Status Report, Final Version, 080229
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Northern Europe Regional initiative – Implementation Group “Optimizing the use of the interconnectors – SwePol Link and Baltic Cable” Status report Ref: ERI-NO-IG Final version 11-04-2008 European Regulators’ Group for Electricity and Gas Contact: Council of European Energy Regulators ASBL 28 rue le Titien, 1000 Bruxelles Arrondissement judiciaire de Bruxelles RPM 0861.035.445 Ref: ERI-NO-IG [Optimizing the use of the interconnectors – SwePol Link and Baltic Cable] Document history Version Date Description Author 1 2007-04-03 Initial Draft Tony Rosten 2 2007-04-27 Draft 2 Tony Rosten 3 2007-05-07 Draft 3 Tony Rosten 4 2007-06-12 Draft 4 Tony Rosten 5 2007-08-24 Draft 5 Tony Rosten 6 2007-09-19 Draft 6 Tony Rosten 7 2007-10-03 Draft 7 Tony Rosten 8 2007-11-23 Draft 8 Tony Rosten 9 2007-12-19 Draft 9 Tony Rosten 10 2008-01-08 Draft 10 Tony Rosten 11 2008-02-18 Draft 11 Tony Rosten 12 2008-02-29 Final version Tony Rosten 2/63 Ref: ERI-NO-IG [Optimizing the use of the interconnectors – SwePol Link and Baltic Cable] Table of Contents 1 BACKGROUND................................................................................................................... 5 2 THE ELECTRICITY MARKETS AND PRESENT SITUATIONS .......................................... 7 2.1 Sweden ........................................................................................................................ 7 2.1.1 Market description........................................................................................... 7 2.1.2 Overview of the regulatory authority’s role and responsibilities ..................... 10 2.2 Germany..................................................................................................................... 11 2.2.1 Market description......................................................................................... 11 2.2.2 Overview of the regulatory authority’s role and responsibilities ..................... 13 2.3 Poland ........................................................................................................................ 16 2.3.1 Market description......................................................................................... 16 2.3.2 Overview of the regulatory authority’s role and responsibilities ..................... 20 3 INTERCONNECTORS BETWEEN SWEDEN AND CONTINENTAL EUROPE................. 22 3.1 Background ................................................................................................................ 22 3.2 Baltic Cable ................................................................................................................ 22 3.2.1 History, ownership and legal structure .......................................................... 22 3.2.2 Utilisation of the interconnector, capacity allocation and third party access... 22 3.2.3 Circumstances limiting the use of the interconnector .................................... 23 3.2.4 Circumstances limiting third party access ..................................................... 23 3.3 SwePol Link................................................................................................................ 23 3.3.1 History, ownership and legal structure .......................................................... 23 3.3.2 Utilisation of the interconnector, capacity allocation and third party access... 24 3.3.3 Circumstances limiting the use of the interconnector .................................... 24 3.3.4 Circumstances limiting third party access ..................................................... 25 3/63 Ref: ERI-NO-IG [Optimizing the use of the interconnectors – SwePol Link and Baltic Cable] 4 THE EC LEGISLATIVE FRAMEWORK AND INTERPRETATION OF THE LEGAL SITUATION REGARDING THE CABLES................................................................................ 26 4.1 Regulators view of the interpretation of the legal situation .......................................... 26 4.1.1 Background................................................................................................... 26 4.1.2 The relevant Community legislation .............................................................. 27 4.1.2 The judgement of the European Court of Justice in Case C-17/03 VEMW and others ECR I-4983...................................................................................................... 31 4.1.3 Legal conclusion as regards SwePol Link and Baltic Cable .......................... 32 4.2 Baltic Cable AB´s position on the legal status fo Baltic Cable vs EC law..................... 33 4.2.1 Summary ...................................................................................................... 33 4.2.2 Baltic Cable under EC law ............................................................................ 34 4.3 SwePol Link AB´s position on the legal status of SwePol Link vs EC law ................... 37 4.4 Svenska Kraftnät´s legal position concerning SwePol Link AB ................................... 39 4.5 Vattenfall AB´s position on the legal situation of SwePol Link ..................................... 45 4.6 PSE-Operator position on the situation of SwePol Link............................................... 47 5 SUMMARY OF THE WORK IN THE IMPLEMENTATION GROUP AND THE CURRENT SITUATION REGARDING SWEPOL LINK AND BALTIC CABLE .......................................... 49 ANNEX 1 – DESCRIPTION BALTIC CABLE (BASED ON A DOCUMENT FROM THE CABLE OWNERS)................................................................................................................................ 51 ANNEX 2 – DESCRIPTION SWEPOL LINK (BASED ON A DOCUMENT FROM THE CABLE OWNERS)................................................................................................................................ 57 ANNEX 3 – VALUE AND DIRECTION OF ENERGY FLOW USING SWEPOL LINK.............. 62 ANNEX 4 – PARTICIPANTS IN THE IMPLEMENTATION GROUP ........................................ 63 4/63 Ref: ERI-NO-IG [Optimizing the use of the interconnectors – SwePol Link and Baltic Cable] 1 Background There is a general understanding that integration of electricity markets requires an efficient utilization of existing interconnectors. The regional approach as a transitional phase towards the creation of one internal electricity market was first launched in the March 2004 Strategy Paper of The Commission. The subsequent ERGEG Regional Initiative is also explicitly supported by the Energy Council 8 June 2006, while at the same time stressing that “Cross-border exchange of energy should be improved and the regional energy cooperation should be accelerated…” There are currently five existing interconnectors on the Nordic-Continental interface today and this Implementation Group will focus on Baltic Cable and SwePol Link which both are operated as “merchant lines”. In this report merchant line will refer to an interconnector where the owners have priority rights to the capacity, and where the cost for the cable are covered by the users (i.e. no part of the cost is included in the calculation of the respective national grid tariffs). There are two issues that have to be addressed in the work of the Implementation Group for SwePol Link and Baltic Cable: • the present operation of the cables including opportunities for third party access • how these cables can be integrated in a common coordinated regional congestion management method according to the provisions in the CMG (Congestion Management Guidelines) Special attention will be given to the consequences of the present ownership structure and capacity allocation, with view to move towards common capacity allocation and congestion management methods on all present and future interconnectors between the Nordel area and continental Europe. 5/63 Ref: ERI-NO-IG [Optimizing the use of the interconnectors – SwePol Link and Baltic Cable] There are terms of reference stated by the the Regional Coordination Committee (RCC) of the ERGEG Northern Europe Electricity Regional Initiative. According to the terms of reference the implementation group will describe the current situation, the EC legal framework, describe the pros and cons of present methods applied, list alternative solutions and finally propose capacity allocation and congestion management mechanisms for Baltic Cable and SwePol Link which aligns them as much as possible with other interconnectors between Nordel area and continental Europe. The Implementation Group only addresses issues in relation to day-ahead allocation and utilization of transmission capacity. However the possibilities for intra-day utilization are also important for the total efficient use of interconnectors. Furthermore, the implementation group does not address the issue how available transmission capacity (ATC) for the interconnectors is determined as a function of the situation in the surrounding national grids. Parallel to the work in this implementation group, the IG Transparency of the Northern Europe region has recently published a report containing a common regional understanding of market relevant information to be published by TSOs/PXs. This is based on present EU transparency requirements as well as ERGEG guidelines published. The implementation is to take place in a two step approach during 2008. The IG Transparency will be monitoring the implementation. In the report it is mentioned that it should be discussed in this IG to what extent the transparency rules can be adopted regarding Baltic Cable and SwePol Link. 6/63 Ref: ERI-NO-IG [Optimizing the use of the