanisms in other should calculate capacities up they should calculate capacities up Member States. Therefore, they

  to which cross-border to which cross-border participation should calculate capacities up to which cross-border participation

ANNEX I TREE.2.B EN

participation would be possible, would be possible, enable would be possible, enable enable participation and check participation and check participation and check availabilities. National availabilities. National regulatory availabilities. [ ] Regulatory regulatory authorities should authorities should enforce the authorities should enforce the enforce the cross-border rules cross-border rules in the Member cross-border rules in the in the Member States. States. Member States.

• 45. 

  (32) In view of differences in

  national energy systems and (32) In view of differences in technical limitations of existing national energy systems and electricity networks, the best technical limitations of existing approach to achieving progress electricity networks, the best in market integration will often approach to achieving progress be at a regional level. Regional in market integration will often cooperation of transmission be at a regional level. Regional system operators should thus be cooperation of transmission strengthened. In order to ensure system operators should thus be efficient cooperation, a new strengthened. In order to ensure regulatory framework should efficient cooperation, a new foresee stronger regional regulatory framework should governance and regulatory foresee stronger regional oversight, including by governance and regulatory strengthening the decisionoversight, including by making power of the Agency strengthening the decisionfor cross-border issues. Closer making power of the Agency for cooperation of Member States cross-border issues. Closer could be needed also in crisis cooperation of Member States situations, to increase security could be needed also in crisis of supply and limit market situations, to increase security of

  distortions. supply and limit market distortions.

• 46. 

  (33) The coordination (33) The coordination between Provisionally agreed in TM: between transmission system transmission system operators at (33) The coordination between operators at regional level has regional level has been transmission system operators at regional been formalised with the formalised with the mandatory level has been formalised with the mandatory participation of participation of transmission mandatory participation of transmission transmission system operators system operators in regional system operators in regional security

ANNEX I TREE.2.B EN

in regional security security coordinators, which coordinators. The regional coordination of coordinators, which should be should be [ ] further developed transmission system operators which complemented by an enhanced and support the increasingly should be [ ] further developed with an institutional framework via the integrated operation of enhanced institutional framework via the establishment of regional electricity systems across the establishment of Regional Coordination operational centres. The Union, ensuring their efficient Centres. The establishment of Regional creation of regional operational and secure performance. Coordination Centres should take into centres should take into account account existing or planned regional existing regional coordination coordination initiatives and support the initiatives and support the increasingly integrated operation of increasingly integrated electricity systems across the Union, operation of electricity systems ensuring their efficient and secure across the Union, ensuring their performance. efficient and secure performance. For this reason, it is necessary to ensure that the coordination of transmission system operators through Regional Coordination Centres takes place across the EU. Where transmission system operators of a given region are not coordinated yet by an existing or planned Regional Coordination Centre, the transmission system operator of that region should establish or designate a Regional Coordination Centre.

(in relation to article 32.1 (line 521)) 47. (34) The geographical scope (34) The geographical scope of Provisionally agreed in TM:

of regional operational centres [ ] Regional Security (34) The geographical scope of Regional should allow them to play an Coordinators should allow Coordination Centres should allow them to effective coordination role by them to play an effective play an effective contribution to the optimising the operations of contribution to the coordination of [ ] the operations of transmission system operators coordination of [ ] the transmission system operators over [ ] over larger regions. operations of transmission regions and lead to enhanced system system operators over [ ] security and market efficiency. Regional regions and lead to enhanced Coordination Centres should have the

ANNEX I TREE.2.B EN

system security and market flexibility to carry out the tasks in the efficiency. Regional Security region as best adapted to the nature of the Coordinators should have the individual tasks entrusted to them. flexibility to carry out the tasks in the region as best adapted to the nature of the individual tasks entrusted to them.

• 48. 

  (35) Regional operational AM 8 (35) [ ] Regional Security Provisionally agreed in TM: centres should carry out (35) Regional coordination Coordinators should fulfil (35) Regional Coordination Centres functions where their centres should carry out functions tasks where their regionalisation should perform fulfil tasks where their regionalisation brings added where their regionalisation brings brings added value compared to regionalisation brings added value compared value compared to functions added value compared to functions functions performed at national to functions tasks performed at national performed at national level. The performed at national level. The level. The [ ] tasks of [ ] level. The [ ] tasks of Regional functions of regional functions of regional operational Regional Security Coordination Centres should cover the operational centres should centres should cover the functions Coordinators should cover the functions tasks carried out by regional cover the functions carried out carried out by regional security functions carried out by regional security coordinators pursuant to the by regional security coordinators as well as additional security coordinators pursuant System Operation Guideline 4 as well as coordinators as well as functions with regional to the System Operation additional system operation, market additional system operation, importance. The functions carried Guideline 3 as well as additional operation and risk preparedness tasks market operation and risk out by regional coordination system operation, market functions. The [ ] tasks carried out by preparedness functions. The centres should exclude real time operation and risk preparedness Regional Coordination Centresshould functions carried out by operation of the electricity system. functions. The [ ] tasks carried exclude real time operation of the electricity regional operational centres out by [ ] Regional Security system.

  should exclude real time Coordinators should exclude operation of the electricity real time operation of the system. electricity system.

3 Commission Regulation (EU) 2017/1485 of 2 August 2017 establishing a guideline on electricity transmission system operation (OJ L 220, 25.8.2017, p. 1). 4 Commission Regulation (EU) 2017/1485 of 2 August 2017 establishing a guideline on electricity transmission system operation (OJ L 220, 25.8.2017, p. 1).

ANNEX I TREE.2.B EN

• 49. 

  AM 9 Provisionally agreed in TM:

  (35 a) In performing their (35 a) In performing their tasks functions, functions, regional coordination regional coordination centres should shall centres shall contribute to the contribute to the achievement of the 2030 achievement of the 2030 and 2050 and 2050 objectives set out in the climate objectives set out in the climate and energy policy framework. and energy policy framework.

• 50. 

  (36) Regional operational (36) [ ] Regional Security Provisionally agreed in TM: centres should primarily act in Coordinators should primarily (36) Regional Coordination Centres the interest of system and act in the interest of system and should primarily act in the interest of system market operation of the region market operation of the region and market operation of the region over the over the interests of any single over the interests of any single interests of any single entity. Hence, entity. Hence, regional entity. Hence, [ ] Regional Regional Coordination Centres should be operational centres should be Security Coordinators should entrusted with [ ] the powers necessary to entrusted with decision-making be entrusted with [ ] powers coordinate the support [ ] actions to be powers to act and to direct necessary to support [ ] taken by transmission system operators of actions to be taken by actions to be taken by the system operation region for certain transmission system operators transmission system operators of functions and with an enhanced advisory role of the system operation region the system operation region for for the remaining functions. for certain functions and with certain functions and with an

  an enhanced advisory role for enhanced advisory role for the the remaining functions. remaining functions.

50a. Provisionally agreed in TM:

(36a) The human, technical, physical and financial resources of Regional Coordination Centres should not go beyond what is strictly necessary for the fulfilment of its tasks.

• 51. 

  (37) ENTSO for Electricity (37) ENTSO for Electricity Provisionally agreed in TM: should ensure that the actions of should ensure that the actions of (37) ENTSO for Electricity should ensure regional operational centres are [ ] Regional Security that the actions activities of Regional coordinated across the regions' Coordinators are coordinated Coordination Centres are coordinated boundaries. across the regions' boundaries. across the regions' boundaries.

ANNEX I TREE.2.B EN

• 52. 

  (38) In order to raise (38) In order to raise efficiencies in the electricity efficiencies in the electricity distribution networks in the distribution networks in the Union and ensure close Union and ensure close cooperation with transmission cooperation with transmission system operators and ENTSO system operators and ENTSO for electricity, a European for electricity, a European entity entity of distribution system of distribution system operators operators in the Union ("EU in the Union ("EU DSO entity") DSO entity") should be should be established. The tasks established. The tasks of the EU of the EU DSO entity should be DSO entity should be wellwell-defined and its working defined and its working method method should ensure should ensure efficiency, efficiency, transparency and transparency and representativeness amongst the representativeness amongst the Union distribution system Union distribution system operators. The EU DSO Entity operators. The EU DSO Entity should closely cooperate with should closely cooperate with ENTSO for Electricity on the ENTSO for Electricity on the preparation and implementation preparation and implementation of the network codes where of the network codes where applicable and should work on applicable and should work on providing guidance on the providing guidance on the integration inter alia of integration inter alia of distributed generation and distributed generation and storage in distribution networks storage in distribution networks or other areas which relate to the or other areas which relate to management of distribution the management of distribution networks. The EU DSO shall networks. also take due consideration of the specificities inherent in distribution systems connected downstream with electricity systems on islands which are not connected with other electricity systems via interconnectors.

ANNEX I TREE.2.B EN

• 53. 

  (39) Increased cooperation (39) Increased cooperation and and coordination among coordination among

  transmission system operators transmission system operators is is required to create network required to create network codes codes for providing and for providing and managing managing effective and effective and transparent access transparent access to the to the transmission networks transmission networks across across borders, and to ensure borders, and to ensure coordinated and sufficiently coordinated and sufficiently forward-looking planning and forward-looking planning and sound technical evolution of the sound technical evolution of the transmission system in the transmission system in the Union, including the creation of Union , including the creation interconnection capacities, with of interconnection capacities, due regard to the environment. with due regard to the Those network codes should be environment. Those network in line with framework codes should be in line with guidelines, which are nonframework guidelines, which binding in nature (framework are non-binding in nature guidelines) and which are (framework guidelines) and developed by the Agency. The which are developed by the Agency should have a role in Agency . The Agency should reviewing, based on matters of have a role in reviewing, based fact, draft network codes, on matters of fact, draft including their compliance with network codes, including their the framework guidelines, and it compliance with the framework should be enabled to recommend guidelines, and it should be them for adoption by the enabled to recommend them for Commission. The Agency adoption by the Commission. should assess proposed The Agency should assess amendments to the network proposed amendments to the codes and it should be enabled network codes and it should be to recommend them for adoption enabled to recommend them for by the Commission. adoption by the Commission. Transmission system operators

ANNEX I TREE.2.B EN

Transmission system operators should operate their networks in should operate their networks in accordance with those network accordance with those network codes. codes.

• 54. 

  (40) To ensure the smooth (40) To ensure the smooth functioning of the internal functioning of the internal

  market in electricity, provision market in electricity, provision should be made for procedures should be made for procedures which allow the adoption of which allow the adoption of decisions and guidelines with decisions and guidelines with regard, inter alia, to tarification regard, inter alia, to tarification and capacity allocation by the and capacity allocation by the Commission whilst ensuring the Commission whilst ensuring the involvement of Member States’ involvement of Member States’ regulatory authorities in that regulatory authorities in that process, where appropriate process, where appropriate through their European through their European association. Regulatory association. Regulatory authorities, together with other authorities, together with other relevant authorities in the relevant authorities in the Member States, have an Member States, have an important role to play in important role to play in contributing to the proper contributing to the proper functioning of the internal functioning of the internal market in electricity. market in electricity.

• 55. 

  (41) All market participants (41) All market participants have an interest in the work have an interest in the work

  expected of the ENTSO for expected of the ENTSO for Electricity. An effective Electricity. An effective consultation process is therefore consultation process is therefore essential and existing structures essential and existing structures that are set up to facilitate and that are set up to facilitate and streamline the consultation streamline the consultation process, such as via national process, such as via national regulators or the Agency, regulators or the Agency, should should play an important role. play an important role.

ANNEX I TREE.2.B EN

• 56. 

  (42) In order to ensure greater (42) In order to ensure greater transparency regarding the transparency regarding the entire entire electricity transmission electricity transmission network network in the Union, the in the Union, the ENTSO for

  ENTSO for Electricity should Electricity should draw up, draw up, publish and regularly publish and regularly update a update a non-binding Unionnon-binding Union-wide tenwide ten-year network year network development plan development plan (Union-wide (Union-wide network network development plan). development plan). Viable Viable electricity transmission electricity transmission networks networks and necessary and necessary regional regional interconnections, interconnections, relevant from a relevant from a commercial or commercial or security of supply security of supply point of point of view, should be view, should be included in that included in that network network development plan. development plan

• 57. 

  (43) Experience with the

  development and adoption of (43) Experience with the network codes has shown that it development and adoption of is useful to streamline the network codes has shown that it development procedure by is useful to streamline the clarifying that the Agency has development procedure by the right to revise draft clarifying that the Agency has electricity network codes before the right to [ ] approve draft submitting them to the electricity network codes before

  Commission. submitting them to the Commission.

ANNEX I TREE.2.B EN

• 58. 

  (44) Investments in major new (44) Investments in major new Council proposal for an addition: infrastructure should be infrastructure should be

  promoted strongly while promoted strongly while (44) Investments in major new ensuring the proper functioning ensuring the proper functioning infrastructure should be promoted strongly of the internal market in of the internal market in while ensuring the proper functioning of the electricity. In order to enhance electricity. In order to enhance internal market in electricity. In order to

  the positive effect of exempted the positive effect of exempted

  direct current interconnectors direct current interconnectors on enhance the positive effect of exempted on competition and security of competition and security of direct current interconnectors on competition supply, market interest during supply, market interest during and security of supply, market interest during the project-planning phase the project-planning phase the project-planning phase should be tested should be tested and should be tested and congestionand congestion-management rules should be congestion-management rules management rules should be adopted. Where direct current should be adopted. Where adopted. Where direct current interconnectors are located in the territory of direct current interconnectors interconnectors are located in more than one Member State, the Agency are located in the territory of the territory of more than one should handle as a last resort the exemption more than one Member State, Member State, the Agency request in order to take better account of its the Agency should handle as a should handle as a last resort the cross-border implications and to facilitate its last resort the exemption exemption request in order to administrative handling. Moreover, given the request in order to take better take better account of its crossexceptional risk profile of constructing those account of its cross-border border implications and to exempt major infrastructure projects, implications and to facilitate its facilitate its administrative undertakings with supply and production administrative handling. handling. Moreover, given the interests should be able to benefit from a Moreover, given the exceptional risk profile of temporary derogation from the full exceptional risk profile of constructing those exempt major unbundling rules for the projects concerned. constructing those exempt infrastructure projects, Exemptions granted under Regulation (EC) major infrastructure projects, undertakings with supply and No 1228/2003 7 continue to apply until the undertakings with supply and production interests should be scheduled expiry date as decided in the production interests should be able to benefit from a temporary granted exemption decision. Offshore able to benefit from a derogation from the full electricity infrastructure with dual

  temporary derogation from the unbundling rules for the projects

  full unbundling rules for the concerned. Exemptions granted functionality (so-called ‘offshore hybrid

  projects concerned. Exemptions under Regulation (EC) No assets’) combining transport of offshore wind energy to shore and interconnectors,

ANNEX I TREE.2.B EN

granted under Regulation (EC) 1228/2003 i 6 continue to apply should also be eligible for exemption such No 1228/2003 5 continue to until the scheduled expiry date as under the rules applicable to new direct apply until the scheduled expiry as decided in the granted current interconnectors. Where necessary, date as decided in the granted exemption decision. the regulatory framework should duly exemption decision. consider the specific situation of these

assets to overcome barriers to the realisation of societally cost-efficient offshore hybrid assets.

• 59. 

  (45) To enhance trust in the (45) To enhance trust in the market, its participants need to market, its participants need to be sure that those engaging in be sure that those engaging in abusive behaviour can be abusive behaviour can be subject subject to effective, to effective, proportionate and proportionate and dissuasive dissuasive penalties. The

  penalties. The competent competent authorities should be authorities should be given the given the competence to competence to investigate investigate effectively effectively allegations of allegations of market abuse. To market abuse. To that end, it is that end, it is necessary that necessary that competent competent authorities have authorities have access to data access to data that provides that provides information on information on operational operational decisions made by decisions made by supply supply undertakings. In the undertakings. In the electricity electricity market, many market, many relevant decisions relevant decisions are made by are made by the generators, the generators, which should which should keep information keep information in relation in relation thereto available to

7 Regulation (EC) No 1228/2003 i of the European Parliament and of the Council of 26 June 2003 on conditions for access to the network for cross-border exchanges in electricity (OJ L 176, 15.7.2003, p. 1).

5 Regulation (EC) No 1228/2003 i of the European Parliament and of the Council of 26 June 2003 on conditions for access to the network for cross-border exchanges in electricity (OJ L 176, 15.7.2003, p. 1).

6 Regulation (EC) No 1228/2003 i of the European Parliament and of the Council of 26 June 2003 on conditions for access to the network for cross-border exchanges in electricity (OJ L 176, 15.7.2003, p. 1).

ANNEX I TREE.2.B EN

thereto available to and easily and easily accessible by the accessible by the competent competent authorities for a fixed authorities for a fixed period of period of time. The competent time. The competent authorities authorities should, furthermore, should, furthermore, regularly regularly monitor the monitor the compliance of the compliance of the transmission transmission system operators system operators with the rules. with the rules. Small generators Small generators with no real with no real ability to distort the ability to distort the market market should be exempt from should be exempt from that that obligation. obligation.

• 60. 

  (46) The Member States and (46) The Member States and the competent national the competent national

  authorities should be required authorities should be required to to provide relevant information provide relevant information to to the Commission. Such the Commission. Such information should be treated information should be treated confidentially by the confidentially by the Commission. Where necessary, Commission. Where necessary, the Commission should have an the Commission should have an opportunity to request relevant opportunity to request relevant information directly from information directly from undertakings concerned, undertakings concerned, provided that the competent provided that the competent national authorities are national authorities are informed. informed.

ANNEX I TREE.2.B EN

• 61. 

  (47) Member States should (47) Member States should lay lay down rules on penalties down rules on penalties

  applicable to infringements of applicable to infringements of the provisions of this the provisions of this Regulation Regulation and ensure that they and ensure that they are are implemented. Those implemented. Those penalties penalties must be effective, must be effective, proportionate proportionate and dissuasive. and dissuasive.

• 62. 

  (48) Member States and the (48) Member States, [ ] the

  Energy Community Contracting Energy Community Contracting Parties should closely cooperate Parties and other third on all matters concerning the countries which are applying development of an integrated this Regulation or are part of electricity trading region and the synchronous grid of should take no measures that Continental Europe should endanger the further integration closely cooperate on all matters of electricity markets or concerning the development of security of supply of Member an integrated electricity trading States and Contracting Parties. region and should take no measures that endanger the further integration of electricity markets or security of supply of Member States and Contracting Parties.

ANNEX I TREE.2.B EN

• 63. 

  (49) In order to ensure the (49) At the time of adoption minimum degree of of Regulation 714/2009 i, only harmonization required for few rules for the internal

  effective market functioning, electricity market existed at the power to adopt acts in EU level. Since then, the EU accordance with Article 290 of internal market has become

  the Treaty on the Functioning

  of the European Union should more complex due to the be delegated to the Commission fundamental change the in respect of areas which are markets are undergoing in fundamental for market particular regarding integration. These should deployment of variable include the geographical area renewable electricity for regional cooperation of production. Therefore the transmission system operators, Network Codes and Guidelines the amount of compensation have become extensively payments between transmission comprehensive addressing system operators, the adoption both technical and general and amendment of network issues. In order to ensure the codes and guidelines, as well as minimum degree of the application of exemption harmonization required for provisions for new effective market functioning, the interconnectors. It is of power to adopt and amend particular importance that the implementing acts in Commission carry out accordance with Article 291 of appropriate consultations the Treaty on the Functioning of during its preparatory work, the European Union should be [ including at expert level, and ] conferred to the Commission that those consultations be in respect of non-essential conducted in accordance with elements of certain specific

  the principles laid down in the

  Interinstitutional Agreement on areas which are fundamental for Better Law-Making of 13 April market integration. These should 2016 . In particular, to ensure include [ ] the adoption and equal participation in the amendment of network codes preparation of delegated acts, and guidelines, as well as the the European Parliament and application of exemption

ANNEX I TREE.2.B EN

the Council receive all provisions for new documents at the same time as interconnectors. It is of Member States' experts, and particular importance that the their experts systematically Commission carry out have access to meetings of appropriate consultations during Commission expert groups its preparatory work, including

dealing with the preparation of

delegated acts. at expert level, and that those consultations be conducted in

accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016 8 . In particular, to ensure equal participation in the preparation of [ ] implementing acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of [ ] implementing acts.

8 OJ L 123, 12.5.2016, p. 1.

ANNEX I TREE.2.B EN

• 64. 

  (49a) The empowerment of the Commission to amend network codes and guidelines is limited until 31 December 2027. This interim period shall provide sufficient time for the Commission to carry out a review of the existing network codes and guidelines and if needed propose legislative acts of the Union.

• 65. 

  (50) Since the objective of (50) Since the objective of this this Regulation, namely the Regulation, namely the

  provision of a harmonised provision of a harmonised framework for cross-border framework for cross-border exchanges of electricity, cannot exchanges of electricity, cannot be sufficiently achieved by the be sufficiently achieved by the Member States and can Member States and can therefore therefore be better achieved at be better achieved at Union Union level, the Union may level, the Union may adopt adopt measures, in accordance measures, in accordance with the with the principle of principle of subsidiarity, as set subsidiarity, as set out in out in Article 5 of the Treaty on Article 5 of the Treaty on European Union . In accordance European Union. In accordance with the principle of with the principle of proportionality, as set out in that proportionality, as set out in Article, this Regulation does not that Article, this Regulation go beyond what is necessary in does not go beyond what is order to achieve that objective. necessary in order to achieve that objective.

  HAVE ADOPTED THIS REGULATION:

ANNEX I TREE.2.B EN

• 66. 

  (51) Market rules should enable the integration of

  electricity from renewable energy sources and provide incentives for increasing energy efficiency.

• 67. 

  (52) For reasons of coherence and legal certainty, nothing in this Regulation should prevent the application of the

  derogations emerging from [Article 66] of [Electricity Directive].

• 68. 

  (53) With regard to balancing markets, efficient and non-distortive price formation in the procurement of balancing capacity and balancing energy requires that balancing capacity does not set the price for balancing energy. This is without prejudice for the dispatching systems using an integrated scheduling process according to the Commission Regulation (EU) 2017/XXXX [Balancing]. HAVE ADOPTED THIS REGULATION:

ANNEX I TREE.2.B EN

• 69. 

  Chapter I Subject matter, scope and definitions

• 70. 

  Article 1 Subject-matter and scope

• 71. 

  This Regulation aims at: AM 10 (a) setting the basis for an This Regulation aims at: Provisionally agreed:

  (a) setting the basis for an efficient achievement of the

  efficient achievement of the objectives of the European Energy (a) setting the basis for an

  (a) setting the basis for an efficient

  objectives of the European Union and in particular the climate efficient achievement of the

  achievement of the objectives of the

  Energy Union and in particular and energy framework for 2030 30 objectives of the European

  European Energy Union and in particular the

  the climate and energy by enabling market signals to be Energy Union and in particular

  climate and energy framework for 2030 11 by

  framework for 2030 9 by delivered for increased flexibility, the climate and energy

  enabling market signals to be delivered for

  enabling market signals to be efficiency, decarbonisation, framework for 2030

  10 by increased efficiency, higher share of

  delivered for increased innovation and a higher share of enabling market signals to be

  renewable energy sources, security of

  flexibility, decarbonisation and renewable energy sources. delivered for increased security

  supply, flexibility, sustainability, decarbonisation and innovation;

  innovation; __________________ of supply, flexibility,

  30

   COM/2014/015 final. sustainability, decarbonisation and innovation;

9 COM/2014/015 final.

10 COM/2014/015 final.

11 COM/2014/015 final.

ANNEX I TREE.2.B EN

• 72. 

  (b) setting fundamental AM 11

  principles for well-functioning, (b) setting fundamental (b) setting fundamental

  Provisionally agreed:

  integrated electricity markets, principles for well-functioning principles for well-functioning, which allow non-discriminatory cross-border, integrated and liquid integrated electricity markets,

  (b) setting fundamental principles for wellmarket

  access for all resource electricity markets, which allow which allow non-discriminatory

  functioning, integrated electricity markets,

  providers and electricity non-discriminatory market access market access for all resource

  which allow non-discriminatory market

  customers, empower for all resource providers and providers and electricity

  access for all resource providers and

  consumers, enable demand electricity customers, empower customers, empower consumers,

  electricity customers, empower consumers,

  response and energy efficiency, consumers, enable competitiveness enable demand response and

  enable competitiveness on the global market

  facilitate aggregation of on the global market, demand energy efficiency, facilitate

  as well as demand response, energy storage

  distributed demand and supply, response, energy storage and aggregation of distributed

  and energy efficiency, facilitate aggregation

  and contribute to the energy efficiency, facilitate demand and supply, [ ] and

  of distributed demand and supply, [ ] and

  decarbonisation of the economy aggregation of distributed demand enable market integration and

  enabling market and sectoral integration

  by enabling market integration and supply, and contribute to the market-based remuneration of

  and market-based remuneration of electricity

  and market-based remuneration decarbonisation of the economy by electricity generated from

  generated from renewable sources;

  of electricity generated from enabling market and sectoral renewable sources;

  renewable sources; integration and market-based remuneration of electricity

  generated from renewable sources;

ANNEX I TREE.2.B EN

• 73. 

  (c) setting fair rules for (c) setting fair rules for cross No change cross-border exchanges in border exchanges in electricity,

electricity, thus enhancing thus enhancing competition (c) setting fair rules for cross-border

competition within the internal within the internal market in exchanges in electricity, thus enhancing

market in electricity, taking into electricity, taking into account competition within the internal market in

account the particular the particular characteristics of electricity, taking into account the particular

characteristics of national and national and regional markets. characteristics of national and regional

regional markets. This includes This includes the establishment markets. This includes the establishment of a

the establishment of a of a compensation mechanism compensation mechanism for cross-border

compensation mechanism for for cross-border flows of flows of electricity and the setting of

cross-border flows of electricity electricity and the setting of harmonised principles on cross-border

and the setting of harmonised harmonised principles on crosstransmission charges and the allocation of

principles on cross-border border transmission charges and available capacities of interconnections

transmission charges and the the allocation of available between national transmission systems;

allocation of available capacities of interconnections

capacities of interconnections between national transmission

between national transmission systems;

systems;

• 74. 

  (d) facilitating the AM 12 (d) facilitating the emergence Provisionally agreed:

emergence of a well(d) facilitating the emergence of of a well-functioning and

functioning and transparent a well-functioning, liquid and transparent wholesale market (d) facilitating the emergence of a wellwholesale

market with a high transparent whole sale market with a high level of security of functioning and transparent whole sale

level of security of supply in contributing to a high level of supply in electricity. It provides market contributing to a high level of

electricity. It provides for security of supply in electricity. It for mechanisms to harmonise security of supply in electricity. It provides

mechanisms to harmonise the provides for mechanisms to the rules for cross-border for mechanisms to harmonise the rules for

rules for cross-border harmonise the rules for crossexchanges in electricity cross-border exchanges in electricity.

exchanges in electricity. border exchanges in electricity.

ANNEX I TREE.2.B EN

• 75. 

  Article 2 Definitions

• 76. 

  1. For the purpose of this 1. For the purpose of this Council proposal for an addition:

  Regulation, the definitions Regulation, the definitions 1. For the purpose of this Regulation, the contained in Article 2 of contained in Article 2 of definitions contained in Article 2 of Directive [recast of Directive Directive [recast of Directive Directive [recast of Directive 2009/72/EC i as 2009/72/EC as proposed by 2009/72/EC as proposed by proposed by COM(2016) 864 i/2], in Article 2 COM(2016) 864 i/2], in Article 2 COM(2016) 864 i/2], in Article 2 of Regulation (EU) No 1227/2011 i of the of Regulation (EU) No of Regulation (EU) No European Parliament and of the Council

  16

  , in

  1227/2011 of the European 1227/2011 of the European Article 2 of Commission Regulation (EU) Parliament and of the Parliament and of the Council 14 , No 543/2013

  17 and in Article 2 of [Recast

  Council 12 , in Article 2 of in Article 2 of Commission Renewable Energies Directive] apply with Commission Regulation (EU) Regulation (EU) No 543/2013 i 15 the exception of the definition of No 543/2013 13 and in Article 2 and in Article 2 of [Recast ‘interconnector’ which shall be replaced of [Recast Renewable Energies Renewable Energies Directive] by the following: ‘interconnector’ means a Directive] apply. apply [with the exception of the transmission line which crosses or spans a definition of ‘interconnector’ border between Member States and which which shall be replaced by the connects the national transmission following:— ‘interconnector’ systems of the Member States.

  means a transmission line which crosses or spans a border

12 Regulation (EU) No 1227/2011 i of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (OJ L 326, 8.12.2011, p. 1).

13 Commission Regulation (EU) No 543/2013 i of 14 June 2013 on submission and publication of data in electricity markets and amending Annex I to

Regulation (EC) No 714/2009 i of the European Parliament and of the Council (OJ L 163, 15.6.2013, p. 1). 14 Regulation (EU) No 1227/2011 i of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency

(OJ L 326, 8.12.2011, p. 1). 15 Commission Regulation (EU) No 543/2013 i of 14 June 2013 on submission and publication of data in electricity markets and amending Annex I to

Regulation (EC) No 714/2009 i of the European Parliament and of the Council (OJ L 163, 15.6.2013, p. 1). 16 Regulation (EU) No 1227/2011 i of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency

(OJ L 326, 8.12.2011, p. 1). 17 Commission Regulation (EU) No 543/2013 i of 14 June 2013 on submission and publication of data in electricity markets and amending Annex I to

Regulation (EC) No 714/2009 i of the European Parliament and of the Council (OJ L 163, 15.6.2013, p. 1).

ANNEX I TREE.2.B EN

between Member States and which connects the national transmission systems of the Member States.]

• 77. 

  2. In addition, the 2. In addition, the following following definitions shall definitions shall apply:

  apply: 78. (a) ‘regulatory authorities’ (a) ‘regulatory authorities’

  means the regulatory authorities means the regulatory authorities referred to in Article 57(1) of referred to in Article 57(1) of [recast of Directive 2009/72/EC i [recast of Directive 2009/72/EC i as proposed by COM(2016) as proposed by COM(2016) 864 i/2] ; 864/2] ;

• 79. 

  (b) ‘cross-border flow’ (b) ‘cross-border flow’ means means a physical flow of a physical flow of electricity on electricity on a transmission a transmission network of a

  network of a Member State that Member State that results from results from the impact of the the impact of the activity of activity of producers and/or producers and/or customers customers outside that Member outside that Member State on its State on its transmission transmission network; network;

• 80. 

  (c) ‘congestion’ means a AM 13 (c) ‘congestion’ means a situation in which all requests (c) ‘congestion’ means a situation in which all requests from market participants to situation in which all requests from from market participants to trade trade between two bidding market participants to trade [ ] between [ ] network areas zones cannot be accommodated cannot be accommodated because cannot be accommodated

  because they would they would significantly affect the because they would significantly significantly affect the physical physical flows on network affect the physical flows on flows on network elements elements which cannot network elements which cannot which cannot accommodate accommodate those flows ; accommodate those flows; those flows ;

ANNEX I TREE.2.B EN

• 81. 

  (d) ‘new interconnector’ (d) ‘new interconnector’ means an interconnector not means an interconnector not completed by 4 August 2003; completed by 4 August 2003;

• 82. 

  (e) 'structural congestion' AM 14 (e) 'structural congestion' means congestion in the (e) 'structural congestion' means means congestion in the

  transmission system that is congestion in the transmission transmission system that can be predictable, is geographically system that is predictable, [ ] unambiguously defined, is stable over time, and is geographically stable over time, predictable, is geographically frequently reoccurring under and frequently reoccurring under stable over time, and is normal power system normal power system conditions; frequently reoccurring under conditions; normal power system conditions;

• 83. 

  (f) 'market operator' means (f) 'market operator' means an entity that provides a service an entity that provides a service whereby the offers to sell whereby the offers to sell

  electricity are matched with electricity are matched with bids bids to buy electricity; to buy electricity;

• 84. 

  (g) 'nominated electricity (g) 'nominated electricity market operator' or 'NEMO’ market operator' or 'NEMO’ means a market operator means a market operator

  designated by the competent designated by the competent authority to perform tasks authority to perform tasks related to single day-ahead or related to single day-ahead or single intraday coupling; single intraday coupling;

• 85. 

  (h) 'value of lost load' means (h) 'value of lost load' means an estimation in €/MWh, of the an estimation in €/MWh, of the maximum electricity price that maximum electricity price that customers are willing to pay to customers are willing to pay to avoid an outage; avoid an outage;

ANNEX I TREE.2.B EN

• 86. 

  (i) 'balancing' means all (i) 'balancing' means all actions and processes, in all actions and processes, in all timelines, through which timelines, through which

  transmission system operators transmission system operators ensure, in a continuous way, ensure, in a continuous way, maintenance of the system maintenance of the system frequency within a predefined frequency within a predefined stability range and compliance stability range and compliance with the amount of reserves with the amount of reserves needed with respect to the needed with respect to the required quality; required quality;

• 87. 

  (j) 'balancing energy' means (j) 'balancing energy' means energy used by transmission energy used by transmission

  system operators to perform system operators to perform balancing; balancing;

• 88. 

  (k) 'balancing service (k) 'balancing service provider' means a market provider' means a market participant providing either or participant providing either or both balancing energy and both balancing energy and balancing capacity to balancing capacity to

  transmission system operators; transmission system operators; 89. (l) 'balancing capacity' (l) 'balancing capacity' means

  means a volume of capacity that a volume of capacity that a a balancing service provider has balancing service provider has agreed to hold to and in respect agreed to hold to and in respect to which the balancing service to which the balancing service provider has agreed to submit provider has agreed to submit bids for a corresponding bids for a corresponding volume volume of balancing energy to of balancing energy to the the transmission system transmission system operator for operator for the duration of the the duration of the contract; contract;

ANNEX I TREE.2.B EN

• 90. 

  (m) 'balance responsible (m) 'balance responsible party' party' means a market means a market participant or its participant or its chosen chosen representative

  representative responsible for responsible for its imbalances in its imbalances in the electricity the electricity market; market;

• 91. 

  (n) 'imbalance settlement (n) 'imbalance settlement period' means the time unit for period' means the time unit for which the imbalance of the which the imbalance of the balance responsible parties is balance responsible parties is calculated; calculated;

• 92. 

  (o) 'imbalance price' means (o) 'imbalance price' means the price, be it positive, zero or the price, be it positive, zero or negative, in each imbalance negative, in each imbalance

  settlement period for an settlement period for an imbalance in each direction; imbalance in each direction;

• 93. 

  (p) 'imbalance price area' (p) 'imbalance price area' means the area in which an means the area in which an imbalance price is calculated; imbalance price is calculated;

• 94. 

  (q) 'prequalification process' (q) 'prequalification process' means the process to verify the means the process to verify the compliance of a provider of compliance of a provider of

  balancing capacity with the balancing capacity with the requirements set by the requirements set by the transmission system operators; transmission system operators;

• 95. 

  (r) 'reserve capacity' means (r) 'reserve capacity' means the amount of frequency the amount of frequency

  containment reserves, containment reserves, frequency frequency restoration reserves restoration reserves or or replacement reserves that replacement reserves that needs needs to be available to the to be available to the transmission system operator; transmission system operator;

ANNEX I TREE.2.B EN

• 96. 

  (s) 'priority dispatch' means (s) 'priority dispatch' means the dispatch of power plants on in self-dispatch model the

  the basis of criteria different dispatch of power plants on the from the economic order of bids basis of criteria different from and, in central dispatch the economic order of bids and, systems, network constraints, in central dispatch model also giving priority to the dispatch from network constraints, of particular generation giving priority to the dispatch of technologies; particular generation technologies;

• 97. 

  (t) 'capacity calculation (t) 'capacity calculation region' means the geographic region' means the geographic area in which the coordinated area in which the coordinated capacity calculation is applied; capacity calculation is applied;

• 98. 

  (u) 'capacity mechanism' AM 15 (u) 'capacity mechanism' Council compromise: means an administrative (u) capacity mechanism' means means an administrative

  measure to ensure the temporary administrative measures measure or a market based (u) 'capacity mechanism' means an achievement of the desired taken by Member States to fill the measure to ensure the administrative measure to ensure the level of security of supply by expected resource adequacy gap achievement of the desired level achievement of the desired level of security remunerating resources for their for electricity supply to match of [ ] resource adequacy by of supply resource adequacy by availability not including electricity demand by offering remunerating resources for their remunerating resources for their availability measures relating to ancillary additional payments to capacity availability not including not including measures relating to ancillary

  services; providers that operate in the measures relating to ancillary services and congestion management; electricity market, in addition to services and congestion

  income obtained by selling management ; electricity on the market in return for the availability of existing capacity or investment in new capacity to guarantee the necessary level of security of supply;

ANNEX I TREE.2.B EN

• 99. 

  (v) 'strategic reserve' means AM 16 [ ] a capacity mechanism in which (v) 'strategic reserve' means a

  resources are only dispatched in capacity mechanism in which case day-ahead and intraday resources are held outside the markets have failed to clear, electricity market and are only transmission system operators dispatched in case day-ahead and have exhausted their balancing intraday markets have failed to resources to establish an clear, transmission system equilibrium between demand operators have exhausted their and supply, and imbalances in balancing resources to establish an the market during periods equilibrium between demand and where the reserves were supply, and imbalances in the dispatched are settled at the market during periods where the value of lost load; reserves were dispatched are settled at least at technical price limits or at the value of lost load;

• 100. 

  (w) ‘high-efficiency (w) ‘high-efficiency cogeneration’ means cogeneration’ means

  cogeneration meeting the cogeneration meeting the criteria criteria laid down in Annex II laid down in Annex II of of Directive 2012/27 i/EU of the Directive 2012/27 i/EU of the European Parliament and of the European Parliament and of the Council 18 ; Council 19 ;

18 Directive 2012/27 i/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives

2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC i and 2006/32/EC (OJ L 315, 14.11.2012, p. 1). 19 Directive 2012/27 i/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives

2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC i and 2006/32/EC (OJ L 315, 14.11.2012, p. 1).

ANNEX I TREE.2.B EN

• 101. 

  (x) ‘demonstration project’ (x) ‘demonstration project’ means a project demonstrating means a project demonstrating a a technology as a first of its technology as a first of its kind kind in the Union and in the Union and representing a representing a significant significant innovation that goes innovation that goes well well beyond the state of the art. beyond the state of the art.

• 102. 

  (y) 'market participant' means a natural or legal

  person, who is generating, buying or selling electricity, demand response or storage services, including the placing of orders to trade, in one or more electricity markets including balancing energy markets.

• 103. 

  (z) 'redispatching' means a measure, including

  curtailment, activated by one or several system operators by altering the generation and/or load pattern in order to change physical flows in the transmission system and relieve a physical congestion.

ANNEX I TREE.2.B EN

• 104. 

  (aa) 'countertrading' means a cross zonal exchange

  initiated by system operators between two bidding zones to relieve physical congestion.

• 105. 

  (bb) 'power generating facility' means a facility that converts primary energy into electrical energy and which consists of one or more power generating modules connected to a network.

• 106. 

  (cc) 'central dispatching model' means a scheduling and dispatching model where the generation schedules and consumption schedules as well as dispatching of power

  generating facilities and demand facilities, in reference to dispatchable facilities, are determined by a TSO within the integrated scheduling process.

• 107. 

  (dd) 'standard balancing product' means a harmonised balancing product defined by all TSOs for the exchange of balancing services as set out in the Balancing Guideline

  adopted on the basis of Article 18 of the Regulation 714/2009 i.

ANNEX I TREE.2.B EN

• 108. 

  (ee) 'specific balancing product' means a product different from a standard product, the requirements for which are set out in the Balancing Guideline adopted on the basis of Article 18 of the Regulation 714/2009 i.

• 109. 

  (ff) 'delegated operator' Provisionally agreed: means an entity to whom (ff) 'delegated operator' means an entity specific tasks or obligations to whom specific tasks or obligations entrusted to a transmission entrusted to a transmission system system operator or nominated operator or nominated electricity market electricity market operator operator under this Regulation or any under this Regulation or any other Regulation, Directive, Network other Regulation, Directive, Code or Guideline have been delegated by Network Code or Guideline that transmission system operator or have been delegated by that nominated electricity market operator or transmission system operator have been assigned by a Member State or or nominated electricity Regulatory Authority; market operator or have been

  assigned by a Member State or Regulatory Authority;

ANNEX I TREE.2.B EN

• 110. 

  Chapter II

  General rules for the electricity market

• 111. 

  Article 3

  Principles regarding the operation of electricity markets

• 112. 

  1. Member States, national AM 17 1. Member States, national Provisionally agreed: regulatory authorities, 1. Member States, national regulatory authorities,

  transmission system operators, regulatory authorities, transmission transmission system operators, 1. Member States, national regulatory distribution system operators, system operators, distribution distribution system operators, [ authorities, transmission system operators, and market operators shall system operators, market operators ] market operators and distribution system operators, [ ] market ensure that electricity markets and third parties to whom delegated operators shall operators and delegated operators shall are operated in accordance with responsibilities have been ensure that electricity markets ensure that electricity markets are operated the following principles: delegated or assigned, shall ensure are operated in accordance with in accordance with the following principles: that electricity markets are operated the following principles: in accordance with the following principles:

• 113. 

  (a) prices shall be formed (a) prices shall be formed No change based on demand and supply; based on demand and supply. (a) prices shall be formed based on demand and supply.

• 114. 

  (b) actions which prevent AM 18 (b) actions which prevent Provisionally agreed: price formation on the basis of (b) actions which prevent price price formation on the basis of (b) market rules shall encourage free demand and supply or formation on the basis of demand demand and supply or constitute price formation and avoid actions which constitute a disincentive to the and supply shall be avoided; a disincentive to the prevent price formation on the basis of development of more flexible development of more flexible demand and supply [ ]; generation, low carbon generation, low carbon

  generation, or more flexible generation, or more flexible demand shall be avoided; demand shall be avoided;

• 115. 

  AM 19 Provisionally agreed:

  Article 3 – paragraph 1 – point b (ba) market rules shall facilitate the a (new) development of more flexible generation, (ba) the development of more sustainable low carbon generation, and flexible generation, sustainable more flexible demand [ ]; low carbon generation, and more flexible demand shall be promoted;

ANNEX I TREE.2.B EN

• 116. 

  (c) customers shall be AM 20 (c) customers shall be Provisionally agreed: enabled to benefit from market (c) customers shall be enabled enabled to benefit from market (c) customers shall be enabled to benefit opportunities and increased to benefit from market opportunities and increased from market opportunities and increased competition on retail markets; opportunities and increased competition on retail markets; competition on retail markets and be competition on retail markets and empowered to act as participant in the be empowered to act as participant energy market and the energy transition; in the energy market and the

  energy transition; 117. (d) market participation of (d) market participation of No change

  consumers and small businesses consumers and small businesses shall be enabled by aggregation shall be enabled by aggregation (d) market participation of consumers and of generation from multiple of generation from multiple small businesses shall be enabled by generation facilities or load generation facilities or load from aggregation of generation from multiple from multiple demand facilities multiple demand facilities to generation facilities or load from multiple to provide joint offers on the provide joint offers on the demand facilities to provide joint offers on electricity market and be jointly electricity market and be jointly the electricity market and be jointly operated operated in the electricity operated in the electricity in the electricity system, subject to system, subject to compliance system, subject to compliance compliance with EU treaty rules on with EU treaty rules on with EU treaty rules on competition; competition; competition;

• 118. 

  (e) market rules shall support AM 21 (e) market rules shall [ ] Provisionally agreed: the decarbonisation of the (e) market rules shall support accompany the decarbonisation (e) market rules shall [ ] accompany economy by enabling the the decarbonisation of the of the economy e.g. by enabling enable the decarbonisation of the electricity integration of electricity from electricity system and thus the the integration of electricity system and thus the economy e.g. by renewable energy sources and economy by enabling the from renewable energy sources enabling the integration of electricity from providing incentives for energy integration of electricity from and providing incentives for renewable energy sources and providing efficiency; renewable energy sources energy efficiency; incentives for energy efficiency; including energy storage and

  providing incentives for energy efficiency;

ANNEX I TREE.2.B EN

• 119. 

  (f) market rules shall deliver AM 22 (f) market rules shall deliver Provisionally agreed: appropriate investment (f) market rules shall encourage appropriate investment f) market rules shall deliver appropriate incentives for generation, free price formation to deliver incentives for generation, investment incentives for generation, in storage, energy efficiency and appropriate investment incentives storage, energy efficiency and particular long-term investments for a demand response to meet for generation, in particular longdemand response to meet market decarbonised and sustainable electricity market needs and thus ensure term investments for a needs and thus ensure security of system, energy storage, energy efficiency, security of supply; decarbonised and sustainable supply; demand response to meet market needs and electricity system storage, energy facilitate fair competition and thus ensure efficiency, demand response and security of supply;

  facilitate fair competition and thus ensure security of supply;

• 120. 

  (g) barriers to cross-border AM 23 (g) barriers to cross-border Provisionally agreed: electricity flows and cross(g) barriers to cross-border electricity flows between (g) barriers to cross-border electricity border transactions on electricity flows and cross-border bidding zones or Member flows between bidding zones or Member electricity markets and related transactions on electricity markets States and cross-border States and cross-border transactions on services markets shall be and related services markets shall transactions on electricity electricity markets and related services avoided; be removed; markets and related services markets shall be avoided progressively markets shall be avoided; removed;

• 121. 

  (h) market rules shall AM 24 (h) market rules shall provide Provisionally agreed: provide for regional (h) market rules shall provide for regional cooperation where (h) market rules shall provide for regional cooperation where effective; for strong regional cooperation effective; cooperation where effective; where effective; [strong - to be reflected in recitals]

• 122. 

  (i) all generation, storage (i) [ ] safe and sustainable Provisionally agreed: and demand resources shall generation, storage and demand (i) [ ] safe and sustainable generation, participate on equal footing in [ ] shall participate on equal storage and demand [ ] shall participate on the market; footing in the market, under the equal footing in the market, under the requirements provided for in requirements provided for in the EU law; the EU law;

ANNEX I TREE.2.B EN

• 123. 

  (j) all producers shall be (j) all producers shall be No change directly or indirectly directly or indirectly responsible (j) all producers shall be directly or responsible for selling the for selling the electricity they indirectly responsible for selling the electricity they generate; generate; electricity they generate;

• 124. 

  AM 25 Maintain Council GA

  Article 3 – paragraph 1 – point j [ ] a (new) (ja) electricity generation operators shall bear full financial and legal responsibility deriving from their assets;

• 125. 

  (k) market rules shall allow AM 26 [ ] Maintain Council GA for progress in research and (k) market rules shall allow for [ ]

  development to be realized and progress in research and used to the benefit of society; development into sustainable, secure and low-carbon energy sources, technologies or systems to be realized and used to the benefit of society;

• 126. 

  (l) market rules shall enable AM 27 (l) market rules shall enable Provisionally agreed: the efficient dispatch of (l) market rules shall enable the the efficient dispatch of (l) market rules shall enable the efficient generation assets and demand efficient dispatch of generation generation assets and demand dispatch of generation assets, energy storage response; assets, storage and demand response; and demand response; response;

ANNEX I TREE.2.B EN

• 127. 

  (m) market rules shall allow AM 28 (m) market rules shall allow Provisionally agreed: for entry and exit of electricity (m) market rules shall allow for for entry and exit of electricity (m) market rules shall allow for entry and generation and electricity entry and exit of electricity generation and electricity supply exit of electricity generation, energy storage supply undertakings based on generation, energy storage and undertakings based on their and electricity supply undertakings based on their assessment of the electricity supply undertakings assessment of the economic and their assessment of the economic and economic and financial viability based on their assessment of the financial viability of their financial viability of their operations; of their operations; economic and financial viability of operations;

  their operations; effective competition and price formation;

• 128. 

  (n) long-term hedging AM 29 (n) [ ] in order to allow Provisionally agreed: opportunities, which allow (n) long-term hedging market participants [ ] to be (n) [ ] in order to allow market market participants to hedge opportunities, which allow market protected against price volatility participants [ ] to be protected against against price volatility risks on participants to hedge against price risks on a market basis, and [ ] price volatility risks on a market basis, and [ a market basis, and eliminate volatility risks on a market basis, mitigate uncertainty on future ] mitigate uncertainty on future returns on uncertainty on future returns on and mitigate uncertainty on future returns on investment, longinvestment, long-term hedging investment shall be tradable on returns on investment shall be term hedging opportunities opportunities shall be tradable on exchanges exchanges in a transparent tradable on exchanges in a shall be tradable on exchanges in in a transparent manner and long-term manner subject to compliance transparent manner subject to a transparent manner and longsupply contracts shall be negotiable over with EU treaty rules on compliance with EU treaty rules on term supply contracts shall be the counter, subject to compliance with EU competition. competition while current negotiable over the counter, treaty rules on competition. products offered on exchanges subject to compliance with EU

  should be further expanded and treaty rules on competition. Market rules shall facilitate trade of promoted at Union level; products on exchanges at across the Union. Regulatory changes shall take into account effects on both short-term Regulatory changes shall take into account and long-term forward and effects on both short-term and long-term futures markets and products. forward and futures markets and products.

• 129. 

  (o) market participants Provisionally agreed: have a right to obtain access to (o) market participants have a right to the transmission and obtain access to the transmission and distribution networks on distribution networks on objective, objective, transparent and transparent and non-discriminatory non-discriminatory terms. terms.

ANNEX I TREE.2.B EN

• 130. 

  AM 30

  Article 3 a (new)

• 131. 

  Just transition

• 132. 

  The Commission shall support

  Member States that put in place a national strategy for the progressive reduction of installed coal and other solid fossil fuel generation and mining capacity through all available means, including targeted financial support to enable a “just transition” in regions affected by structural change. The Commission shall assist Member States to address the social, skills and industrial impacts of the clean energy transition.

• 133. 

  The Commission shall work in close partnership with the actors of coal and carbon-intensive

  regions, provide guidance, in particular for the access to and use of available funds and programmes, and shall encourage the exchange of good practices, including discussions on industrial roadmaps and reskilling needs.

ANNEX I TREE.2.B EN

• 134. 

  Article 4 Article 4

  Balancing responsibility Balance[ ] responsibility

• 135. 

  1. All market participants 1. All market participants [ ] shall aim for system balance shall be [ ] responsible for the

  and shall be financially imbalances they cause in the responsible for imbalances they system. To that end, the cause in the system. They shall market participants [ ] shall either be balance responsible either be balance responsible parties or delegate their parties or contractually delegate responsibility to a balance their responsibility to a balance responsible party of their responsible party of their choice. choice. In accordance with the Balancing Guideline adopted on the basis of Article 17 and 18 of the Regulation 714/2009 i, each balance responsible party shall be financially responsible for its imbalances and strive to be balanced or help the power system to be balanced.

• 136. 

  2. Member States may 2. Member States may provide for derogation from provide [ ] derogations from [ balance responsibility in respect ] balancing responsibility only of: in the following cases:

• 137. 

  (a) demonstration projects; (a) demonstration projects for emerging technologies as

  defined in Article 66 and 67 of Regulation (EU) 2016/631 ; 20

20 Commission Regulation (EU) 2016/631 of 14 April 2016 establishing a network code on requirements for grid connection of generators (OJ L 112, 27.4.2016, p. 1).

ANNEX I TREE.2.B EN

• 138. 

  (b) generating installations (b) power generating facility using renewable energy sources [ ], using renewable energy

  or high-efficiency cogeneration sources or high-efficiency with an installed electricity cogeneration with a total capacity of less than 500 kW; installed electricity capacity of less than [ ] 250 kW;

• 139. 

  (c) installations benefitting (c) Without prejudice to from support approved by the contracts concluded before Commission under Union State [entry into force of the

  aid rules pursuant to Articles legislation], and installations 107 to 109 TFEU, and benefitting from support commissioned prior to [OP: approved by the Commission entry into force]. Member under Union State aid rules States may, subject to Union pursuant to Articles 107 to 109 state aid rules, incentivize TFEU, and commissioned prior market participants which are to [OP: entry into force]. fully or partly exempted from Member States may, [ ] balancing responsibility to without prejudice to Articles accept full balancing 107 and 108 TFEU, incentivise responsibility against market participants which are appropriate compensation. fully or partly exempted from balancing responsibility to accept full balancing responsibility[ ].

• 140. 

  AM 31 2a. When a Member State

  Article 4 – paragraph 2 a (new) chooses to provide a 2a. When a Member State derogation according to chooses to provide a derogation in Article 4 (2), they need to accordance with Article 4(2), it ensure that the financial shall ensure that the financial responsibilities of imbalances responsibilities for imbalances are are fulfilled by another party. fulfilled by another party.

ANNEX I TREE.2.B EN

• 141. 

  3. From 1 January 2026,

  point (b) of paragraph 2 shall 3. For power generating apply only to generating facilities commissioned after 1 installations using renewable January 2026, point (b) of energy sources or highparagraph 2 shall apply only to efficiency cogeneration with an renewable energy sources or installed electricity capacity of high-efficiency cogeneration

  less than 250 kW. with an total installed electricity capacity of less than [ ] 150 kW.

  Member States may apply a lower threshold.

• 142. 

  Article 5

  Balancing market

• 143. 

  1. All market participants AM 32 [ ] Maintain Council GA shall have access to the 1. All market participants,

  balancing market, be it including those providing Entire article was not yet discussed with the individually or through electricity generated from variable EP. The fourth column is identical to REV 2 aggregation. Balancing market renewable sources and demand and 3 seen by COREPER on 7 September rules and products shall respect side response and storage services and 12 October. the need to accommodate shall have full access to the increasing shares of variable balancing market, be it individually generation as well as increased or through aggregation. Balancing demand responsiveness and the market rules and products shall advent of new technologies. respect the need to accommodate increasing shares of variable generation as well as increased demand responsiveness and the advent of new technologies.

ANNEX I TREE.2.B EN

• 144. 

  2. Balancing markets shall AM 33 2. Balancing markets, Compromise proposal: be organised in such a way as to 2. Balancing markets shall be including prequalification 2. Balancing markets, including ensure effective nonorganised in such a way as to processes, shall be organised in prequalification processes, shall be discrimination between market ensure effective non-discrimination such a way as to: organised in such a way as to: participants taking account of between market participants. All (a) ensure effective non(a) ensure effective non-discrimination the different technical generation, including from discrimination between market between market participants taking account capability of generation from variable renewable sources, participants taking account of of the different technical [ ] needs of the variable renewable sources and demand side response and storage the different technical [ ] needs power system and the different technical demand side response and shall be enabled to participate on of the power system, a capabilities of generation sources, energy storage. equal footing in balancing transparent and storage and demand response; markets, taking account of the technologically neutral

  different technical capability. definition of services and their (aa) ensure a transparent and transparent, market based technologically neutral definition of procurement, services and their transparent, market based procurement,

• 145. 

  (b) ensure access to all Compromise proposal: prequalified market Ref. to prequalification remains in 5(2) and participants, be it individual 5(8).

  or through aggregation; (b) ensure non-discriminatory access to all [ ] market participants, including

  electricity generated from variable renewable sources, demand response and energy storage, be it individual or through aggregation;

• 146. 

  (c) respect the need to Maintain Council GA accommodate increasing

  shares of variable generation as well as increased demand responsiveness and the advent of new technologies.

ANNEX I TREE.2.B EN

• 147. 

  3. Balancing energy shall be AM 34 [ ] Compromise proposal: procured separately from 3. Balancing energy shall be This corresponds to 5(5a) of the GA; see balancing capacity. procured separately from balancing also article 16(6) of Reg. 2017/2195 Procurement processes shall be capacity. The price of balancing (Balancing Guideline). Exemptions see new transparent while at the same energy shall not be pre-determined para. 5(11).

  time respecting confidentiality. in a contract of balancing except 3. The price of balancing energy shall where an exemption is applied in not be pre-determined [ ] in a contract for accordance with Article 16(6) of balancing capacity.

  the Commission Regulation (EU) 2017/2195 1a . Procurement Procurement processes shall be processes shall be transparent while transparent while at the same time at the same time respecting respecting confidentiality in accordance confidentiality. with paragraph 4 of Article 40 of the _______________ [recast Electricity Directive].

  1a

  Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing (OJ L 312, 28.11.2017 p. 6).

• 148. 

  4. Balancing markets

  shall ensure operational security 4. Balancing markets shall

  No change

  whilst allowing for maximum ensure operational security

  • 4. 

    Balancing markets shall ensure

  use and efficient allocation of whilst allowing for maximum

  operational security whilst allowing for

  cross-zonal capacity across use and efficient allocation of

  maximum use and efficient allocation of cross-zonal capacity across timeframes in

  timeframes in accordance with cross-zonal capacity across accordance with Article 15.

  Article 15. timeframes in accordance with Article 15.

• 149. 

  5. Marginal pricing shall be AM 35 5. [ ] For standard and Compromise proposal: used for the settlement of 5. The settlement of balancing specific balancing products, [ ] The settlement of balancing energy for balancing energy. Market energy shall be based on marginal the settlement of balancing standard and specific balancing products participants shall be allowed to pricing. On balancing markets, energy shall be based on shall be based on marginal pricing, pay-asbid as close to real time as market participants shall be marginal pricing, pay-ascleared, [ ]

  possible, and at least after the allowed to bid as close to real time cleared, without prejudice to intraday cross-zonal gate as possible, and balancing energy the Balancing Guideline Market participants shall be allowed to bid as closure time determined in gate closure times shall not be adopted on the basis of Article close to real time as possible, and [ ] accordance with Article 59 of before intraday cross-zonal gate 18 of the Regulation 714/2009 i. balancing energy gate closure times shall

ANNEX I TREE.2.B EN

Commission Regulation (EU) closure time determined in Market participants shall be not be before the intraday cross-zonal gate 2015/1222 21 . accordance with Article 59 of allowed to bid as close to real closure time [ ]. Commission Regulation (EU) time as possible, and [ ] 2015/1222 34 balancing energy gate closure Transmission system operator applying a __________________ times shall not be before the central dispatching model may define

34

 Commission Regulation (EU) intraday cross-zonal gate closure additional rules in accordance with [ ] the 2015/1222 of 24 July 2015 time determined in accordance Balancing Guideline adopted on the basis establishing a guideline on capacity with Article 59 of Commission of Article 18 of the Regulation 714/2009 i. allocation and congestion Regulation (EU) 2015/1222 22 . management (OJ L 197, 25.7.2015, Transmission system operator p. 24). applying a central dispatching

model may define additional rules in accordance with the Balancing Guideline adopted on the basis of Article 18 of the Regulation 714/2009 i.

• 150. 

  5a. The price of balancing Compromise proposal: energy shall not be pre Accept to delete here

  determined in a contract for Paragraph 5a is moved to paragraph 3.

  balancing capacity. An exemption for specific balancing products may be applied in accordance with the Balancing Guideline adopted on the basis of Article 18 of the Regulation 714/2009 i. Procurement processes shall be transparent while at the same time respecting confidentiality in accordance with paragraph 4 of Article 40 of the [recast Electricity Directive].

21 Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline on capacity allocation and congestion management (OJ L 197, 25.7.2015, p. 24).

22 Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline on capacity allocation and congestion management (OJ L 197, 25.7.2015, p. 24).

ANNEX I TREE.2.B EN

• 151. 

  6. The imbalances shall be 6. The imbalances shall be Compromise proposal: settled at a price that reflects settled at a price that reflects the Accept to revert to COM original proposal the real time value of energy. real time value of energy and 6. The imbalances shall be settled at a shall be calculated in price that reflects the real time value of accordance with the Balancing energy.

  Guideline adopted on the basis of Article 18 of the Regulation 714/2009.

• 152. 

  6a. The imbalance price Compromise proposal: area shall be equal to a Accept to modify GA and merge with Am 64. bidding zone, except in case of For the part on imbalance and scheduling a central dispatching model areas see Article 54(2) of Reg. 2017/2195 and in accordance with (Balancing Guideline). Balancing Guideline adopted 6a. Each imbalance price area shall be on the basis of Article 18 of the equal to a bidding zone, except in case of a Regulation 714/2009 i. The central dispatching model where an imbalance area shall be equal imbalance price area may constitute a to the scheduling area, except part of a bidding zone. [ ] in case of a central dispatching

  model where imbalance area may constitute a part of a scheduling area in accordance with the Balancing Guideline adopted on the basis of Article 18 of the Regulation 714/2009 i.

ANNEX I TREE.2.B EN

• 153. 

  7. The sizing of reserve AM 36 7. The [ ] dimensioning of Compromise proposal: capacity shall be performed at 7. The sizing of reserve reserve capacity shall be 7. The [ ] dimensioning of reserve regional level in accordance capacity shall be performed at performed [ ] by the capacity shall be performed [ ] by the with point 7 of Annex I. regional level in accordance with transmission system operators transmission system operators [ ] and Regional operational centres point 7 of Annex I. Regional in accordance with the System may be facilitated on a regional level. shall support transmission coordination centres shall support Operation Guideline adopted

  system operators in determining transmission system operators in on the basis of Article 18 of the the amount of balancing determining the amount of Regulation 714/2009 i and may capacity that needs to be balancing capacity that needs to be be facilitated on a regional procured in accordance with procured in accordance with point level. point 8 of Annex I. 8 of Annex I.

• 154. 

  8. The procurement of AM 37 8. The procurement of Compromise proposal: balancing capacity shall be 8. The procurement of balancing capacity shall be The reference to a primary market (COM facilitated on a regional level in balancing capacity shall be performed by the transmission and EP wording) clarifies that organizing accordance with point 8 of performed by the transmission system operators, facilitated on balancing via obligations on all market Annex I. The procurement shall system operators. The procurement a regional level in accordance participants with a secondary market is not be based on a primary market shall be based on a primary market with [ ] Balancing Guideline sufficient.

  and organised in such a way as and organised in such a way as to adopted on the basis of Article to be non-discriminatory be non-discriminatory between 18 of the Regulation 714/2009 i. 8. The procurement of balancing between market participants in market participants in the The procurement of balancing capacity shall be performed by the the prequalification process prequalification process, whether capacity shall be market-based transmission system operators and may be individually or through market participants participate [ ] and organised in such a way facilitated on a regional level [ ]. aggregation. individually or through aggregation as to be non-discriminatory The procurement of balancing capacity subject to technical constraints between market participants in shall be market-based [ ] and organised in inherent in managing networks. the prequalification process such a way as to be non-discriminatory The reservation of cross-zonal individually or through between market participants in the capacity for the exchange of aggregation in accordance with prequalification process, whether market balancing capacity shall be limited paragraph 4 of Article 40 of participants participate individually or to 5% of the available capacity for the [recast Electricity through aggregation in accordance with the exchange of energy of the Directive]. paragraph 4 of Article 40 of the [recast previous relevant calendar year Electricity Directive]. between the respective bidding zones.

ANNEX I TREE.2.B EN

• 155. 

  9. The procurement of AM 38 9. The procurement of Maintain Council GA upward balancing capacity and 9. The procurement of upward upward balancing capacity and

  downward balancing capacity balancing capacity and downward downward balancing capacity shall be carried out separately. balancing capacity shall be carried shall be carried out separately, [ The contracting shall be out separately. Procurement of ] in accordance with the performed for not longer than balancing capacity shall be Balancing Guideline adopted one day before the provision of performed for not longer than one on the basis of Article 18 of the the balancing capacity and the day before the provision of the Regulation 714/2009 i. To the contracting period shall have a balancing capacity and the extent possible, and at least for maximum of one day. contracting period shall have a a minimum of 40 % of the maximum duration of one day. standard products used for balancing capacity, the contracting of balancing capacity shall be performed for not longer than one day before the provision of the balancing capacity and the contracting period shall have a maximum of one day. The contracting of the remaining part of the balancing capacity shall be performed for a maximum of one month in advance of the provision of balancing capacity and the contracting period of the remaining part of balancing capacity shall have a maximum period of one month.

ANNEX I TREE.2.B EN

• 156. 

  9a. On the request of the Maintain Council GA transmission system operator

  the regulatory authority may extend the contracting period of the remaining part of balancing capacity referred to in paragraph 9 to a maximum period of twelve months provided that such decision will be limited in time, and the positive effects in terms of lowering of costs for consumers will exceed the negative impacts on the market. The request shall include:

• 157. 

  (a) specification of the time Maintain Council GA period during which the

  exemption would apply; 158. (b) specification of the volume Maintain Council GA

  of balancing capacity for which the exemption would apply;

ANNEX I TREE.2.B EN

• 159. 

  (c) analysis of the impact of Maintain Council GA such an exemption on the

  participation of balancing resources; and

• 160. 

  (d) justification for the Maintain Council GA exemption demonstrating that

  such an exemption would lead to lower costs for consumers.

• 161. 

  10. Transmission system AM 39 10. Transmission system Compromise proposal: operators shall publish close to 10. Transmission system operators shall publish, [ ] as 10. Transmission system operators or real-time information on the operators or third parties to whom soon as possible but not later third parties delegated operators shall current balancing state of their these responsibilities have been than 30 minutes after real-time, publish, [ ] as soon as possible but not control areas, the imbalance delegated by the relevant the information on the current [ later than 30 minutes after real-time, the price and the balancing energy transmission system operator, ] system balance of their [ ] information on the current [ ] system price. Member State or regulatory scheduling areas [ ] and the balance of their [ ] scheduling areas, [ ] authority shall publish close to estimated [ ] balancing energy the estimated imbalance prices [ ] and the real-time information on the prices. To the extent that estimated [ ] balancing energy prices. current balancing state of their responsibility for provision of

  control areas, the estimated this information has been imbalance price and the estimated assigned or delegated to a balancing energy price. third party, in accordance with the Balancing Guideline adopted on the basis of Article 18 of the Regulation 714/2009Article, those parties will be responsible for meeting the requirements of this Article.

ANNEX I TREE.2.B EN

• 162. 

  AM 40 Reject

  Article 5 – paragraph 10 a (new) 10a. Member States shall report on the functioning and transparency of, and access to, in particular by small providers, the balancing markets, in particular for the purpose of Article 4, through the reporting procedure on the internal energy market laid down in Article 21 of Regulation .../... [Governance of the Energy Union].

• 163. 

  New proposal in reference to paragraphs 3,

  5 and 5a of the GA and Articles 25-26 of Reg. 2017/2195 (Balancing Guideline). Exemptions for specific products (to avoid copying the entire Balancing Guideline) are bundled here. 11. Transmission system operators may, where standard balancing products are not sufficient to ensure operational security or some balancing resources cannot participate in the balancing market through standard balancing products, propose exemptions from paragraphs 3 and 5 for specific balancing products which are activated locally without exchanging them with other transmission system operators.

  Exemptions for specific balancing products shall be subject to approval by the national regulatory authority.

ANNEX I TREE.2.B EN

• 164. 

  Article 6

  Day-ahead and intraday markets

• 165. 

  1. Transmission system 1. Transmission system Provisionally agreed:

  operators and nominated operators and nominated electricity market operators electricity market operators shall 1. Transmission system operators and shall jointly organise the jointly organise the management nominated electricity market operators shall management of the integrated of the integrated day-ahead and jointly organise the management of the day-ahead and intraday markets intraday markets based on integrated day-ahead and intraday markets based on market coupling as set market coupling as set out in based on market coupling as set out in out in Regulation (EU) Regulation (EU) 2015/1222. Regulation (EU) 2015/1222. Transmission 2015/1222. Transmission Transmission system operators system operators and nominated electricity system operators and nominated and nominated electricity market market operators shall cooperate at Union electricity market operators operators shall cooperate at level or, where more appropriate, on a shall cooperate at Union level Union level or, where more regional basis in order to maximise the or, where more appropriate, on appropriate, on a regional basis efficiency and effectiveness of Union a regional basis in order to in order to maximise the electricity day-ahead and intraday trading. maximise the efficiency and efficiency and effectiveness of The obligation to cooperate shall be without effectiveness of Union Union electricity day-ahead and prejudice to the application of the provisions electricity day-ahead and intraday trading. The obligation of Union competition law. In their functions intraday trading. The obligation to cooperate shall be without relating to electricity trading, transmission to cooperate shall be without prejudice to the application of system operators and nominated electricity prejudice to the application of the provisions of Union market operators shall be subject to the provisions of Union competition law. In their regulatory oversight by regulators and the competition law. In their functions relating to electricity Agency pursuant to Article 59 of [recast of functions relating to electricity trading, transmission system Directive 2009/72/EC i as proposed by trading, transmission system operators and nominated COM(2016) 864 i/2] and Articles 4 and 9 of operators and nominated market electricity market operators [recast of Regulation (EC) No 713/2009 i as operators shall be subject to shall be subject to regulatory proposed by COM(2016) 863 i/2]. regulatory oversight by oversight by regulators and the regulators and the Agency Agency pursuant to Article 59 of pursuant to Article 59 of [recast [recast of Directive 2009/72/EC i of Directive 2009/72/EC i as as proposed by COM(2016) proposed by COM(2016) 864 i/2] and Articles 4 and 9 of 864/2] and Articles 4 and 9 of [recast of Regulation (EC) No [recast of Regulation (EC) No 713/2009 i as proposed by 713/2009 as proposed by COM(2016) 863 i/2]. COM(2016) 863 i/2].

ANNEX I TREE.2.B EN

• 166. 

  2. Day-ahead and intraday 2. Day-ahead and intraday No change markets shall markets shall 2. Day-ahead and intraday markets shall

• 167. 

  (a) be organised in such a AM 41 (a) be organised in such a Provisionally agreed: way as to be non(a) be [ ] non-discriminatory; way as to be non-discriminatory; (a) be organised in such a way as to be discriminatory; non-discriminatory;

• 168. 

  (b) maximise the ability of (b) maximise the ability of all Provisionally agreed: market participants to market participants to [ ] (b) maximise the ability of all market contribute to avoid system manage their imbalances; participants to [ ] manage [ ] imbalances; imbalances;

• 169. 

  (c) maximise the (c) maximise the Provisionally agreed: opportunities for market opportunities for all market (c) maximise the opportunities for all participants to participate in participants to participate in market participants to participate in cross-[ ] cross-border trade as close as cross-[ ] zonal trade as close as zonal trade as close as possible to real time possible to real time across all possible to real time across all across all bidding zones; bidding zones; bidding zones;

• 170. 

  (d) provide prices that reflect (d) provide prices that reflect Provisionally agreed: market fundamentals and that market fundamentals, including (d) provide prices that reflect market market participants can rely on the real time value of energy, fundamentals, including the real time value when agreeing on longer-term and that market participants can of energy, and that market participants can hedging products; rely on when agreeing on rely on when agreeing on longer-term longer-term hedging products; hedging products;

• 171. 

  (e) ensure operational (e) ensure operational No change security whilst allowing for security whilst allowing for (e) ensure operational security whilst maximum use of transmission maximum use of transmission allowing for maximum use of transmission capacity; capacity; capacity;

• 172. 

  (f) be transparent while at (f) be transparent while at the Provisionally agreed: the same time respecting same time respecting (f) be transparent while at the same time confidentiality; confidentiality and ensuring respecting confidentiality and ensuring trading occurs in an trading occurs in an anonymous manner; anonymous manner; and; and;

ANNEX I TREE.2.B EN

• 173. 

  (g) ensure trades are [ ] Provisionally agreed: [ ] anonymous; and

• 174. 

  (h) make no distinction (h) make no distinction No change between trades made within a between trades made within a (h) make no distinction between trades bidding zone and across bidding zone and across bidding made within a bidding zone and across bidding zones. zones. bidding zones.

174a. Provisionally agreed to add additional point (i) in exchange for Council deletion of

paragraph 3 below (line 175).

(i) be organised in such a way as to ensure that all markets participants are able to access the market individually or through aggregation.

• 175. 

  3. Market operators shall be AM 42 [ ] Provisionally agreed: [ ] free to develop products and 3. Market operators shall be

  trading opportunities that suit free to develop products and In addition provisionally agreed to add new market participants' demand trading opportunities that suit point (i) to Article 6(2) above (line 174a). and needs and ensure that all market participants' demand and market participants are able to needs and ensure that all market access the market individually participants are able to access the or through aggregation. They market individually or through shall respect the need to aggregation. They shall respect the accommodate increasing shares need to accommodate increasing of variable generation as well as shares of variable generation and increased demand energy storage as well as increased responsiveness and the advent demand responsiveness and the of new technologies. advent of new technologies

ANNEX I TREE.2.B EN

• 176. 

  Article 7

  Trade on day-ahead and intraday markets

• 177. 

  1. Market operators shall AM 43 1. Nominated electricity Provisionally agreed to keep Nominated allow market participants to 1. Market operators shall allow market operators shall allow electricity market operators.

  trade energy as close to real market participants to trade energy market participants to trade time as possible and at least up as close to real time as possible and energy as close to real time as AM 43 or keeping the ref. to CACM to the intraday cross-zonal gate at least up to 15 minutes before possible and at least up to the guideline is still under negotiations. closure time determined in real time across all bidding zones. intraday cross-zonal gate closure accordance with Article 59 of time determined in accordance Regulation (EU) 2015/1222. with [ ] the capacity allocation and congestion management guideline adopted on the basis of Article 18 of Regulation (EU) 714/2009.

• 178. 

  2. Market operators shall AM 44 2. Nominated electricity Compromise proposal: (Seen by COREPER provide market participants 2. Market operators shall market operators shall provide on 7 September and 12 October) Still to be with the opportunity to trade in provide market participants with market participants with the discussed with the EP

  energy in time intervals at least the opportunity to trade in energy opportunity to trade in energy in as short as the imbalance in national and cross-border time intervals at least as short as 2. Nominated electricity market settlement period in both daymarkets in time intervals at least as the imbalance settlement period operators shall provide market participants ahead and intraday markets. short as the imbalance settlement in both day-ahead and intraday with the opportunity to trade in energy in period in both day-ahead and markets in accordance with time intervals at least as short as the intraday markets. the balancing guideline imbalance settlement period in both dayadopted on the basis of Article ahead and intraday markets [ ] 18 of Regulation (EU) 714/2009.

ANNEX I TREE.2.B EN

• 179. 

  3. Market operators shall AM 45 3. Nominated electricity Compromise proposal: (Seen by COREPER provide products for trading in 3. Market operators shall market operators shall provide on 7 September and 12 October) Still to be day-ahead and intraday markets provide products for trading in dayproducts for trading in daydiscussed with the EP

  which are sufficiently small in ahead and intraday markets which ahead and intraday markets size, with minimum bid sizes of are sufficiently small in size, with which are sufficiently small in 3. Nominated electricity market 1 Megawatt or less, to allow for minimum bid sizes of 500 size, with minimum bid sizes of operators shall provide products for trading the effective participation of Kilowatt, to allow for the effective 1 Megawatt [ ], to allow for the in day-ahead and intraday markets which are demand-side response, energy participation of demand-side effective participation of sufficiently small in size, with minimum bid storage and small-scale response, energy storage and smalldemand-side response, energy sizes of 1 Megawatt or less, to allow for the renewables. scale renewables including directly storage and small-scale effective participation of demand-side by customers. renewables in accordance to response, energy storage and small-scale the methodologies developed renewables including directly by customers. in the capacity allocation and [ ] congestion management guideline adopted on the basis of Article 18 of Regulation (EU) 714/2009.

• 180. 

  4. By 1 January 2025, the AM 46

  imbalance settlement period 4. By 1 January 2021, the 4. By 1 January 2021, the

  Compromise proposal discussed in Coreper

  shall be 15 minutes in all imbalance settlement period shall imbalance settlement period

  on 12 October, still to be discussed with the EP:

control areas. be 15 minutes in all control areas. shall be 15 minutes in all [ ] scheduling areas unless 4. By 1 January 2021, the imbalance

regulatory authorities have settlement period shall be 15 minutes in all [ granted a derogation or an ] scheduling areas unless regulatory exemption in accordance with authorities have granted a derogation or the balancing guideline an exemption in accordance with the adopted on the basis of Article balancing guideline adopted on the basis

18 of the Regulation 714/2009 i. of Article 18 of the Regulation 714/2009 i. Derogations and exemptions may only be

granted until 1 January 2025.

ANNEX I TREE.2.B EN

• 181. 

  Article 8

  Forward markets

• 182. 

  1. In line with Regulation 1. In line with Regulation Maintain Council GA

  (EU) 2016/1719, transmission (EU) 2016/1719, transmission system operators shall issue system operators shall issue long-term transmission rights or long-term transmission rights or have equivalent measures in have equivalent measures in place to allow for market place to allow for market participants, in particular participants, [ ] including owners of generation facilities owners of generation facilities using renewable energy using renewable energy sources, sources, to hedge price risks to hedge price risks across across bidding zone borders. bidding zone borders, unless an assessment of the forward market performed by the competent regulatory authorities on the bidding zone borders shows sufficient hedging opportunities in the concerned bidding zones in accordance with the guideline on forward capacity allocation adopted on the basis of Article 18 of the Regulation 714.

ANNEX I TREE.2.B EN

• 183. 

  2. Long-term transmission 2. Long-term transmission Maintain Council GA rights shall be allocated in a rights shall be allocated in a

  transparent, market based and transparent, market based and non-discriminatory manner non-discriminatory manner through a single allocation through a single allocation platform. Long-term platform [ ] according to the transmission rights shall be firm provisions of the guideline on and be transferable between forward capacity allocation market participants. adopted on the basis of Article 18 of the Regulation 714/2009 i.

• 184. 

  3. Subject to compliance AM 47 3. Subject to compliance Provisionally agreed: with treaty rules on 3. Subject to compliance with with treaty rules on competition,

  competition, market operators treaty rules on competition, market market operators shall be free to 3. Subject to compliance with treaty shall be free to develop forward operators shall be free to develop develop forward hedging rules on competition, market operators shall hedging products including for forward hedging products products including for the longbe free to develop forward hedging products the long-term to provide market including for the long-term to term to provide market including for the long-term to provide participants, in particular provide market participants, in participants, [ ] including market participants, [ ] including owners of owners of generation facilities particular owners of generation owners of generation facilities generation facilities using renewable energy using renewable energy facilities using renewable energy using renewable energy sources, sources, with appropriate possibilities to sources, with appropriate sources, with appropriate with appropriate possibilities to hedge financial risks from price fluctuations. possibilities to hedge financial possibilities to hedge financial risks hedge financial risks from price Member States shall not restrict such risks from price fluctuations. from price fluctuations. Member fluctuations. Member States hedging activity to trades within a Member Member States shall not restrict States shall support the liquidity of shall not restrict such hedging State or bidding zone. such hedging activity to trades such products, in particular of activity to trades within a within a Member State or exchange-based products that Member State or bidding zone. bidding zone. have already been developed, and shall allow them to be traded across bidding zones.

ANNEX I TREE.2.B EN

• 185. 

  Article 9 Article 9

  Price Restrictions [ ] Technical bidding limits

• 186. 

  1. There shall be no AM 48 1. [ ] Wholesale Compromise proposal: (Seen by COREPER maximum limit of the 1. There shall be no maximum electricity prices and on 7 September and 12 October) Still to be wholesale electricity price [ ] and no minimum limit of the balancing energy prices, discussed with the EP

  unless it is set at the value of wholesale electricity price [ ]. This including bidding and clearing lost load as determined in provision shall apply, inter alia, to prices, shall not be subject to a There shall be no maximum [ ] and no accordance with Article 10. bidding and clearing in all minimum or maximum limit. minimum limit of the wholesale electricity There shall be no minimum timeframes and include balancing This is without prejudice to price [ ]. This provision shall apply, inter limit of the wholesale energy and imbalance prices. the technical price limits alia, to bidding and clearing in all electricity price unless it is set which may be applied in the timeframes and include balancing energy and at a value of minus 2000 € or balancing timeframe imbalance prices. This is without prejudice less and, in the event that it is or according to the Balancing to the technical price limits which may be anticipated to be reached, set at Guideline adopted on the basis applied in the balancing timeframe a lower value for the following of Article 18 of the Regulation according to the Balancing Guideline day. This provision shall apply, 714/2009 and in the day-ahead adopted on the basis of Article 18 of the inter alia, to bidding and and intraday timeframes as set Regulation 714/2009 i and in the day-ahead clearing in all timeframes and out in the following and intraday timeframes as set out in the include balancing energy and paragraph. following paragraph. imbalance prices.

• 187. 

  2. By way of derogation AM 49 2. [ ] Nominated electricity Compromise proposal: (Seen by COREPER from paragraph 1, until [OP: 2. By way of derogation from market operators may apply on 7 September and 12 October) Still to be two years after entry into force] paragraph 1, market operators may harmonised limits on maximum discussed with the EP

  market operators may apply apply technical limits on maximum and minimum clearing prices limits on maximum clearing and minimum bidding limits for for day-ahead and intraday 2. Nominated electricity market operators prices for day-ahead and day-ahead and intraday timeframes timeframes in accordance with [ may apply harmonised limits on maximum intraday timeframes in in accordance with Articles 41 and ] the capacity allocation and and minimum clearing prices for day-ahead accordance with Articles 41 and 54 of Regulation (EU) 2015/1222 congestion management and intraday timeframes in accordance with [ 54 of Regulation (EU) and for the balancing timeframe guideline adopted on the basis ] the capacity allocation and congestion 2015/1222. In the event that in accordance with Regulation of Article 18 of the Regulation management guideline adopted on the limits are, or are anticipated to (EU) 2017/2195. In the event that 714/2009. These limits shall basis of Article 18 of the Regulation be, reached, they shall be raised those technical limits are, or are take into account the 714/2009. These limits shall be sufficiently

for the following day. anticipated to be, reached, they maximum value of lost load. high so as not to unnecessarily restrict shall be automatically adjusted. Nominated market operators trade, be harmonised for the common

The technical price limits shall be shall implement a transparent market area and take into account the

ANNEX I TREE.2.B EN

sufficiently high so as not to mechanism to adjust maximum value of lost load. Nominated unnecessarily restrict trade, and automatically the technical market operators shall implement a shall be harmonised for the bidding limits in due time in transparent mechanism to adjust common market area. They shall the event that the set limits are automatically the technical bidding limits be returned to initial values after expected to be reached. The in due time in the event that the set limits the scarcity situation is over. adjusted higher limits shall are expected to be reached. The adjusted remain applicable until higher limits shall remain applicable until further increases under this further increases under this mechanism mechanism are required. are required.

• 188. 

  3. Transmission system 3. Transmission system Maintain Council GA operators shall not take any operators shall not take any

  measures with the aim of measures with the aim of changing the wholesale prices. changing the wholesale prices. [ All dispatch orders shall be ] reported to the national regulatory authority within one day.

• 189. 

  4. Member States shall 4. National regulatory Provisionally agreed: identify policies and measures authorities or other competent

  applied within their territory authorities designated by 4. National regulatory authorities or that could contribute to Member States shall identify other competent authorities designated by indirectly restrict price policies and measures applied Member States shall identify policies and formation, including limiting within their territory that could measures applied within their territory that bids relating to the activation of contribute to indirectly restrict could contribute to indirectly restrict balancing energy, capacity wholesale price formation, wholesale price formation, including mechanisms, measures by the including limiting bids relating limiting bids relating to the activation of transmission system operators, to the activation of balancing balancing energy, capacity mechanisms, measures intended to challenge energy, capacity mechanisms, measures by the transmission system market results or to prevent measures by the transmission operators, measures intended to challenge

  abuse of dominant positions or

inefficiently defined bidding system operators, measures market results or to prevent abuse of

zones. intended to challenge market dominant positions or inefficiently defined results or to prevent abuse of bidding zones.

dominant positions or inefficiently defined bidding zones.

ANNEX I TREE.2.B EN

• 190. 

  5. Where a Member State 5. Where a national Provisionally agreed: has identified a policy or regulatory authority or other

measure which could serve to competent authority 5. Where a national regulatory

restrict price formation it shall designated by a Member State authority or other competent authority

take all appropriate actions to has identified a policy or designated by a Member State has

eliminate or, if not possible, measure which could serve to identified a policy or measure which could

mitigate the impact on bidding restrict price formation it shall serve to restrict price formation it shall take

behaviour. Member States shall take all appropriate actions to all appropriate actions to eliminate or, if not

provide a report to the eliminate or, if not possible, possible, mitigate the impact on bidding

Commission by [OP: six mitigate the impact on bidding behaviour. Member States shall provide a

months after entry into force] behaviour. Member States shall report to the Commission by [OP: six months

detailing the measures and provide a report to the after entry into force] detailing the measures

actions they have taken or Commission by [OP: six months and actions they have taken or intend to take.

intend to take. after entry into force] detailing

the measures and actions they

have taken or intend to take.

ANNEX I TREE.2.B EN

• 191. 

  Article 10

  Value of lost load

• 192. 

  1. By [OP: one year after AM 50 1. By [OP: one year after Provisionally agreed: entry into force] Member States 1. By [OP: one year after entry entry into force] where 1. By [OP: one year after entry into shall establish a single estimate into force] Member States shall required for setting a force] where required for setting a of the Value of Lost Load establish a single estimate of the reliability standard in reliability standard in accordance with (VoLL) for their territory, Value of Lost Load (VoLL) for accordance with Article 20 Article 20 national regulatory authorities expressed in €/MWh. That their territory, expressed in€/MWh. national regulatory authorities or other competent authorities designated estimate shall be reported to the That estimate shall be reported to or other competent authorities by Member States shall establish a single

  Commission and made the Commission and made designated by Member States estimate of the Value of Lost Load (VoLL)

  publically available. Member publically available. In the case of shall establish a single estimate

  States may establish different cross-border bidding zones, of the Value of Lost Load for their territory [ ]. That estimate shall be [ VoLL per bidding zone if they Member States shall establish a (VoLL) for their territory [ ]. ] made publically available. National have several bidding zones in common estimate of the VoLL. That estimate shall be [ ] made regulatory authorities or other competent their territory. In establishing Member States may establish publically available. National authorities designated by Member States VoLL, Member States shall different VoLL per bidding zone if regulatory authorities or other may establish different [ ] estimates per apply the methodology they have several bidding zones in competent authorities bidding zone if they have several bidding developed pursuant to Article their territory. In establishing designated by Member States zones in their territory. In case a bidding 19(5). VoLL, Member States shall apply may establish different [ ] zone consists of territories of more than the methodology developed estimates per bidding zone if one Member State, the concerned pursuant to Article 19(5). they have several bidding zones Member States shall establish a single in their territory. In case a VoLL for that bidding zone. In establishing bidding zone consists of VoLL, national regulatory authorities or territories of more than one other competent authorities designated by Member State, the concerned Member States shall apply the methodology Member States shall establish developed pursuant to Article 19(5).

  a single VoLL for that bidding zone. In establishing VoLL, national regulatory authorities or other competent authorities designated by Member States shall apply the methodology developed pursuant to Article 19(5).

ANNEX I TREE.2.B EN

• 193. 

  2. Member States shall 2. Member States shall Provisionally agreed: update their estimate at least update their estimate at least 2. Member States shall update their every five years. every five years or when a estimate at least every five years or earlier significant change is observed. when a significant change is observed.

• 194. 

  Article 11

  Dispatching of generation and demand response

• 195. 

  1. Dispatching of power

  generation facilities and 1. Dispatching of power demand response shall be nongeneration facilities and demand discriminatory and market response shall be nonbased unless otherwise discriminatory, transparent provided under paragraphs 2 to and, unless otherwise provided

  • 4. 

    under Article 11 (2) to Article 11 (4), market based [ ].

• 196. 

  2. When dispatching

  electricity generating 2. [ ] Without prejudice to installations, transmission Articles 107 to 109 TFEU system operators shall give Member States may provide priority to generating for electricity generated [ ] installations using renewable using renewable energy sources energy sources or highor high-efficiency cogeneration efficiency cogeneration from from small [ ] power small generating installations or generating facility or power generating installations using generating facility using emerging technologies to the emerging technologies to be

  following extent: granted priority dispatch up to the following extent:

ANNEX I TREE.2.B EN

• 197. 

  (a) generating installations AM 51 (a) [ ] power generating using renewable energy sources (a) generating installations using facility using renewable energy or high-efficiency cogeneration renewable energy sources or highsources or high-efficiency

  with an installed electricity efficiency cogeneration with an cogeneration with an installed capacity of less than 500 kW; installed electricity capacity of less electricity capacity of less than [ or than 500 kW; [ ] ] 250 kW; or

• 198. 

  (b) demonstration projects AM 52 (b) demonstration projects for for innovative technologies. (b) generating installations emerging [ ] technologies as

  which are demonstration projects defined in the network code on for innovative technologies; requirements for generators Member States may apply higher adopted on the basis of Article limits to local energy communities 6 of Regulation 714/2009 i. as established in the Directive (EU) ... [recast of Directive 2009/72/EC as proposed by COM(2016) 864 i/2].

• 199. 

  3. Where the total capacity AM 53 [ ] of generating installations 3. A Member State which does

  subject to priority dispatch not at the time of entry into force under paragraph 2 is higher of this Regulation grant priority than 15 % of the total installed dispatch to any generating generating capacity in a installations may request to be Member State, point (a) of exempted from the provisions of paragraph 2 shall apply only to paragraph 2 if it can demonstrate additional generating to the Commission that all of the installations using renewable following conditions are met: energy sources or highefficiency cogeneration with an installed electricity capacity of less than 250 kW.

ANNEX I TREE.2.B EN

• 200. 

  (a) no priority dispatch exists for installations other than those listed in paragraph 2 is in place;

• 201. 

  (b) its liquid intraday, wholesale and balancing markets are fully accessible to all market players in accordance with the provisions of this Regulation;

• 202. 

  (c) its curtailment rules and congestion management are transparent to all market parties and comply with the provisions of this Regulation;

• 203. 

  (d) its renewable energy target for

  2030 is sufficient for the collective achievement of the Union’s binding overall target for share of energy from renewable sources pursuant to Article 3(2) of [Directive 2009/28/EC i as proposed by COM(2016) 767 i]and the Member State is expected to meet its target

ANNEX I TREE.2.B EN

• 204. 

  The Commission shall approve or reject a request for exemption

  within six months of receipt of the request. Any exemption granted shall avoid retroactive changes for installations already benefiting from priority dispatch, notwithstanding any agreement between a Member State and an installation on a voluntary basis.

• 205. 

  From 1 January 2026, point (a) From 1 January 2026, point (a) of 3a. For power generating of paragraph 2 shall apply only paragraph 2 shall apply only to facility commissioned as from to generating installations using generating installations using 1 January 2026, point (a) of

  renewable energy sources or renewable energy sources or highparagraph 2 shall apply only to high-efficiency cogeneration efficiency cogeneration with an power generating facilities [ ] with an installed electricity installed electricity capacity of less using renewable energy sources capacity of less than 250 kW or, than 250 kW [ ] . or high-efficiency cogeneration if the threshold under the first with an installed electricity sentence of this paragraph has capacity of less than [ ] 150 been reached, of less than 125 kW [ ]. Member States may kW. apply a lower threshold.

ANNEX I TREE.2.B EN

• 206. 

  4. Generating installations AM 54 4. [ ] Without prejudice to using renewable energy sources 4. Without prejudice to contracts concluded before

  or high-efficiency cogeneration paragraph 3 of this Article, [entry into force of the which have been commissioned generating installations using legislation], power generating prior to [OP: entry into force] renewable energy sources or highfacility using renewable energy and have, when commissioned, efficiency cogeneration which have sources or high-efficiency been subject to priority dispatch been commissioned prior to [OP: cogeneration which have been under Article 15(5) of Directive entry into force] and have, when commissioned prior to [OP: 2012/27/EU of the European commissioned, been subject to entry into force] and have, when Parliament and of the Council priority dispatch under Article 15 commissioned, been subject to or Article 16(2) of Directive (5) of Directive 2012/27 i/EU of the priority dispatch under Article 2009/28/EC of the European European Parliament and of the 15(5) of Directive 2012/27 i/EU Parliament and of the Council 23 Council or Article 16 (2) Directive of the European Parliament and shall remain subject to priority 2009/28/EC of the European of the Council or Article 16(2) dispatch. Priority dispatch shall Parliament and of the Council 39 of Directive 2009/28/EC i of the no longer be applicable from shall remain subject to priority European Parliament and of the the date where the generating dispatch. Priority dispatch shall no Council 24 shall [ ] continue to installation is subject to longer be applicable from the date benefit from priority dispatch. significant modifications, which where the generating installation is Priority dispatch shall no longer shall be the case at least where subject to significant modifications, be applicable from the date a new connection agreement is which shall be the case at least where the [ ] power generating required or the generation where a new connection agreement facility is subject to significant capacity is increased. is required or the generation modifications, which shall be the capacity is increased. case at least where a new 1. __________________ connection agreement is

  35

   Directive 2009/28/EC i of the required or the generation European Parliament and of the capacity is increased.

  Council of 23 April 2009 on the promotion of the use of energy from renewable sources and

23 Directive 2009/28/EC i of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC i and 2003/30/EC (OJ L 140, 5.6.2009, p. 16).

24 Directive 2009/28/EC i of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC i and 2003/30/EC (OJ L 140, 5.6.2009, p. 16).

ANNEX I TREE.2.B EN

amending and subsequently repealing Directives 2001/77/EC i and 2003/30/EC (OJ L 140, 5.6.2009, p. 16).

• 207. 

  5. Priority dispatch shall not

  endanger the secure operation 5. Priority dispatch shall not of the electricity system, shall endanger the secure operation of not be used as a justification for the electricity system, shall not curtailment of cross-border be used as a justification for capacities beyond what is curtailment of cross-border provided for in Article 14 and capacities beyond what is shall be based on transparent provided for in Article 14 and

  and non-discriminatory criteria. shall be based on transparent and non-discriminatory criteria.

• 208. 

  Article 12 Article 12

  Redispatching and curtailment Redispatching [ ]

• 209. 

  1. Curtailment or

  redispatching of generation and 1. [ ] Redispatching of redispatching of demand generation and redispatching of response shall be based on demand response shall be based objective, transparent and nonon objective, transparent and

  discriminatory criteria. non-discriminatory criteria. It shall be open to all generation

  technologies, storage and demand response, including operators located in other Member States unless technically not feasible.

ANNEX I TREE.2.B EN

• 210. 

  2. The resources curtailed AM 55 2. The resources [ or redispatched shall be 2. The resources curtailed or ]redispatched shall be selected selected amongst generation or redispatched shall be selected amongst generation, storage or demand facilities submitting amongst generation, energy demand facilities [ ] using offers for curtailment or storage, and/or demand response market-based mechanisms and redispatching using marketfacilities submitting offers for be financially compensated. [ ] based mechanisms and be curtailment or redispatching using Balancing energy bids used for financially compensated. Nonmarket-based mechanisms and be redispatching shall not set the market-based curtailment or financially compensated. Nonbalancing energy price in redispatching of generation or market-based curtailment or accordance with the Balancing redispatching of demand redispatching of generation or Guideline adopted on the basis response shall only be used redispatching of energy storage of Article 18 of the Regulation where no market-based and/or demand response shall only 714/2009.

  alternative is available, where be used for operational security all available market-based reasons and where no marketresources have been used, or based alternative is available or (part of 2, moved as 2a) where the number of generation where all available market-based or demand facilities available in resources have been used, or where the area where suitable the number of generation, energy generation or demand facilities storage or demand facilities for the provision of the service available in the area where suitable are located is too low to ensure generation, energy storage or effective competition. The demand facilities for the provision provision of market-based of the service are located is too low resources shall be open to all to ensure effective competition. generation technologies, storage The provision of market-based and demand response, including resources shall be open to all operators located in other generation technologies, storage Member States unless and demand response, including technically not feasible. operators located in other Member States unless technically not feasible.

ANNEX I TREE.2.B EN

• 211. 

  2a. Without prejudice to

  Articles 107 to 109 TFEU nonmarket-based [ ] redispatching of generation or redispatching of demand response [ ] may only be used [ ] subject to the following conditions:

• 212. 

  (a) no market-based alternative is available,

• 213. 

  (b) [ ] all available marketbased resources have been used, or

• 214. 

  (c) [ ] the number of generation or demand facilities available in the area where suitable generation or demand facilities for the provision of the service are located is too low to ensure effective competition. [ ]

• 215. 

  (d) the current grid situation leads to congestion in such a regular and predictable way that market-based redispatch would lead to regular strategic bidding which would increase the level of internal congestion and the Member State concerned has adopted an action plan to address this congestions or ensures that

  minimum available capacity for cross-zonal trade is in accordance with Article 14 (7).

ANNEX I TREE.2.B EN

• 216. 

  3. The responsible system AM 56 3. The responsible system operators shall report at least 3. The responsible system operators shall report at least once per year to the competent operators shall report at least once once per year to the competent regulatory authority on per year to the competent regulatory authority on [ ]

  curtailment or downward regulatory authority, which shall downward redispatching of redispatching of generating be transmitted to the Agency, on: power generating facility [ ] installations using renewable using renewable energy sources energy sources or highor high-efficiency cogeneration [ efficiency cogeneration and on ]. measures taken to reduce the need for such curtailment or downward redispatching in the future. Curtailment or redispatching of generating installations using renewable energy sources or highefficiency cogeneration shall be subject to compensation pursuant to paragraph 6.

• 217. 

  (a) the level of development and effectiveness of market-based

  curtailment or redispatching mechanisms for generation and demand facilities;

ANNEX I TREE.2.B EN

• 218. 

  (b) the reasons, volumes in MWh and type of generation source

  subject to curtailment or downward redispatching;

• 219. 

  (c) the measures taken to reduce the need for the curtailment or

  downward redispatching of generating installations using renewable energy sources or highefficiency cogeneration in the future including investments in digitalisation of the grid infrastructure and in services that increase flexibility;

• 220. 

  (d) requests and contractual arrangements made with

  generating units for them to operate at a certain level of electricity infeed, the necessity of which the system operators shall justify,, specifying to what extent those services could not be provided by other units.

• 221. 

  The competent regulatory authority shall publish the data referred to in paragraphs (a) to (d) together with recommendations for improvement where necessary.

ANNEX I TREE.2.B EN

• 222. 

  Curtailment or redispatching of generating installations using

  renewable energy sources or highefficiency cogeneration shall be subject to compensation pursuant to paragraph 6.

• 223. 

  4. Subject to requirements 4. Subject to requirements relating to the maintenance of relating to the maintenance of the reliability and safety of the the reliability and safety of the grid, based on transparent and grid, based on transparent and non-discriminatory criteria non-discriminatory criteria

  defined by the competent defined by the competent national authorities, national authorities, transmission transmission system operators system operators and and distribution system distribution system operators operators shall: shall:

• 224. 

  (a) guarantee the capability AM 57 (a) guarantee the capability of

  of transmission and distribution (a) guarantee the capability of transmission and distribution networks to transmit electricity transmission and distribution networks to transmit electricity produced from renewable networks to transmit electricity produced from renewable energy energy sources or highproduced from renewable energy sources or high-efficiency efficiency cogeneration with sources, energy storage, demandcogeneration with minimum minimum possible curtailment response or high-efficiency possible [ ] redispatching. That or redispatching. That shall not cogeneration with minimum shall not prevent network prevent network planning from possible curtailment or planning from taking into taking into account limited redispatching. That shall not account limited [ ] redispatching curtailment or redispatching prevent network planning from where this is shown to be more where this is shown to be more taking into account limited economically efficient and, [ ] economically efficient and does curtailment or redispatching where does not exceed 5 % of [ ] the not exceed 5 % of installed they can demonstrate in a annual generated electricity in capacities using renewable transparent way that this is more installations using renewable energy sources or higheconomically efficient and does not energy sources [ ] and which efficiency cogeneration in their exceed 5 % of installed capacities are directly connected to their area; using renewable energy sources, respective grid, unless energy storage, demand-response otherwise provided by a or high-efficiency cogeneration in Member State in which their area; electricity from power

ANNEX I TREE.2.B EN

generating facility using renewable energy sources or high-efficiency cogeneration represents more than 50 % of annual gross final consumption of electricity;

• 225. 

  (b) take appropriate grid and

  market-related operational (b) take appropriate grid and measures in order to minimise market-related operational the curtailment or downward measures in order to minimise redispatching of electricity the [ ] downward redispatching produced from renewable of electricity produced from energy sources or highrenewable energy sources or efficiency cogeneration. high-efficiency cogeneration.

• 226. 

  AM 58

  Article 12 – paragraph 4 – point b (new)

  (ba) ensure that their networks are sufficiently flexible such that they are in a position to manage them.

• 227. 

  5. Where non-market-based 5. Where non-market-based downward redispatching or downward redispatching [ ] is curtailment is used, the used, the following principles

  following principles shall shall apply: apply:

ANNEX I TREE.2.B EN

• 228. 

  (a) generating installations AM 59 (a) [ ] power generating using renewable energy sources (a) generating installations using facilities using renewable shall only be subject to renewable energy sources shall energy sources shall only be downward redispatching or only be subject to downward subject to downward

  curtailment if no other redispatching or curtailment if no redispatching [ ]if no other alternative exists or if other other alternative exists or if other alternative exists or if other solutions would result in solutions would result in solutions would result in disproportionate costs or risks significantly disproportionate costs disproportionate costs or severe to network security; or significant risks to network risks to network security; security;

• 229. 

  (b) generating installations AM 60 (b) electricity generated in a [ using high-efficiency (b) electricity generated in a ] high-efficiency cogeneration cogeneration shall only be high-efficiency cogeneration process shall only be subject to subject to downward process shall only be subject to downward redispatching [ ] if, redispatching or curtailment if, downward redispatching or other than [ ] downward other than curtailment or curtailment if, other than redispatching of [ ] power downward redispatching of curtailment or downward generating facilities using generating installations using redispatching of generating renewable energy sources, no renewable energy sources, no installations using renewable other alternative exists or if other alternative exists or if energy sources, no other alternative other solutions would result in other solutions would result in exists or if other solutions would disproportionate costs or severe disproportionate costs or risks result in disproportionate costs or risks to network security;

  to network security; risks to network security;

ANNEX I TREE.2.B EN

• 230. 

  (c) self-generated electricity [ ] from generating installations

  using renewable energy sources or high-efficiency cogeneration which is not fed into the transmission or distribution network shall not be curtailed unless no other solution would resolve network security issues;

• 231. 

  (d) downward redispatching (d) downward redispatching [ or curtailment under letters a to ] under letters a [ ] and b [ ] it

  c shall be duly and shall be duly and transparently transparently justified. The justified. The justification shall justification shall be included in be included in the report under the report under paragraph 3. paragraph 3.

• 232. 

  6. Where non-market based AM 61 6. Where non-market based [ curtailment or redispatching is 6. Where non-market based ] redispatching is used, it shall

  used, it shall be subject to curtailment or redispatching is be subject to financial financial compensation by the used, it shall be subject to financial compensation by the system system operator requesting the compensation by the system operator requesting the [ ] curtailment or redispatching to operator requesting the curtailment redispatching to the [ ] the owner of the curtailed or or redispatching to the owner of the operator of the [ ] redispatched redispatched generation or curtailed or redispatched generation or demand facility demand facility. Financial generation, energy storage or except in the case of compensation shall at least be demand facility. Financial generators accepting equal to the highest of the compensation shall at least be connection agreement in which following elements: equal to the highest of the firm delivery of energy is not following elements: guaranteed. Financial compensation at least be equal to the highest of the following elements or a combination of them if applying one of the elements would lead to an unjustifiably low or unjustifiably high compensation:

ANNEX I TREE.2.B EN

• 233. 

  (a) additional operating cost (a) additional operating cost caused by the curtailment or caused by the [ ] redispatching, redispatching, such as such as additional fuel costs in additional fuel costs in case of case of upward redispatching, or upward redispatching, or backup heat provision in case of backup heat provision in case of downward redispatching or downward redispatching or curtailment of [ ] power curtailment of generating generating facility using highinstallations using highefficiency cogeneration;

  efficiency cogeneration; 234. (b) 90 % of the net revenues AM 62 (b) [ ] Net revenues from the

  from the sale of electricity on (b) [ ] net revenues from the sale of electricity on the daythe day-ahead market that the sale of electricity on the day-ahead ahead market that the generating generating or demand facility market that the generating or or demand facility would have would have generated without demand facility would have generated without the [ ] the curtailment or redispatching generated without the redispatching redispatching request. Where request. Where financial request, including lost financial financial support is granted to support is granted to generating support where financial support is generating or demand facilities or demand facilities based on granted to generating or demand based on the electricity volume the electricity volume generated facilities based on the electricity generated or consumed, lost or consumed, lost financial volume generated or consumed [ ] . financial support shall be support shall be deemed part of deemed part of the net revenues. the net revenues.

ANNEX I TREE.2.B EN

• 235. 

  Chapter III

  Network access and congestion management 236. S ECTION 1

  C APACITY ALLOCATION

• 237. 

  Article 13 Article 13 Compromise proposal: to divide article 13,

  Definition of bidding zones Measures to address congestion into 13 and 13a. Due to changing of and definition of bidding zones structure and shifting parts of paragraphs please note that the comparison with first three columns may not be exact and/or possible. A consolidated version of 13 and 13a can be found in Annex II.

  Article 13 Bidding Zone Review Article 13a Action plans

• 238. 

  1. Bidding zone borders AM 63 1. Member States shall Compromise proposal: shall be based on long-term, 1. The configuration of take all appropriate measures Following adoption this will be paragraph 1 structural congestions in the bidding zones in the Union shall to address congestions. Bidding of Article 13:

  transmission network and be designed in such a way as to zone borders shall be based on 1. Member States shall take all bidding zones shall not contain ensure liquidity of day-ahead and long-term, structural congestions appropriate measures to address such congestions. The intraday markets, and thus to in the transmission network [ ]. congestions. Bidding zone borders shall be configuration of bidding zones maximise economic efficiency and Bidding zones shall not based on long-term, structural congestions in in the Union shall be designed cross-border trading opportunities contain such structural the transmission network [ ]. Bidding zones in such a way as to maximise while maintaining security of congestions unless they have shall not contain such structural economic efficiency and crosssupply. Bidding zone borders shall no impact, or their impact on congestions unless they have no impact, or border trading opportunities be based on long-term, structural neighbouring bidding zones is their impact on neighbouring bidding while maintaining security of congestions in the transmission mitigated through the use of zones is mitigated through the use of supply. network and bidding zones shall remedial actions and they do remedial actions and they do not lead to not contain such congestions not lead to reductions of cross reductions of cross zonal trading capacity unless they have no impact on zonal trading capacity. The in accordance with the requirements of neighbouring bidding zones, or configuration of the bidding Art 14. The configuration of the bidding their impact is mitigated by zones in the Union shall be zones in the Union shall be designed in such remedial actions. designed in such a way as to a way as to maximise economic efficiency maximise economic efficiency and in order to maximise cross-border and in order to maximise crosstrading opportunities, while maintaining border trading opportunities, [ ] security of supply with due respect to the

ANNEX I TREE.2.B EN

with due respect to the provisions in Article 14. provisions in Article 14.

• 239. 

  2. Each bidding zone should AM 64 [ ] Compromise proposal: be equal to an imbalance price 2. Each bidding zone should be [ ]

  area. equal to an imbalance price area, (covered in line 152) except where an imbalance price

  area may constitute a part of a bidding zone.

239a. Compromise proposal:

Following adoption this will be paragraph 2 of Article 13: 2. Every three years, the ENTSO for Electricity shall report on structural congestion and other major physical congestion between and within bidding zones, including location and frequency of such congestion in accordance with the capacity allocation and congestion management guideline adopted on the basis of Article 18 of Regulation (EU) 714/2009 and an assessment of whether the cross-zonal trade capacity reached the minimum threshold pursuant to Article 14.

• 240. 

  3. In order to ensure an AM 65 3. In order to ensure an Compromise proposal: optimal bidding zone definition 3. In order to ensure an optimal optimal bidding zone [ ] Following adoption this will be paragraph 3 in closely interconnected areas, bidding zone definition in closely configuration [ ] a bidding of Article 13:

  a bidding zone review shall be interconnected areas, a bidding zone review shall be carried out. carried out. That review shall zone review shall be carried out. That review shall identify all 3. In order to ensure an optimal bidding include analysis of the That review shall include analysis structural congestion and zone [ ] configuration [ ] a bidding zone configuration of bidding zones of the configuration of bidding include analysis of [ ] different review shall be carried out. That review shall in a coordinated manner with zones in a coordinated manner with configurations of bidding zones identify all structural congestion and the involvement of affected the involvement of affected in a coordinated manner with the include analysis of [ ] different stakeholders from all affected stakeholders from all affected involvement of affected configurations of bidding zones in a Member States, following the Member States, following the stakeholders from all [ ] coordinated manner with the involvement of

ANNEX I TREE.2.B EN

process in accordance with process in accordance with Articles relevant Member States, affected stakeholders from all [ ] relevant Articles 32 to 34 of Regulation 32 to 34 of Regulation (EU) following the process in Member States, following the process in (EU) 2015/1222. The Agency 2015/1222. Current bidding zones accordance with [ ] the accordance with [ ] the capacity allocation shall approve and may request shall be assessed based on their capacity allocation and and congestion management guideline amendments to the ability to create a reliable market congestion management adopted on the basis of Article 18 of methodology and assumptions environment, ensure sufficient guideline adopted on the basis Regulation (EU) 714/2009 i. Current bidding that will be used in the bidding flexible generation and load of Article 18 of Regulation zones shall be assessed based on their zone review process as well as capacity, which is crucial for (EU) 714/2009. All relevant ability to create a reliable market the alternative bidding zone avoiding grid bottlenecks, transmission system operators environment, ensure sufficient including configurations considered. balancing electricity demand and shall submit a proposal to the for flexible generation and load capacity, supply securing the long-term relevant national regulatory which is crucial for avoiding grid security of investments and the authorities for approval. The bottlenecks, balancing electricity demand grid. The Agency shall approve relevant national regulatory and supply, securing the long-term security and may request amendments to authorities shall come to an of investments and the grid in network the methodology and assumptions unanimous decision on the infrastructure. that will be used in the bidding proposal within [3 month]. In zone review process as well as the case they do not agree within (ex part of line 242) In this article and in alternative bidding zone this time frame, the Agency article 13a, relevant Member States, configurations considered. The shall [ ] decide on the transmission system operators or national methodology shall take due methodology and assumptions regulatory authorities refer to those account of infrastructure that will be used in the bidding Member States, transmission system development projects that are zone review process as well as operators or national regulatory expected to be realised within the the alternative bidding zone authorities participating in the review of next 5 years. configurations considered. The the bidding zone configuration and also methodology shall be based on those in the same capacity calculation structural congestions which region pursuant to the capacity allocation are not expected to be and congestion management guideline overcome within the next five adopted on the basis of Article 18 of years, for example taking due Regulation (EU) 714/2009 i. account of tangible progress on infrastructure development projects, that are expected to be realised within the next five years.

ANNEX I TREE.2.B EN

240a. Compromise proposal:

Following adoption this will be paragraph 4 of Article 13: (based on para 3 Council) (ex part of line 240) All relevant transmission system operators shall submit a proposal for the methodology and assumptions that will be used in the review process as well as the alternative bidding zone configurations considered to the relevant national regulatory authorities for approval. The relevant national regulatory authorities shall come to a unanimous decision on the proposal within [3 months]. In case they do not agree within this time frame, the Agency shall [ ] decide on the methodology and assumptions [ ] as well as the alternative bidding zone configurations considered. The methodology shall be based on structural congestions which are not expected to be overcome within the next five years, [for example] taking due account of tangible progress on infrastructure development projects, that are expected to be realised within the next five years.

• 241. 

  3a. Irrespective of the Compromise proposal: concrete outcome of the [ ]

  infrastructure development projects, Article 14 shall apply to the calculation of the available capacity for crosszonal exchanges. Where an action plan is implemented pursuant to paragraph 4a, the threshold referred to in Article 14(7) shall be reached not later than end of 2025.

ANNEX I TREE.2.B EN

• 242. 

  4. The transmission system AM 66 4. The transmission system Compromise proposal: operators participating in the 4. The transmission system operators participating in the Partially incorporated in second part of bidding zone review shall operators participating in the bidding zone review shall paragraph 3 above.

  submit a proposal to the bidding zone review shall submit a submit a joint proposal to the Commission regarding whether proposal to the relevant Member [ ] relevant Member States or Following adoption this will be paragraph 5 to amend or maintain the States whether to amend or designated competent of Article 13: bidding zone configuration. maintain the bidding zone authorities of the relevant Based on that proposal, the configuration. The relevant Member States [no later than 4. Based on the methodology and Commission shall adopt a Member States shall be those 12 months after entry into force assumptions approved pursuant to decision whether to amend or participating in the review of this Regulation, specific date paragraph 3, the transmission system maintain the bidding zone pursuant to Article 32(2) of to be inserted by OJ]. In this operators participating in the bidding zone configuration, [no later than 6 Regulation (EU) 2015/1222 and article, relevant Member review shall submit a joint proposal to the [ months after entry into force of those in the same Capacity States refer to those Member ] relevant Member States or designated this Regulation, specific date to Calculation Region(s) pursuant to States participating in the competent authorities of the relevant be inserted by OP] or by six Regulation (EU) 2015/1222. Based review of the bidding zone Member States whether to amend or months after the conclusion of on the proposal, the relevant configuration and also those in maintain the bidding zone configuration the bidding zone configuration Member States shall come to a the same capacity calculation no later than 12 months after [entry into launched in accordance with unanimous decision within six region pursuant to the force of this Regulation, specific date to be points (a), (b) or (c) of Article months on whether to amend or capacity allocation and inserted by OJ]. Other Member States, 32(1) of Regulation (EU) maintain the bidding zone congestion management Energy Community Contracting Parties or 2015/1222, whichever comes configuration. Other Member guideline adopted on the basis other third countries sharing the same later. States, Energy Community of Article 18 of Regulation synchronous area with any Member State Contracting Parties or other third (EU) 714/2009. may submit comments. countries sharing the same synchronous area with any Member State may submit comments. The decision shall be reasoned, in accordance with relevant Union law and shall take account of any observations of other Member States, Energy Community Contracting Parties and other third countries sharing the same synchronous area with any Member State, as well as of

ANNEX I TREE.2.B EN

commitments on addressing existing congestion made by the relevant Member States. The relevant Member States shall notify the Commission and the Agency of their decision and any cross-border agreements entered into by the Member States, the regulatory authorities or the transmission system operators for the purpose of achieving consensus. Agreements entered into by the relevant Member States shall not deviate from coordinated capacity calculation processes as set out in Article 14 of this Regulation nor from the relevant provisions of Regulation (EU) 2015/1222.

• 243. 

  AM 67 Compromise proposal:

Article 13 – paragraph 4 a(new) [ ]

4 a. Where the relevant Member States fail to come to a unanimous decision within the deadline referred to in paragraph 4, or where the Member States become aware of the fact that commitments on which a previous unanimous decision was based were not complied with, they shall immediately notify the Commission.

ANNEX I TREE.2.B EN

• 244. 

  The Commission shall initiate a Compromise proposal: conciliation procedure and shall [ ]

  act as a mediator between the relevant Member States. In the conciliation procedure, the relevant Member States shall, within six months of such initiation, adopt a unanimous decision on whether to amend or maintain the bidding zone configuration.

• 245. 

  Where the relevant Member States Compromise proposal: in the conciliation fail to adopt a [ ]

  unanimous decision within six months, the Member State with the internal structural congestion shall have the choice to either amend its bidding zone or establish a roadmap with concrete measures on how to overcome the congestions in its national territory in due time. That Member State shall immediately notify its choice to the Commission.

• 246. 

  For those Member States that

  choose to amend their bidding zones, the Commission shall adopt a decision within six months of that notification, after a thorough evaluation of all the issues at stake, together with an assessment of all available solutions.

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• 247. 

  4a. Where structural Compromise proposal: congestion has been identified Following adoption this will be paragraph 6 by one or more transmission of Article 13:

  system operator or where the Where structural congestion has been bidding zone review identified in the report pursuant to recommends a bidding zone paragraph 2 or by one or more change of one or more transmission system operators in their Member States, the concerned control areas in a report approved by the Member States in cooperation relevant national regulatory authorities by with their transmission system one or more transmission system operator operators have the possibility, or where the bidding zone review within 6 months, to define recommends a bidding zone change of one action plans, national or or more Member States, the concerned multinational. Member States in cooperation with their transmission system operators have the possibility shall decide, within 6 months, to either define national or multinational action plans, national or multinational pursuant to Art 13a, or to review their bidding zone configuration. The decision shall be immediately notified to the Commission and the Agency.

  Compromise proposal: Following adoption this will be paragraph 1 of Article 13a:

  Following a decision pursuant to Article 13(6), Member States shall develop action plans in cooperation with national

  These action plans shall regulatory authorities. These action plans contain a concrete timetable shall contain a concrete timetable for for adopting measures to adopting measures to reduce the reduce the structural structural congestions identified within congestions identified within the period of [no later than [4] years after

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the period of [no later than [4] entry into force of this Regulation, specific years after entry into force of date to be inserted by OJ] [ ] this Regulation, specific date to be inserted by OJ], including for example acceleration of network development, more efficient use of existing infrastructure, a review of current system operation practices, increased coordination of system operation with relevant neighbouring transmission system operators, review of regulation regarding remedial actions and barriers to increased flexibility and national energy policy measures that shift the location of production and consumption.

• 248. 

  4b. Member State Compromise proposal: implementing the actions plans Following adoption this will be paragraph 2 pursuant to paragraph 4a of Article 13a:

  shall ensure that without Irrespective of the concrete progress of prejudice to derogations under the action plan, Member States [ ] shall Articles 14(7a) and 14(7b), the ensure that without prejudice to the level of allocated capacity set derogation under Article [ ] 14 (7b), the out in Article 14(7) is achieved cross-border trade capacities are in the last year of the action increased every year up to the benchmark plan, and in no case later than level [ ] calculated in accordance with end of 2025, the minimum Article 14 (7), which is to be achieved by allocated capacity. Member the end of 2025. The yearly increase shall States shall achieve the be achieved by means of a linear capacity referred to in this trajectory. The starting of this trajectory

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paragraph by means of a shall be either the capacity allocated at this linear trajectory. This linear border in the year before adoption of the trajectory and the starting of roadmap or the average of the three last this trajectory, which shall be years before the adoption of the roadmap, either the capacity allocated at whatever is higher. This linear trajectory [ this border in the year before ] shall be agreed with the Member States implementation of the action of the same capacity calculation region. plan or the average of the For the period when a Member State is three last years before the implementing an action plan, the Member action plan, whatever is State shall ensure that the capacity made higher, shall be agreed with available for cross-zonal trade to be the Member States of the same compliant with Article 14 (7) is at least capacity calculation region. equal to the values of the trajectory, For the period when a including by use of remedial actions in the Member State is implementing capacity calculation region but the an action plan, the Member decisions of the regulatory authorities State shall ensure that the referred to in paragraphs 7a and 7b of capacity made available for article 14 are not applicable to such a cross-zonal trade to be Member State. compliant with paragraph 7 is at least equal to the values of the trajectory, including by use of remedial actions in the capacity calculation region, but the decisions of the regulatory authorities referred to in paragraphs 7a and 7b are

not applicable to such a Compromise proposal: Member State. Costs of Following adoption this will be paragraph 3 remedial actions required to of Article 13a: follow the trajectory or make Costs of remedial actions required to available cross-zonal capacity follow the trajectory or make available at the borders concerned by cross-zonal capacity at the borders the action plan shall be borne concerned by the action plan shall be

by the Member State or borne by the Member State or Member States implementing the action plan.

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Member States implementing the action plan.

• 249. 

  4c. Six months before the Compromise proposal: expiry of the action plan, Following adoption this will be paragraph 6 Member States shall decide of Article 13a:

  whether to split their bidding Six months before the expiry of the action zone to address remaining plan, Member States shall decide whether congestions or whether to to amend their bidding zone to address address remaining internal remaining congestions or whether to congestions with remedial address remaining internal congestions actions for which they shall with remedial actions for which they shall cover the costs. Yearly, during cover the costs. the implementation of the action plan and within six months after the expiry of the action plan, the transmission system operators participating in the bidding zone review shall assess the available crosszonal capacity calculated in accordance with the methodology referred to in Article 14(7) for the period of the last 12 months, and determine in a report whether the cross-border trade Compromise proposal: capacity reached the minimum Following adoption this will be paragraph 7 level outlined in Article 14(7). of Article 13a: Where a structural congestion Where a structural congestion has been has been identified pursuant to identified pursuant to paragraph 4 but no paragraph 4a but no action action plan was defined within 6 months, plan was defined within 6 the relevant transmission system months, the relevant operators shall within twelve months after transmission system operators a structural congestion has been identified shall within twelve months assess [ ] whether the available cross

ANNEX I TREE.2.B EN

after a structural congestion border capacity has reached the minimum has been identified assess the level outlined in Article 14(7) for the available cross-zonal capacity period of the last 12 months and report to calculated in accordance with relevant national regulatory authorities and the methodology referred to in the Agency. For those Member States for Article 14(7) for the period of which the assessment demonstrates that a the last 12 months, and transmission system operator has not been determine in a report whether compliant with the minimum level, the cross-border trade paragraph 5 applies. capacity reached its minimum level outlined in Article 14(7). The assessments under this paragraph shall be continuously reiterated every 24 months for the period of the last 24 months.

• 250. 

  4d. For those Member Compromise proposal:

  States for which the Following adoption this will be paragraph 5 assessment following of Article 13a: paragraph 4c demonstrates For those Member States for which the that a transmission system assessment following paragraph 4 operator has not been demonstrates that a transmission system compliant with the level operator has not been compliant with the outlined in Article 14(7) or for level outlined in Article 14(7) linear those Member States that have trajectory [ ] the relevant Member States opted for a bidding zone split, shall come to a unanimous decision within the relevant Member States 6 months from receiving the assessment shall come to a unanimous referred in paragraph 4 on whether to decision within 6 months from maintain or amend the bidding zone receiving the report referred configuration. Other Member States may in paragraph 4c on whether to submit comments to the relevant Member maintain or amend the States who should take account of these bidding zone configuration. comments when coming to their decision. Other Member States may The decision shall be justified and shall submit comments to the notified to the Commission and the

ANNEX I TREE.2.B EN

relevant Member States who Agency. Should the relevant Member should take account of these States fail to come to a unanimous comments when coming to decision within the allowed timeframe, their decision. The decision they shall immediately notify the shall be justified, and shall Commission. [The Commission may make notified to the Commission further proposals and may invite the and the Agency. relevant Member States for consultation aiming at fostering a balanced solution within three months.] As a measure of last resort, the Commission after consultation with the Agency and the relevant stakeholders shall adopt a decision whether to amend or maintain the bidding zone configuration in and between those Member States [ ], by six months after receiving of such a notification. [ ]

• 251. 

  4e. Should the relevant Compromise proposal:

  Member States fail to come to Following adoption this will be paragraph 7 an unanimous decision within of Article 13: the allowed timeframe, they For those Member States for which the shall immediately notify the assessment following paragraph 4c Commission. The Commission demonstrates that a transmission system may make further proposals operator has not been compliant with the and may invite the relevant level outlined in Article 14(7) or for For Member States for those Member States that have opted for a consultation aiming at proposal to amend the bidding zone fostering a balanced solution configuration split, the relevant Member within three months. As a States shall come to a unanimous decision measure of last resort, the within 6 months after the notification Commission after consultation pursuant to paragraph 4 from receiving with the Agency and the the report referred in paragraph 4c on relevant stakeholders shall whether to maintain or amend the bidding adopt a decision whether to zone configuration. Other Member States amend or maintain the may submit comments to the relevant bidding zone configuration in Member States who should take account

ANNEX I TREE.2.B EN

and between those Member of these comments when coming to their States that are subject to the decision. The decision shall be justified decision according to and notified to the Commission and the paragraph 4d, by six months Agency. (ex 4e) Should the relevant after receiving of such a Member States fail to come to a notification. unanimous decision within the allowed timeframe, they shall immediately notify the Commission. [The Commission may make further proposals and may invite the relevant Member States for consultation aiming at fostering a balanced solution within three months.] As a measure of last resort, the Commission after consultation with the Agency and the relevant stakeholders shall adopt a decision whether to amend or maintain the bidding zone configuration in and between those Member States that are subject to the decision according to paragraph 4d, by six months after receiving such a notification.

ANNEX I TREE.2.B EN

• 252. 

  4f. In case one of the Compromise proposal: consecutive reassessments [ ]

  referred to in paragraph 4c demonstrates that a transmission system operator has not been compliant with the provisions from Article 14(7c) the procedure under paragraphs 4d and 4e shall apply.

• 253. 

  5. The decision referred to AM 68 5. The decision referred to in Compromise proposal: in paragraph 4 shall be based on 5. Where the relevant Member paragraph 4d or 4e shall be Following adoption this will be paragraph 6 the result of the bidding zone State chooses to establish a based on the report identifying of Article 13a:

  review and the transmission detailed road map with concrete structural congestion or the Six months before the expiry of the action system operators' proposal milestones on how the congestion result of the bidding zone review plan, Member States shall decide whether concerning its maintenance or issues will be resolved, that and the transmission system to amend their bidding zone to address amendment. The decision shall Member State shall, within six operators' proposal in remaining congestions or whether to be justified, in particular as months of the Commission paragraph 4a and the report address remaining internal congestions regards possible deviations decision, present that roadmap to in paragraph 4c concerning its with remedial actions for which they shall from the result of the bidding the Commission and other maintenance or amendment [ ]. cover the costs. zone review. relevant Member States. During The decision shall be justified, the implementation of the in particular as regards possible roadmap the relevant Member deviations from the result of the State shall regularly report to the bidding zone review and shall Commission on the progress take account of the positions made. and commitments of the concerned Member States and the comments provided by other Member States.

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• 254. 

  Irrespective of the concrete Compromise proposal: progress of the roadmap, the [ ]

  Member State that is (covered in line 248) implementing a roadmap shall ensure that the cross-border trade capacities are increased every year up to the benchmark level of at least 75% calculated in accordance with Article 14 paragraph 7, which is to be achieved by the end of 2025. The yearly increase shall be achieved by means of a linear trajectory.

• 255. 

  The starting of this trajectory shall Compromise proposal: be either the capacity allocated at [ ]

  this border in the year before (covered in line 248) adoption of the roadmap or the average of the three last years before the adoption of the roadmap, whatever is higher.

• 256. 

  Member States shall be considered Compromise proposal: to be in compliance with Article 14 [ ]

  paragraph 7 if the capacity made (covered in line 248) available for cross-zonal trade is at least equal to the values of the linear trajectory.

ANNEX I TREE.2.B EN

• 257. 

  AM 69 Compromise proposal:

  Article 13 – paragraph 5 a (new) Following adoption this will be paragraph 4 of Article 13a:

  5a. The relevant transmission Yearly during the implementation of the system operators and national action plan and within six months after regulatory authorities shall assess the expiry of the action plan, the relevant yearly whether the available crosstransmission system operators border capacity has reached the participating in the bidding zone review linear trajectory or, as of the end shall [ ] assess whether the available of 2025, the minimum level cross-border capacity has reached the outlined in Article 14(7). linear trajectory or, as of the end of 2025, the minimum level outlined in Article 14 (7) for the period of the last 12 months [ ] and report to relevant national regulatory authorities and the Agency. [This assessment [ ] shall be continuously reiterated every 24 months for the period of the last 24 months.]

• 258. 

  AM 70 Compromise proposal:

Article 13 – paragraph 5 b (new) [ ]

5b. For those Member States for which the assessment referred to in paragraph 5a demonstrates that a transmission system operator has not been compliant with the linear trajectory, or as of the end of 2025, with the level outlined in Article 14 (7), the Commission may recommend additional measures and as a measure of last resort, adopt a decision whether to amend or maintain the bidding zone configuration in and between those Member States.

ANNEX I TREE.2.B EN

• 259. 

  6. Where further bidding AM 71 6. Where further bidding Compromise proposal: zone reviews are launched deleted zone reviews are launched under Following adoption this will be paragraph under Article 32(1)(a), (b) or [ ] the capacity allocation and 10 of Article 13:

  (c) of Regulation (EU) congestion management Where further bidding zone reviews are 2015/1222, the Commission guideline adopted on the basis launched under [ ] the capacity allocation may adopt a decision within six of Article 18 of Regulation and congestion management guideline months of the conclusion of that (EU) 714/2009 the procedure adopted on the basis of Article 18 of bidding zone review. outlined in this Article shall be Regulation (EU) 714/2009 i this Article followed. shall apply. the procedure outlined in this Article shall be followed.

• 260. 

  7. The Commission shall AM 72 [ ] Compromise proposal: consult relevant stakeholders on 7. Member States and the Following adoption this will be paragraph 8 its decisions under this Article Commission shall consult relevant of Article 13:

  before they are adopted. stakeholders before adopting a Member States and the Commission shall decision under this Article. consult relevant stakeholders before

  adopting a decision under this Article.

• 261. 

  8. The Commission AM 73 8. [ ] Any decision adopted Compromise proposal: decision shall specify the date 8. The decision adopted under according to this Article shall Following adoption this will be paragraph 9 of implementation of a change. this Article shall specify the date of specify the date of of Article 13:

  That implementation date shall implementation of a change. That implementation of a change. 8. [ ] Any decision adopted according to balance the need for expediency implementation date shall balance That implementation date shall this Article shall specify the date of with practical considerations, the need for expediency with balance the need for expediency implementation of a change. That including forward trade of practical considerations, including with practical considerations, implementation date shall balance the need electricity. The Commission forward trade of electricity. including forward trade of for expediency with practical considerations, may define appropriate Appropriate transitional electricity and shall not be less including forward trade of electricity and transitional arrangements as arrangements may be defined as than 12 months after the shall not be less than 12 months after the part of its decision. part of the decision. decision is published unless decision is published unless otherwise otherwise agreed with the agreed with the relevant Member States. relevant Member States. The [ The [ ] decision may define appropriate ] decision may define transitional arrangements [ ]. appropriate transitional arrangements [ ].

ANNEX I TREE.2.B EN

• 262. 

  AM 74 Compromise proposal:

  Article 13 – paragraph 8 a (new) [ ] 8a. Where further bidding zone (covered by line 259) reviews are launched under point (a), (b) or (c) of Article 32(1) of Regulation (EU) 2015/1222, paragraphs 4 to 8 of this Article shall apply.

• 263. 

  Article 14

  General principles of capacity allocation and congestion management

• 264. 

  1. Network congestion

  problems shall be addressed 1. Network congestion

  Maintain General Approach

  with non-discriminatory problems shall be addressed

  (no agreement on the reference to the

  market-based solutions which with non-discriminatory market

  Guideline)

  give efficient economic signals based solutions which give to the market participants and efficient economic signals to the transmission system operators market participants and involved. Network congestion transmission system operators problems shall be solved with involved. Network congestion non-transaction based methods, problems shall be solved with i.e. methods that do not involve non-transaction based methods, a selection between the i.e. methods that do not involve contracts of individual market a selection between the contracts participants. When taking of individual market operational measures to ensure participants. When taking that its transmission system operational measures to ensure remains in the normal state, the that its transmission system transmission system operator remains in the normal state, the shall take into account the transmission system operator effect of those measures on shall take into account the effect neighbouring control areas and of those measures on coordinate such measures with neighbouring control areas and other affected transmission coordinate such measures with system operators as provided other affected transmission for in Regulation (EU) system operators [as provided 1222/2015. for in [ ] the capacity

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allocation and congestion management guideline adopted on the basis of Article 18 of Regulation (EU) 714/2009].

• 265. 

  2. Transaction curtailment 2. Transaction curtailment No change procedures shall only be used in procedures shall only be used in 2. Transaction curtailment procedures emergency situations where the emergency situations where the shall only be used in emergency situations transmission system operator transmission system operator where the transmission system operator must must act in an expeditious must act in an expeditious act in an expeditious manner and remanner and re-dispatching or manner and re-dispatching or dispatching or countertrading is not possible. countertrading is not possible. countertrading is not possible. Any such procedure shall be applied in a Any such procedure shall be Any such procedure shall be non-discriminatory manner. Except in cases applied in a non-discriminatory applied in a non-discriminatory of force majeure, market participants who manner. Except in cases of manner. Except in cases of force have been allocated capacity shall be force majeure, market majeure, market participants compensated for any curtailment. participants who have been who have been allocated

  allocated capacity shall be capacity shall be compensated compensated for any for any curtailment. curtailment.

• 266. 

  2a. Transmission system Council compromise (new text): operators may decide not to

  implement the coordinated 2a. Regional coordination centres shall actions issued by the regional perform coordinated capacity calculation security coordinator of the as provided for in article 34(1)(a) in system operation region, or the accordance with paragraphs 3 and 7 regional security coordinator pursuant to the process set out in Article himself may reduce the 38(1). capacities calculated in the coordinated capacity In this process they shall assess whether calculation in their the outcome of the coordinated capacity coordinated actions where the calculation would result in a violation of outcome of the coordinated operational security limits, for example capacity calculation, carried due to insufficient availability of remedial out pursuant to the capacity actions, taking into account all remedial

ANNEX I TREE.2.B EN

allocation and congestion actions available in the capacity management guideline and calculation region including redispatch paragraphs 3 and 7, would and countertrading, except load shedding. result in a violation of the If this is the case, the regional operational security limits coordination centres may, as a measure of defined by the transmission last resort, set out coordinated actions system operator in accordance reducing the cross-zonal capacities with the System Operation accordingly. Guideline adopted on the basis of Article 18 of Regulation Transmission system operators may only 714/2009, for example in case deviate from coordinated actions in of insufficient redispatch respect of coordinated capacity potential within the capacity calculation and coordinated security calculation region. Such a analysis in accordance with Article 38(2). deviation shall be duly justified by the relevant Every three months, the regional transmission system operators. coordination centres shall report to the The relevant transmission relevant national regulatory authorities system operators shall inform and the Agency on reductions and the Regional Security deviations pursuant to this paragraph and Coordinators and the national shall assess the incidences and make regulatory authorities of the recommendations, if needed, on how to capacity calculation region of avoid such deviations in the future. If the such deviation without undue Agency concludes that the prerequisites delay in accordance with for a deviation pursuant to this paragraph Article 38(2a) of this were not fulfilled or are of a structural Regulation. Once a year, the nature, the Agency shall submit an Regional Security Coordinator opinion to the relevant national regulatory shall report to the relevant authorities and the Commission. The national regulatory authorities relevant national regulatory authorities and the Agency on the shall take appropriate action against deviations pursuant to this transmission system operators or regional paragraph and shall assess the coordination centres pursuant to articles incidences and analyse, if 59 or 62 of the [recast Electricity needed, how to avoid such Directive] if the prerequisites for a

ANNEX I TREE.2.B EN

deviations in the future. If the deviation pursuant to this paragraph were Agency comes to the not fulfilled. conclusion that the prerequisites for a deviation Deviations of a structural nature shall be pursuant to this paragraph taken into account in decisions pursuant were not fulfilled are of a to articles 13(6) and 13a(5), where structural nature, the Agency applicable. shall submit an opinion to the relevant regulatory authority and the Commission. The regulatory authority shall take appropriate action against the transmission system operators if the prerequisites for a deviation pursuant to this paragraph were not fulfilled.

• 267. 

  3. The maximum capacity AM 75 3. Unless otherwise Council compromise: of the interconnections and/or 3. The maximum capacity of provided in paragraphs 7, 7a, 3. Unless otherwise provided in the transmission networks the interconnections and/or the 7b, 7d and 2a the maximum paragraphs 7, 7a, 7b, 7d and 2a The affecting cross-border flows transmission networks affecting level of capacity of the maximum level of capacity of the shall be made available to cross-border flows shall be made interconnections and/or the interconnections and/or the transmission market participants, complying available to market participants, transmission networks affected networks affected by cross-border [ ] with safety standards of secure complying with safety standards of by cross-border [ ] capacity capacity shall be made available to market network operation. Countersecure network operation. Countershall be made available to participants, complying with safety standards trading and redispatch, trading and redispatch, including market participants, complying of secure network operation. Counter-trading including cross-border cross-border redispatch, shall be with safety standards of secure and redispatch, including cross-border redispatch, shall be used to used to maximise available network operation. Counterredispatch, shall be used to optimize maximise available capacities capacities unless it is demonstrated trading and redispatch, including maximise available capacities to reach the unless it is demonstrated that it that it is not beneficial to economic cross-border redispatch, shall be minimum levels pursuant to paragraph 7 [ is not beneficial to economic efficiency at Union level. used to optimize available ] and a coordinated and nonefficiency at Union level. When allocating cost of remedial capacities [ ] and a discriminatory process for cross-border actions between transmission coordinated and nonremedial actions shall be applied to enable system operators, regulators shall discriminatory process for this, following the implementation of the a analyse to what extent cross-border remedial actions re-dispatching and counter-trading cost unscheduled flows leaving and reshall be applied to enable this, sharing methodology [in accordance with

ANNEX I TREE.2.B EN

entering a bidding zone contribute following the implementation the capacity allocation and congestion to the congestion observed of the re-dispatching and management guideline adopted on the between two bidding zones and countertrading cost sharing basis of Article 18 of Regulation (EU) allocate the counter-trading and methodology in accordance 714/2009]. redispatch costs in proportion to with the capacity allocation their contribution to the and congestion management congestion. guideline adopted on the basis of Article 18 of Regulation (EU) 714/2009.

• 268. 

  4. Capacity shall be 4. Capacity shall be No change allocated only by means of allocated only by means of 4. Capacity shall be allocated only by explicit capacity auctions or explicit capacity auctions or means of explicit capacity auctions or implicit auctions including both implicit auctions including both implicit auctions including both capacity and capacity and energy. Both capacity and energy. Both energy. Both methods may coexist on the methods may coexist on the methods may coexist on the same interconnection. For intra-day trade same interconnection. For intrasame interconnection. For intracontinuous trading shall be used which may day trade continuous trading day trade continuous trading be complemented by auctions. shall be used, which may be shall be used which may be

  complemented by auctions. complemented by auctions.

ANNEX I TREE.2.B EN

• 269. 

  5. The highest value bids, 5. In case of congestion, the Maintain General Approach whether implicit or explicit in a valid highest value bids for

  given timeframe, shall be network capacity, whether successful. Other than in the implicit or explicit, offering the case of new interconnectors highest value for the (scarce) which benefit from an transmission capacity in a exemption under Article 7 of given timeframe, shall be Regulation (EC) No 1228/2003 i, successful. Other than in the Article 17 Regulation 714/2009 i case of new interconnectors or Article 59, establishing which benefit from an reserve prices in capacityexemption under Article 7 of allocation methods shall not be Regulation (EC) No 1228/2003 i, allowed. Article 17 Regulation 714/2009 i or Article 59, establishing reserve prices in capacityallocation methods shall not be allowed.

• 270. 

  6. Capacity shall be freely 6. Capacity shall be freely No change: tradable on a secondary basis, tradable on a secondary basis, 6. Capacity shall be freely tradable on a provided that the transmission provided that the transmission secondary basis, provided that the system operator is informed system operator is informed transmission system operator is informed sufficiently in advance. Where sufficiently in advance. Where a sufficiently in advance. Where a a transmission system operator transmission system operator transmission system operator refuses any refuses any secondary trade refuses any secondary trade secondary trade (transaction), this shall be (transaction), this shall be (transaction), this shall be clearly and transparently communicated and clearly and transparently clearly and transparently explained to all the market participants by communicated and explained to communicated and explained to that transmission system operator and all the market participants by all the market participants by notified to the regulatory authority. that transmission system that transmission system

  operator and notified to the operator and notified to the regulatory authority. regulatory authority.

ANNEX I TREE.2.B EN

• 271. 

  7. Transmission system AM 76 7. Transmission system Council compromise: operators shall not limit the 7. Transmission system operators shall not limit the 7. Transmission system operators shall not volume of interconnection operators shall not limit the volume volume of interconnection limit the volume of interconnection capacity capacity to be made available to of interconnection capacity to be capacity to be made available to to be made available to [ ] market other market participants in made available to other market [ ] market participants in order participants in order to solve congestion order to solve congestion inside participants in order to solve to solve congestion inside their inside their own bidding zone or as a their own control area or as a congestion inside their own control own bidding zone or as a means of managing flows leaving and remeans of managing flows on a area or as a means of managing means of managing flows entering the same bidding zone without border between two control flows on a border between two leaving and re-entering the being scheduled unless otherwise provided areas observed even without control areas observed even same bidding zone without under paragraph 7a or 7b. any transaction, that is to say without any transaction, that is to being scheduled unless

  flows over control areas caused say flows over control areas caused otherwise provided under by origin and destination within by origin and destination within paragraph 7a or 7b. one control area. one control area.

ANNEX I TREE.2.B EN

• 272. 

  Without prejudice to the forth Without prejudice to the Council compromise: subparagraph of Article 13(5), this application of the derogations Without prejudice to the application of paragraph shall be considered to under paragraph 7a and 7b, the derogations under paragraphs 27a and be complied with if the following this paragraph shall be 7b and to the application of article 13a(2), minimum levels of available considered to be complied with this paragraph shall be considered to be capacity for cross-zonal trade, if the following minimum complied with if the following minimum which is calculated pursuant to levels of available capacity for levels of available capacity for cross-zonal the capacity allocation and cross-zonal trade, which is trade, which is calculated pursuant to the congestion management guideline calculated pursuant to the capacity allocation and congestion adopted on the basis of Article 18 capacity allocation and management guideline adopted on the of Regulation (EU) 714/2009 i congestion management basis of Article 18 of Regulation (EU) taking account of contingencies, guideline adopted on the basis 714/2009 taking account of N-1 criterion, are reached: of Article 18 of Regulation are reached:

  (EU) 714/2009 taking account of N-1 criterion, are reached:

• 273. 

  (i) for borders using a (i) For borders using a Council compromise: coordinated net transfer capacity coordinated net transmission (i) For borders using a coordinated net approach, if at least 75 % of the capacity approach, 75% of the transmission capacity approach, the net transfer capacity pursuant to net transfer capacity pursuant minimum level shall be 75% of the net capacity allocation and congestion to capacity allocation and transfer capacity pursuant respecting management guideline are made congestion management operational security limits after deduction available for cross-border trade; guideline adopted on the basis of contingencies and reliability margins, of Article 18 of the Regulation as determined according to the capacity 714/2009; allocation and congestion management

  guideline adopted on the basis of Article 18 of the Regulation 714/2009 i;

• 274. 

  (ii) for borders using a flow(ii) For borders using a Council compromise: based approach, if on cross-zonal flow-based approach, 75% of (ii) For borders using a flow-based and internal critical network the remaining available approach, the minimum level shall be elements considered in the flowmargin on internal and cross 75% of the remaining available margin based calculation at least 75 % of border critical network capacity respecting operational security the thermal capacity after elements made available for limits of internal and cross-zonal border reduction of the amount required cross border flows pursuant to critical network elements made available to secure the N-1 principle capacity allocation and for cross border flows pursuant after pursuant to the capacity allocation congestion management deduction of reliability margins and

ANNEX I TREE.2.B EN

and congestion management guideline adopted on the basis taking into account contingencies, as guideline is used as an input for of Article 18 of the Regulation determined according to the capacity capacity allocation. 714/2009. allocation and congestion management guideline adopted on the basis of Article 18 of the Regulation 714/2009 i.

• 275. 

  The derogations pursuant to Council compromise (new text): paragraph 7a shall not result For the purpose of this paragraph the with a value below this reliability margins shall not be higher threshold. than [10]%.

• 276. 

  7a. Based on a proposal by Provisionally agreed in TM: all transmission system [ ]

  operators of a capacity calculation region , the relevant regulatory authorities by way of derogation from paragraph 7 shall approve the level of total available crosszonal capacity at each bidding zone border, which shall be used in the capacity calculation methodology, to take account of cross-zonal unscheduled flows to the extent that could be expected without structural congestions in a bidding zone.

• 277. 

  Upon request by a transmission 7b. Upon request by [ ] Council compromise: system operator, the relevant transmission system operators of 7b. Upon request by [ ] transmission system regulatory authority may grant a capacity calculation region [ operators of a capacity calculation region [ a derogation from the first ] the relevant regulatory ] the relevant regulatory authorities may

  subparagraph where it is

  necessary for maintaining authorities may grant a grant a derogation from [ ] paragraph 7 for operational security or where it derogation from [ ] paragraph foreseeable reasons where it is necessary is beneficial to economic 7 for foreseeable reasons where for maintaining operational security [ ] efficiency at Union level. Such it is necessary for maintaining other than the ones covered under

ANNEX I TREE.2.B EN

a derogation, which may not operational security [ ] other paragraph 7a, for instance in case of grid relate to curtailment of already than the ones covered under maintenance measures. Such a derogation, allocated capacities pursuant to paragraph 7a, for instance in which may not relate to curtailment of paragraph 5, shall be limited in case of grid maintenance already allocated capacities pursuant to

time, strictly limited to what is

necessary, and avoid measures. Such a derogation, paragraph 52, shall be limited [ ] to one discrimination between internal which may not relate to year at a time, or up to maximum two and cross-zonal exchanges. curtailment of already allocated years with a significantly decreasing level Before granting a derogation, capacities pursuant to paragraph of the derogation each year, be strictly

the relevant regulatory authority 5, shall be limited [ ] to one limited to what is necessary, and avoid shall consult the regulatory year at a time, or up to discrimination between internal and crossauthorities of other Member maximum two years with a zonal exchanges. Before granting a

States forming part of an significantly decreasing level derogation, the relevant regulatory affected capacity calculation of the derogation each year, be authority shall consult the regulatory region. In case a regulatory strictly limited to what is authorities of other Member States authority disagrees with the necessary, and avoid forming part of an affected capacity proposed derogation, the discrimination between internal calculation region. In case a regulatory Agency shall decide on the and cross-zonal exchanges. [ ] authority disagrees with the proposed derogation pursuant to Article The justification and reasons for derogation, the Agency shall decide on the 6(8)(a) [recast of Regulation the derogation shall be derogation pursuant to Article 6(8)(a)

(EC) No 713/2009 as proposed published. Where a derogation is [recast of Regulation (EC) No 713/2009 i as

by COM(2016) 863 i/2]. The

justification and reasons for the granted, the relevant proposed by COM(2016) 863 i/2]. [ ] The derogation shall be published. transmission system operators justification and reasons for the derogation Where a derogation is granted, shall develop and publish a shall be published. Where a derogation is the relevant transmission methodology and projects [ ] granted, the relevant transmission system system operators shall develop that shall provide a long-term operators shall develop and publish a

and publish a methodology and solution to the issue that the methodology and projects that shall provide projects that shall provide a derogation seeks to address. The a long-term solution to the issue that the long-term solution to the issue derogation shall expire when the derogation seeks to address. The derogation that the derogation seeks to time limit is reached or, once the shall expire when the time limit is reached address. The derogation shall solution is applied, whichever is or, once the solution is applied, whichever is expire when the time limit is earlier. earlier.

reached or, once the solution is applied, whichever is earlier.

ANNEX I TREE.2.B EN

• 278. 

  8. Market participants shall 8. Market participants shall No change: inform the transmission system inform the transmission system . Market participants shall inform the operators concerned a operators concerned a transmission system operators concerned a reasonable time in advance of reasonable time in advance of reasonable time in advance of the relevant the relevant operational period the relevant operational period operational period whether they intend to use whether they intend to use whether they intend to use allocated capacity. Any allocated capacity allocated capacity. Any allocated capacity. Any that will not be used shall be reattributed to allocated capacity that will not allocated capacity that will not the market, in an open, transparent and nonbe used shall be reattributed to be used shall be reattributed to discriminatory manner. the market, in an open, the market, in an open,

  transparent and nontransparent and nondiscriminatory manner. discriminatory manner.

• 279. 

  9. Transmission system 9. Transmission system No change: operators shall, as far as operators shall, as far as 9. Transmission system operators shall, technically possible, net the technically possible, net the as far as technically possible, net the capacity requirements of any capacity requirements of any capacity requirements of any power flows in power flows in opposite power flows in opposite opposite direction over the congested direction over the congested direction over the congested interconnection line in order to use that line interconnection line in order to interconnection line in order to to its maximum capacity. Having full regard use that line to its maximum use that line to its maximum to network security, transactions that relieve capacity. Having full regard to capacity. Having full regard to the congestion shall never be denied. network security, transactions network security, transactions

  that relieve the congestion shall that relieve the congestion shall never be denied. never be denied.

• 280. 

  10. The financial 10. The financial No change: consequences of failure to consequences of failure to 10. The financial consequences of failure honour obligations associated honour obligations associated to honour obligations associated with the with the allocation of capacity with the allocation of capacity allocation of capacity shall be attributed to shall be attributed to those who shall be attributed to those who those who are responsible for such a failure. are responsible for such a are responsible for such a Where market participants fail to use the failure. Where market failure. Where market capacity that they have committed to use, or, participants fail to use the participants fail to use the in the case of explicitly auctioned capacity, capacity that they have capacity that they have fail to trade on a secondary basis or give the committed to use, or, in the committed to use, or, in the case capacity back in due time, they shall lose the case of explicitly auctioned of explicitly auctioned capacity, rights to such capacity and pay a cost

ANNEX I TREE.2.B EN

capacity, fail to trade on a fail to trade on a secondary basis reflective charge. Any cost-reflective charges secondary basis or give the or give the capacity back in due for the non-use of capacity shall be justified capacity back in due time, they time, they shall lose the rights to and proportionate. If a transmission system shall lose the rights to such such capacity and pay a costoperator does not fulfil its obligation, it shall capacity and pay a costreflective charge. Any costbe liable to compensate the market reflective charge. Any costreflective charges for the nonparticipant for the loss of capacity rights. reflective charges for the nonuse of capacity shall be justified Consequential losses shall not be taken into use of capacity shall be justified and proportionate. If a account for that purpose. The key concepts and proportionate. If a transmission system operator and methods for the determination of transmission system operator does not fulfil its obligation, it liabilities that accrue upon failure to honour does not fulfil its obligation, it shall be liable to compensate the obligations shall be set out in advance in shall be liable to compensate market participant for the loss of respect of the financial consequences, and the market participant for the capacity rights. Consequential shall be subject to review by the relevant [ ] loss of capacity rights. losses shall not be taken into regulatory authority or authorities. Consequential losses shall not account for that purpose. The be taken into account for that key concepts and methods for purpose. The key concepts and the determination of liabilities methods for the determination that accrue upon failure to of liabilities that accrue upon honour obligations shall be set failure to honour obligations out in advance in respect of the shall be set out in advance in financial consequences, and respect of the financial shall be subject to review by the consequences, and shall be relevant [ ] regulatory authority subject to review by the or authorities. relevant national regulatory authority or authorities.

ANNEX I TREE.2.B EN

• 281. 

  11. When allocating costs of Council compromise: remedial actions between 11. When allocating costs of remedial transmission system operators, actions between transmission system regulators shall analyse to operators, regulators national regulatory what extent flows leaving and authorities shall analyse to what extent re-entering a bidding zone flows leaving and re-entering a bidding without being scheduled zone without being scheduled contribute contribute to the congestion to the congestion between two bidding between two bidding zones zones observed, and allocate the costs in observed, and allocate the proportion to the contribution to the costs in proportion to the congestion in line with re-dispatching and contribution to the congestion countertrading cost sharing methodology in line with re-dispatching and in accordance with the capacity allocation countertrading cost sharing and congestion management guideline methodology in accordance adopted on the basis of Article 18 of with the capacity allocation Regulation (EU) 714/2009 i and Article 76 and congestion management of Commission Regulation (EU) guideline adopted on the basis 2017/XYZZ. This shall not apply to the of Article 18 of Regulation threshold pursuant to paragraph 7a , (EU) 714/2009 and Article 76 except for costs induced by flows leaving of Commission Regulation and re-entering a bidding zone without (EU) 2017/XYZZ. This shall being scheduled to the extent that could be not apply to the threshold expected without structural congestion in pursuant to paragraph 7a. a bidding zone.

ANNEX I TREE.2.B EN

• 282. 

  Article 15

  Allocation of cross-zonal capacity across timeframes

• 283. 

  1. Transmission system

  operators shall recalculate 1. Transmission system available cross-zonal capacity operators shall recalculate at least after day-ahead and available cross-zonal capacity at after intraday cross-zonal gate least after day-ahead and after closure times. Transmission intraday cross-zonal gate closure system operators shall allocate times. Transmission system the available cross-zonal operators shall allocate the capacity plus any remaining available cross-zonal capacity cross-zonal capacity not plus any remaining cross-zonal previously allocated and any capacity not previously allocated cross-zonal capacity released by and any cross-zonal capacity physical transmission right released by physical holders from previous transmission right holders from allocations in the next crossprevious allocations in the next zonal capacity allocation cross-zonal capacity allocation process. process.

• 284. 

  1a. Transmission system operators shall define an

  appropriate structure for the allocation of cross-zonal capacity across timeframes, including day-ahead, intraday and balancing. Such an allocation structure shall be subject to review by the respective regulatory authorities. In drawing up their proposal, the TSOs shall take into account:

ANNEX I TREE.2.B EN

• 285. 

  a) the characteristics of the markets;

• 286. 

  b) the operational condition, such as the implications of netting firmly declared schedules;

• 287. 

  c) the level of harmonisation of the percentages and timeframes adopted for the different cross-zonal capacity allocation mechanisms in place.

• 288. 

  2. When cross-zonal 2. When cross-zonal capacity is available after the capacity is available after the intraday cross-zonal gate intraday cross-zonal gate closure closure time, transmission time, transmission system system operators shall use the operators shall use the crosscross-zonal capacity for the zonal capacity for the exchange exchange of balancing energy of balancing energy or for or for operating the imbalance operating the imbalance netting netting process. process.

ANNEX I TREE.2.B EN

• 289. 

  3. Transmission system 3. Where cross-zonal operators shall use the capacity is allocated for the methodologies developed in exchange of balancing capacity network codes and guidelines or sharing of reserves

  on balancing, where applicable, pursuant to Article 5(8), to allocate cross-zonal capacity transmission system operators for the exchange of balancing shall use the methodologies capacity or sharing of reserves developed in [ ] accordance pursuant to Article 5(4) and (7). with the balancing guideline adopted on the basis of Article 18 of the Regulation 714/2009 i.

• 290. 

  4. Transmission system

  operators shall not increase the 4. Transmission system reliability margin calculated operators shall not increase the pursuant to Regulation (EU) reliability margin calculated 2015/1222 due to the exchange pursuant to Regulation (EU) of balancing capacity or sharing 2015/1222 due to the exchange

  of reserves. of balancing capacity or sharing of reserves.

ANNEX I TREE.2.B EN

• 291. 

  Section 2

  Network charges and congestion income

• 292. 

  Article 16 AM 77 Article 16

  Charges for access to networks Charges for access to networks, use Charges for connection and of networks and reinforcement access to networks

• 293. 

  1. Charges applied by AM 78

  network operators for access to 1. Charges applied by network 1. Charges applied by networks, including charges for operators for access to networks , network operators for access to connection to the networks, including charges for connection to networks, including charges for charges for use of networks, the networks, charges for use of connection to the networks, and, where applicable, charges networks, and, where applicable, charges for use of networks, and, for related network charges for related network where applicable, charges for reinforcements, shall be reinforcements, shall be fair, costrelated network reinforcements, transparent, take into account reflective, transparent, take into shall be transparent, take into the need for network security account the need for network account the need for network and flexibility and reflect actual security and flexibility and reflect security and flexibility and costs incurred insofar as they actual costs incurred insofar as they reflect actual costs incurred correspond to those of an correspond to those of an efficient insofar as they correspond to efficient and structurally and structurally comparable those of an efficient and comparable network operator network operator and are applied in structurally comparable network and are applied in a nona non-discriminatory manner. Grid operator and are applied in a discriminatory manner. In tariffs shall not include unrelated non-discriminatory manner. [ ] particular, they shall be applied costs supporting other policy Without prejudice to Article in a way which does not objectives, such as taxes or levies, 15(1) and (6) and the criteria discriminate between as this would distort production, in Annex XI of Directive production connected at the consumption and investment 2012/27/EU the method used distribution level and decisions. In particular, they shall to develop the network production connected at the neutrally support overall system charges shall in particular be transmission level, either efficiency in the long run through applied in a way which does not positively or negatively. They price signals to consumers and discriminate between production shall not discriminate against producers and they shall as far as connected at the distribution energy storage and shall not possible be applied in a way which level and production connected create disincentives for does not discriminate between at the transmission level, either participation in demand production connected at the positively or negatively. They

  response. Without prejudice to distribution level and production shall not unduly discriminate either positively or negatively

ANNEX I TREE.2.B EN

paragraph 3, those charges shall connected at the transmission level, against energy storage and shall not be distance-related. either positively or negatively. not create disincentives for They shall not discriminate against participation in demand energy storage and aggregation response. Without prejudice to and shall not create disincentives paragraph 3, those charges shall for self-generation, selfnot be distance-related. consumption and for participation in demand response. Without prejudice to paragraph 3, those charges shall not be distancerelated.

• 294. 

  2. Tariffs shall grant AM 79

  appropriate incentives to 2. Tariffs shall grant 2. Tariff methodologies transmission and distribution appropriate incentives to shall [ ] reflect appropriate system operators, over both the transmission and distribution incentives and fixed costs of short and long term, to increase system operators, over both the transmission and distribution efficiencies, including energy short and long term, to increase system operators. The allowed efficiency, foster market efficiencies, including energy revenues to be recovered integration and security of efficiency, foster market through tariffs shall reflect supply, and support investments integration and security of supply, appropriate incentives to and the related research and global competitiveness, and transmission and distribution activities. support efficient investments, in system operators over both the particular in digitalisation, short and long term, to increase flexibility services and efficiencies, including energy interconnections, and the related efficiency, foster market research activities. Tariffs shall integration, [ ] security of not create disincentives for energy supply, and support investments, storage, demand response or self[ ] the related research

  generation production. activities and facilitate innovation in the consumer's

  interest.

ANNEX I TREE.2.B EN

• 295. 

  3. Where appropriate, the 3. Where appropriate, the level of the tariffs applied to level of the tariffs applied to producers and/or consumers producers and/or consumers shall provide locational signals shall provide locational signals at Union level, and take into at Union level, and take into account the amount of network account the amount of network losses and congestion caused, losses and congestion caused, and investment costs for and investment costs for

  infrastructure. infrastructure. 296. 4. When setting the charges 4. When setting the charges

  for network access, the for network access, the following shall be taken into following shall be taken into account: account:

• 297. 

  (a) payments and receipts (a) payments and receipts resulting from the interresulting from the intertransmission

  system operator transmission system operator compensation mechanism; compensation mechanism;

• 298. 

  (b) actual payments made (b) actual payments made and and received as well as received as well as payments

  payments expected for future expected for future periods of periods of time, estimated on time, estimated on the basis of the basis of past periods. past periods.

• 299. 

  5. Setting the charges for 5. Setting the charges for network access under this network access under this

  Article shall be without Article shall be without prejudice to charges resulting prejudice to charges resulting from congestion management from congestion management referred to in Article 14. referred to in Article 14.

• 300. 

  6. There shall be no specific

  network charge on individual 6. There shall be no specific transactions for cross-border network charge on individual

  trade of electricity. transactions for cross-[ ] zonal trade of electricity.

ANNEX I TREE.2.B EN

• 301. 

  7. Distribution tariffs shall AM 80

  reflect the cost of use of the 7. Transmission and 7. Distribution tariffs shall distribution network by system distribution tariffs shall be costreflect the cost of use of the users including active reflective by taking into account distribution network by system customers, and may be the investment cost, added value of users including active differentiated based on system distributed generation, flexibility, customers, and may be users' consumption or digitalisation, demand response, differentiated based on system generation profiles. Where storage and use of the users' consumption or generation Member States have transmission and distribution profiles. Where Member States implemented the deployment of network by system users including have implemented the smart metering systems, active customers, may contain grid deployment of smart metering regulatory authorities may connection capacity elements and systems, [ ] time differentiated introduce time differentiated may be differentiated based on network tariffs may be network tariffs, reflecting the system users' consumption or introduced, reflecting the use of use of the network, in a generation profiles. Where Member the network, in a transparent and transparent and foreseeable way States have implemented the foreseeable way for the for the consumer. deployment of smart metering consumer.

  systems, competent regulatory authorities shall introduce time differentiated network tariffs, reflecting the use of the network, in a transparent and foreseeable and cost efficient way for the consumer. Member States shall ensure that tariffs are not discriminatory.

ANNEX I TREE.2.B EN

• 302. 

  8. Regulatory authorities AM 81

  shall provide incentives to 8. Regulatory authorities shall 8. [ ] The allowed revenues distribution system operators to provide incentives to distribution to be covered through procure services for the system operators for the most distribution tariffs may include operation and development of efficient operation and performance targets in order to their networks and integrate development of their networks and incentivise distribution system innovative solutions in the integrate innovative solutions in the operators [ ] to operate their distribution systems. For that distribution systems, including networks as efficiently as purpose regulatory authorities through the procurement of possible.

  shall recognise as eligible and services. For that purpose include all relevant costs in regulatory authorities shall distribution tariffs and recognise as eligible and include all introduce performance targets relevant costs in distribution tariffs in order to incentivise and introduce performance targets distribution system operators to in order to incentivise distribution raise efficiencies, including system operators to raise energy efficiency, in their efficiencies, including energy networks. efficiency, flexibility and the digitalisation of the distribution networks including the deployment of smart grids and intelligent metering systems, in their networks.

ANNEX I TREE.2.B EN

• 303. 

  9. By [OP: please add AM 82 9. By [OP: please add specific date – three months 9. By [OP: please add specific specific date – three months after entry into force] the date – three months after entry into after entry into force] to

  Agency shall provide a force] the Agency shall evaluate mitigate the risk of market recommendation addressed to the feasibility on the convergence fragmentation the Agency shall regulatory authorities on the of transmission and distribution provide a [ ] best practice progressive convergence of tariff methodologies. The report on [ ] transmission and transmission and distribution feasibility study shall address at distribution tariff methodologies tariff methodologies. That least: while leaving sufficient room recommendation shall address to take national specificities at least: into account. That [ ] best practice report shall address at least:

• 304. 

  (a) the ratio of tariffs applied (a) the ratio of tariffs applied to producers and to consumers; to producers and to consumers;

• 305. 

  (b) the costs to be recovered (b) the costs to be recovered by tariffs; by tariffs;

• 306. 

  (c) time differentiated (c) time differentiated network tariffs; network tariffs;

• 307. 

  (d) locational signals; (d) locational signals;

• 308. 

  (e) the relationship between (e) the relationship between transmission and distribution transmission and distribution

  tariffs, including principles tariffs, [ ] relating to non-discrimination;

• 309. 

  (f) methods to ensure (f) methods to ensure transparency in the setting and transparency in the setting and structure of tariffs; structure of tariffs;

• 310. 

  (g) groups of network users AM 83 (g) groups of network users subject to tariffs, including (g) groups of network users subject to tariffs, including tariff tariff exemptions. subject to tariffs according to exemptions.

  characteristics and forms of consumption, including tariff exemptions

ANNEX I TREE.2.B EN

• 311. 

  The Agency shall update its report at least once every two years.

• 312. 

  AM 84

  Article 16 – paragraph 9 a (new) 9a. Regulatory authorities shall adopt a set of indicators for measuring the performance of transmission and distribution system operators, which should at least include all of the following:

• 313. 

  (a) volume of curtailed energy in

  MWh, disaggregated per type of generation source;

• 314. 

  (b) percentage of the length of

  lines operated under dynamic line ratings;

• 315. 

  (c) percentage of substations remotely monitored and controlled in real-time;

• 316. 

  (d) percentage of the length of lines operated under dynamic line ratings;

• 317. 

  (e) losses in high, medium and low-voltage grids;

• 318. 

  (f) the frequency and duration of power interruptions on the grid.

ANNEX I TREE.2.B EN

• 319. 

  By [two years after the entry into force of this Regulation], and

  every two years thereafter, regulatory authorities shall publish a report on the performance of transmission and distribution system operators, together with recommendations for improvement where necessary.

• 320. 

  10. Without prejudice to [ ] further harmonisation by way

  of delegated acts pursuant to Article 55(1)(k), regulatory authorities shall take the Agency's recommendation duly into consideration when approving or fixing transmission tariffs or their methodologies in accordance with Article 59(6)(a) of [recast of Directive 2009/72/EC i as proposed by COM(2016) 864 i/2].