Early Implementation Project on the Harmonisation of Allocation Rules

​​The Forward Capacity Allocation (FCA) Guideline sets out rules regarding the type of long term transmission rights that can be allocated via explicit auction and the way holders of transmission rights are compensated in case their right is curtailed. The overarching goal is to promote the development of liquid and competitive forward markets in a coordinated way across Europe, and provide market participants with the ability to hedge their risk associated with cross-border electricity trading.

In order to deliver these objectives, a number of steps are required. In coordination with regulators and interested stakeholders, ENTSO-E has decided to begin the early implementation of a number of projects before the guideline is adopted.

One of these projects is the Harmonisation of long term Allocation Rules (HAR).

Latest updates

The main body of the HAR was finalised in close cooperation with stakeholders in June 2015 and afterwards approved by all TSOs on 30 June 2015. Once the main body of the HAR was finalised and approved by all TSOs, individual TSOs had to adjust their border/regional specific annex(es), if any, and submit the HAR with the relevant annexes to NRAs for approval. The HAR will be applicable from 1 January 2016 on borders approved by NRAs for long-term transmission rights.

ENTSO-E has published a consolidated version of the main body of the HAR and its annexes for information purposes only. This document does not in any way represent an official and final consolidation of the HAR and the annexes. The final document is subject to the outcome of the regulatory process applicable in each relevant jurisdiction. Further, It is noted that certain regional and border specific annexes are still being completed by the relevant TSOs.

Following the public consultation on the main body of the HAR, a document was prepared and approved by all TSOs summarising the comments from the public consultation. The document explains in details why the proposed changes were or were not incorporated into the final version of the document. Similar summary documents were prepared by some of the TSOs. Should you need further information on the annexes, please contact the relevant TSO directly.

What is the objective?

Allocation rules govern the contractual arrangements for cross zonal capacity allocation in the long-term timeframe by explicit auctions. Generally, the allocation rules deal with:

  • the procedures for auctioning transmission rights;
  • the terms on which market participants may participate in explicit auctions; and
  • the terms for use of cross zonal capacity. Currently there is no single set of harmonised rules for trading across European bidding zone borders. A number of regional allocation platforms are in place in different regions, each one with specific allocation rules.

The harmonised allocation rules will not be explicitly included in the FCA regulation. The draft text tasks all Transmission System Operators (TSOs) to “develop a proposal for harmonised Allocation Rules” (HAR) no later than 12 months after its entry into force (Article 57 of the NC FCA). The reason is that these rules may need to be amended on a more frequent basis than the regulation in order to meet the needs of market participants. Instead of including the detailed harmonised Allocation Rules into the NC FCA, it was considered more efficient to include and detail the requirements for the harmonised allocation rules in a separate document, which is currently being developed.

Stakeholder Involvement

ENTSO-E has decided to set up a stakeholder advisory group early in the process, aimed at organisations with a particular interest in following the day-to-day development of the project. ENTSO-E launched in March 2015 a public consultation on the draft harmonised allocation rules.

The purpose of the project is that the harmonised allocation rules are approved by the relevant national regulatory authorities in 2015, and will therefore become applicable for 2016 yearly allocation throughout Europe.

Download the Terms of Reference for the HAR Stakeholder Advisory Group

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