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© ICIS HEREN - EU mandates €100m TSO fund to boost cross-border flows
2010-09-16
Grid operators across Europe will be forced to fill a €100m common transit infrastructure fund every year under a new EU law. This fund will be redistributed among the operators to offset the cost of using some of their grid for cross-border flows, rather than national transport, in a move to unlock more pan-European flows. The regulation - the strongest form of EU law - came into force on 2 September, and was published on Wednesday (15th September). So far, transmission system operators (TSOs) have agreed to voluntarily pay one another for the cost of transit. But European grids are becoming more interlinked, and it is becoming harder for TSOs to reach voluntary agreements, the EU said. The new binding guidelines will force TSOs to pay each other for hosting cross-border flows of power. The €100m/year fund will be financed and operated by the TSOs themselves under the supervision of the European Regulators` Group for Electricity and Gas (ERGEG), until the new EU regulator agency takes over in March next year. It will be based on an EU-wide assessment of the long-term average cost of hosting cross-border flows, with transit costs accounting for 75% and load factor for 25%. How much each TSO has to contribute will depend on the volumes it normally handles within its own grid. "A [TSO] should contribute in proportion to the value of net flows to and from its national transmission system as a share of net flows to and from all national transmission systems," the regulation stated. How much each TSO will receive from the fund also depends on how large a proportion transit accounts for out of its total transported volumes, as well as the load factor. Compensation for energy losses caused by transit will be based on the estimated losses if there had been no cross-border flows. The regulation also sets out that TSOs have to keep national transmission tariffs within a tight EU-wide range. Annual average transmission charges paid by producers should stay within a range of €0.00-0.50/MWh across the EU, except those in the Nordic region, Romania and the British Isles. The range in Denmark, Sweden and Finland should be €0.00-1.20MWh, the range in the UK and Ireland €0.00-2.50/MWh, and the range in Romania €0.00-2.00/MWh. The regulation will ensure that TSOs are paid if they handle large transport volumes that do not serve their own home markets. However, this does not answer the question of how to trigger more investment to boost cross-border flows - something TSOs have identified as a key obstacle to a more interlinked European grid. (THE ICIS HEREN REPORTS - EDEM 14.179 / 16 September 2010)

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