Today, ACER releases its report on the Czech gas transmission tariffs proposed for 2025 by the Energetický regulační úřad (ERO), the National Regulatory Authority (NRA) of the Czech Republic.

Recent changes in the patterns of the European gas imports (resulting from Russia’s invasion of Ukraine) have led to the underutilisation of the Czech natural gas transmission infrastructure. Additionally, future flows into the network face considerable uncertainty due to the termination of the transit contract for gas transportation through Ukraine scheduled by the end of 2025.

To address these issues, ERO proposes to apply:

• A capacity weighted distance methodology as the reference price methodology (RPM).

• Several mechanisms to address this volume risk, including the implementation of a price cap regime and a risk premium. These mechanisms aim at allocating the existing risk to the TSO. The NRA recommends applying these measures until the end of 2025, when greater stability and visibility on gas flows across the EU is expected.

What does ACER recommend?

ACER analysed the information provided by ERO and assessed the compliance of the proposed RPM against the requirements of the Network Code on Harmonised Transmission Tariff Structures (NC TAR), providing the following recommendations:

• Ensure transparency and consistency of the proposed reference price methodology.

• Provide additional information on the risk premium collected by the TSO in 2021 and 2022.

• Provide further details on the revenue reconciliation and revenue sharing mechanisms, proposed by ERO to mitigate the volume risk of the network.

• Monitor and analyse the differences between the flow-based charge applicable to domestic exit points and the one applied to Interconnection Points’ (IPs’) exits.

What are the next steps?

By 19 October 2024, ERO shall adopt a motivated decision on the new tariff methodology to be applied to the Czech transmission network, taking into account ACER’s analysis.

Access the report.

Access all ACER reports on national tariff consultation documents.

Today's ACER European LNG Market Monitoring Report (MMR) analyses global and EU market developments and recommends further actions to improve transparency, competition and flexibility in European LNG terminals.

What 2023 trends did ACER’s monitoring and data insights find?

• During the energy crisis, EU successfully secured gas supply and diversified gas imports away from Russia, with LNG playing a key role in this shift.
• Since 2022, over 50 bcm of new LNG regasification infrastructure in the EU has eased supply congestion and helped narrow the price gap between European gas hubs and LNG spot prices.
• EU is the biggest LNG import market (with 134 bcm of LNG imports in 2023), and the US the largest exporter (119 bcm in 2023).
• In 2023, Europe imported 18 bcm of Russian LNG, mostly from long-term contracts signed before 2022. At least 1 bcm, but possibly more, was re-exported to Asian markets through LNG reloads.
• EU LNG demand is likely to reach its peak in 2024. This is due to reductions in structural gas demand driven by the EU’s ambitious decarbonisation goals.
• 19 global liquefaction projects under construction are set to boost LNG production by circa 200 million tonnes by 2030, equivalent to half of the current yearly trade.
• Around 75% of the LNG import capacity added in the EU since 2022 are Floating Storage and Regasification Units (FSRUs). This allows for the potential repurposing or relocation of these floating infrastructure should their utilisation significantly decline.
• The targeted gas demand cut scenario of REPowerEU (if it materialises by 2030) could shift EU's reliance on the spot LNG market, turning a 49 bcm ‘under-contracted’ status in 2023 to an ‘over-contracted’ position of 30 to 40 bcm between 2027-2030. Under-contracted means insufficient long-term contractual commitments increasing buyers’ reliance on the more volatile spot market. Over-contracted means the long-term contracts exceed the demand. Nonetheless, the surplus in long-term commitments should not pose a burden thanks to the flexibility of free-on-board (FOB) contracts, which enable surplus LNG to be sold on the spot market or redirected elsewhere.
• Contrary to the general belief, the EU remains more dependent on long-term than on spot LNG contracts (2 thirds vs 1 third). TTF serves as the predominant indexation term for EU spot contracts (64%), but not for long-term ones (where Henry-hub and Brent indexations are dominant).

Read more about the report.

Explore other MMR publications.

What’s next?

Join our webinar to learn more about the evolving role of LNG in the European energy market.

When? 30 April 2024, 10:00 to 11:00 CET (online). Register for free here.

The revised Regulation on Wholesale Energy Market Integrity and Transparency (EU Regulation 2024/1106), published today in the Official Journal of the European Union, enters into force on 7 May 2024. Ahead of this date, ACER addresses (in an open letter) several questions from stakeholders to help them comply with their reporting obligations under the revised REMIT.

What is REMIT?

Europe has an EU-wide legal framework (generally called ‘REMIT’) designed to prevent and protect consumers and business against market abuse in the European electricity and gas markets. The revised REMIT takes effect from 7 May 2024. For a short overview on the revised REMIT, see here.

Why is the ACER open letter on the revised REMIT relevant? 

The ACER open letter provides an overview of the main changes the revised REMIT brings in terms of data reporting and notification obligations e.g.

• what has changed in the definition of ‘Organised Marketplace’ and when should they start reporting data related to the order books;
• how market participants that are resident or established in a ‘third country’ (outside the EU) should provide information about their designated representative in the EU;
• how market participants should notify their usage of algorithmic trading.

The letter also sets out what ACER expects from reporting parties once the amended regulation enters into force.

The letter should be of interest to all stakeholders involved in data reporting or that have notification obligations under REMIT: market participants, Registered Reporting Mechanisms (RRMs), Inside Information Platforms (IIPs), Organised Marketplaces (OMPs) and Persons Professionally Arranging or Executing Transactions (PPAETs).

What’s next? 

• The revised REMIT was adopted by the European Parliament on 29 February and by the Council on 18 March 2024. It will enter into force on 7 May 2024, twenty days after its publication in the Official Journal (which happened today).
• ACER and the European Commission will host a workshop (11 June) to discuss the implementation of the revised REMIT and its main implications. Register here.
• By the end of 2024, ACER will update its guidance to National Regulatory Authorities (NRAs) and reporting parties on the application of REMIT to reflect the new legal framework. ACER encourages stakeholders’ active involvement in both the implementation of the revised REMIT and in the creation of ACER guidance documents.

Today, ACER releases its Opinion, addressed to the European Parliament and European Commission, highlighting the urgency for Transmission System Operators (TSOs) to meet their obligation of making 70% of transmission capacity available for cross-border electricity trading by the end of 2025. The urgency relates to the approaching legal deadline and the delays with many of the necessary steps to reach the 70% transmission capacity rule that is needed to achieve the ambitious political objectives set for renewable generation. The ACER opinion makes clear that without significant uptake in progress on the “70% rule”, such ambitions will be hard to achieve.

Electricity transmission capacity connects Europe’s markets and benefits consumers

Transmission capacity is essential for cross-border trade of electricity, as it connects supply and demand. TSOs delivering maximal transmission capacity to trade electricity is therefore an essential condition to achieving the ambitious political objectives set for renewable generation.

What is the minimum 70% capacity requirement and where are we on the path?

When more capacity being made available for trading electricity with neighbouring countries did not happen fast enough, EU legislators introduced (in 2019) rules that require grid operators to ensure that at least 70% of their physical transmission capacity is available for cross-border electricity trading by the end of 2025 at the latest. ACER has reported yearly that significant steps remain to be taken for TSOs to fulfil this obligation. As the end of 2025 legal deadline approaches, ACER enlists the support of the European Parliament and the European Commission so that the final necessary steps are taken.

The last ACER report (July 2023) found that most Member States in highly meshed areas of the power grid made available on average 30-50% of the capacity for certain network elements. In parallel, the costs of managing grid congestions in the EU exceeded €4 billion in 2022.

Why is maximising transmission capacity important?

Maximising grid capacity refers not just to the ‘physical’ grid (high voltage lines) but also to the transmission capacity that TSOs make available on those lines for trading (‘commercial transmission capacity’) with neighbours.

Maximising interconnection capacity by reaching the minimum 70% requirement:

• is a pre-requisite for the energy transition;
• enhances security of electricity supply by optimising the use of the existing grid;
• mitigates prices and price volatility;
• provides the market with much-needed flexibility; and
• ensures a level playing field between domestic and cross-border trades.

There is much at stake in not reaching the minimum 70% requirement and Member States are still far off it. What does ACER call for to reach the 70% minimum requirement?

This ACER Opinion calls for the swift implementation by Member States and TSOs of the 3 tools foreseen by EU rules to get us to the 70% minimum requirement:

1. TSOs to do optimised and coordinated reduction of grid congestion. Such ‘remedial actions’ include coordinated re-dispatching and countertrading by TSOs (which relieves congestion and frees up more transmission capacity to the market). Currently, grid congestion is assessed mostly at national level. Fully coordinated processes and an adequate cost-sharing is yet to be done by TSOs.
2. TSOs to undertake targeted grid developments within specific bidding zones and targeted at reducing congestion in that zone.
3. TSOs to complete the technical assessment of the ongoing review of the EU’s bidding zones (and Member States/European Commission to then decide) to ensure alignment of the bidding zone configurations with structural grid congestion. The results of the EU electricity bidding zone review are expected, after several delays, by the end of 2024. In this review process, Member States, and if necessary, the European Commission, will have a key role to play in confirming or re-defining (as appropriate) the bidding zone configuration.

What are the next steps?

In June, ACER intends to publish its new Market Monitoring Report (MMR) on the capacity made available (in the year 2023) for cross-border trade with neighbours. This report will be followed by a public webinar.

ACER sees the need to update the European rules on allocating gas transmission capacity. Hence, ACER will run a public consultation to collect proposals from stakeholders on which amendments to the gas Capacity Allocation Mechanisms Network Code (CAM NC) could be considered.

What is the Capacity Allocation Mechanisms Network Code?

The current Capacity Allocation Mechanisms Network Code has been in place since 2017. It harmonises how Transmission System Operators (TSOs) offer and allocate the available gas transmission pipeline capacity to the network users. In the context of Europe’s decarbonisation targets and the evolving gas market, the network code needs to be updated.

ACER had several interactions with stakeholders on how to do this. This included a preliminary analysis (from October 2023 to January 2024) of the main achievements of the network code to date and potential improvements (see the scoping consultation and the workshop).

After having shared its conclusions with the European Commission, the Commission invited ACER to launch the EU-wide network code revision process building on the scoping and problem identification work undertaken by ACER and considering the regulatory elements introduced by the recently agreed hydrogen and decarbonised gas market package. The CAM NC revision process will conclude with ACER recommending amendments to the Commission, which is responsible for revising the text of the network code.

What are the next steps?

ACER is preparing a policy paper on the revision of the Network Code on Capacity Allocation Mechanisms in the gas transmission systems, which will focus on the potential improvements to the network code.

A public consultation based on the policy paper will run from 8 May until 14 June 2024.

ACER will organise a workshop (by invitation only) on 9 July 2024 (09:00 – 11:00). Respondents of the public consultation that specifically expressed their interest in the survey will be invited to this workshop.

After considering stakeholders’ inputs, by the end of 2024, ACER will draft a recommendation to the Commission on amending the network code.

On 8 February 2024, ACER has received a request from the European Network System Operator for Electricity (ENTSO-E) to provide an opinion on the revised manual of procedures for its Transparency Platform.

Today, ACER releases its favourable opinion, attesting that ENTSO-E’s revision of the manual of procedures should improve the Transparency Platform and overall data transparency.

The updated manual of procedures mainly introduces new data items to be collected and additional clarifications to improve the existing definitions.

What is the ENTSO-E Transparency Platform?

The ENTSO-E Transparency Platform aims to collect and centralise data related to electricity generation, transportation, and consumption at European level. Its purpose is to ensure transparency within the EU electricity market by providing easily accessible data for all market participants, including generators, retailers, and traders. By fostering transparency, the platform contributes to preventing insider trading.

What are ACER’s conclusions?

ACER concludes that the updated manual of procedures aligns with the objectives of the Transparency Regulation and with other relevant legislation. ACER however suggests ENTSO-E to consider further improvements as outlined in its Opinion. These mainly relate to:

• enhancing the consistency on how certain data items are defined,
• improving balancing-related publications, and
• ensuring data quality on the transparency platform.