Väljaminev kiri

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-----Original Appointment----- From: (ACER) Sent: 17 February 2025 11:02 To: (ACER); J

(ACER) Cc: Subject: opinion for FI-EE force majeure: call with ECA+EV When: 17 February 2025 14:00-15:00 (UTC+01:00) Belgrade, Bratislava, Budapest, Ljubljana, Prague. Where: Microsoft Teams Meeting ________________________________________________________________________________

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Tatari 39 / 10134 Tallinn / ESTONIA / Registry number 70000303

Phone: +372 667 2400 / E-mail: [email protected]

Christian Zinglersen

Agency for the Cooperation of

Energy Regulators (ACER)

Ljubljana

Slovenia

Our Ref: 28.01.2025 nr 7-16/2025-043-1

Request for ACER's Opinion concerning the Curtailment of the Forward Transmission

Rights and the interpretation of force majeure provisions

Dear Mr Zinglersen, According to Regulation (EU) 2019/942 of the European Parliament and of the Council of 5

June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators

(hereinafter ACER Regulation)1 Article 6 (7) where, in a specific case, a regulatory authority

encounters difficulties with the application of the network codes and guidelines referred to in

Regulation (EU) 2019/943, Regulation (EC) No 715/2009, Directive (EU) 2019/944 or

Directive 2009/73/EC it may request ACER to provide an opinion. According to the rules,

ACER delivers its opinion, after consulting the Commission, within three months of the date of

receipt of such a request.

As the issue is important and to some extent urgent, we kindly request ACER to provide an

opinion in at their earliest convenience regarding the application of Commission Regulation

(EU) 2016/1719 of 26 September 2016 establishing a guideline on forward capacity allocation

(hereinafter FCA or FCA Regulation)2, as referred to in Regulation (EU) 2019/943.

Furthermore, the ECA seeks clarification on the Harmonised allocation rules for long-term

transmission rights in accordance with Article 51 of the FCA Regulation (hereinafter HAR)3,

which is approved by ACER.

Background

In June 2021, Finnish and Estonian national regulatory authorities (Energy Authority of Finland

and Estonian Competition Authority, hereinafter ECA) requested Finnish and Estonian

transmission system operators (Fingrid Oy and Elering AS, hereinafter the TSOs), to start

issuing long-term transmission rights on the Finnish-Estonian bidding zone border. This request

was made in accordance with Article 30 of the FCA. Following this request and the preparatory

work carried out by the TSOs, monthly and yearly products of financial transmission rights

(hereinafter FTR) have been auctioned since 2023 on the Finnish-Estonian bidding zone border,

in the direction from Finland to Estonia, via Single Allocation Platform (hereinafter SAP).

1 Available: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02019R0942-20240804 2 Available: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02016R1719-20210315 3 Available:

https://www.acer.europa.eu/sites/default/files/documents/Individual%20Decisions_annex/ACER_Decision_18-

2023_HAR-AnnexI.pdf

2 (6)

Finnish and Estonian bidding zones are connected by two HVDC sub-marine cables: EstLink

1 (358 MW) and EstLink 2 (658 MW). Principles for splitting of long-term cross-zonal capacity

for the purpose of allocating FTRs in Finnish-Estonian bidding zone border is set out in Article

4 of bilateral methodology for determining and splitting the long-term cross-zonal capacity for

the purpose of allocating long-term transmission rights on the Finnish–Estonian bidding zone

border (hereinafter Bilateral Methodology)4.Based on these cross-border transfer capacities, the

amount of auctioned yearly FTR product is up to 350 MW, and the monthly FTR product up to

300 MW, depending on the actual availability of the net transfer capacity (hereinafter NTC)

known at the time of the auctioning of the relevant product. This opinion request concerns the

following allocated FTR capacities:

- Yearly products: 2024Y 350 MW and 2025Y 350 MW;

- Monthly products: 2024M December 300MW, 2025M January 322MW (including

22MW of returned and reallocated yearly product capacity).

On 25 December 2024, the EstLink 2 submarine cable was damaged by a ship's anchor,

resulting to its operational failure. Repairs are expected to be completed by the end of July

2025. Hence, the NTC between Finnish and Estonian bidding zones has been decreased to 358

MW, which is less than already allocated total amount of FTRs (650 MW).

In line with published UMM5 on Nord Pool´s dedicated platform, the TSOs have published

notification6 on SAP to curtail the already allocated FTRs starting from 27 December 2024

(from 650 MW to 342 MW) until the end of December 2025 and from 1 January 2025 until the

end of January 2025 (from 650 MW to 337 MW). Triggering event was defined as “Curtailment

due to Force Majeure“. However, several Estonian market participants have objected to the

described curtailment of already allocated FTR products, claiming that required preconditions

for triggering the force majeure event have not been met.

Legal principles

Chapter 6 of the FCA Regulation on the firmness of allocated cross-zonal capacity outlines two

distinct legal bases under which TSOs are entitled to curtail already allocated FTRs:

Article 53 (1): “All TSOs shall be entitled to curtail long-term transmission rights to ensure

operation remains within operational security limits prior to the day-ahead firmness deadline.”

Article 56 (1): “In the event of force majeure, TSOs may curtail long-term transmission rights.

Such curtailment shall be undertaken in a coordinated manner following liaison with all TSOs

directly affected.”

If the reason for curtailment is “to ensure that operation remains within operational security

limits,” the FCA Regulation foresees the following:

Article 52 (2) (k): “The harmonised allocation rules for long-term transmission rights shall

follow the principles of non-discrimination and transparency and contain the provisions on

firmness and compensation rules pursuant to Article 53 and Article 55.”

If the reason for the curtailment is “force majeure,” the FCA Regulation foresees the following:

4 Available: https://www.elering.ee/sites/default/files/2022-09/FI-

EE%20bilateral%20methodology%20for%20FTR%20capacity%20split.pdf 5 Available: https://umm.nordpoolgroup.com/#/messages/79210ee1-3395-4f75-a972-7b03888b107a/5 6 Available: https://www.jao.eu/news/capacity-curtailment-fi-ee-border-delivery-period-2

3 (6)

Article 56 (3): “In the event of curtailment due to force majeure the concerned holders of long-

term transmission rights shall receive compensation for the period of that force majeure by the

TSO which invoked the force majeure. In this case, the compensation shall be equal to the

amount initially paid for the concerned long-term transmission right during the forward

allocation process.”

Article 56 (4): “The TSO which invokes a force majeure shall make every possible effort to limit

the consequences and duration of the force majeure.”

HAR, as approved by ACER, defines the force majeure event, its application and compensation

rules in general as follows:

Article 2 (2) (u): “‘force majeure’ means any unforeseeable or unusual event or situation beyond

the reasonable control of a party and/or the relevant TSOs, and not due to a fault of the party

and/or the relevant TSOs, which cannot be avoided or overcome with reasonable foresight and

diligence, which cannot be solved by measures which are from a technical, financial or

economic point of view reasonably possible for the party and/or the relevant TSOs, which has

actually happened and is objectively verifiable, and which makes it impossible for the party

and/or the relevant TSOs to fulfil, temporarily or permanently, its obligations;”

Article 56 (1): “Long-term transmission rights irrespectively of the product period may be

curtailed in the event of force majeure, or to ensure operation remains within operational

security limits before the day-ahead firmness deadline.“

Article 56 (5): ”In case of curtailment, the affected Registered Participant is entitled to receive

reimbursement or compensation according to Article 59 to Article 60 and where applicable

Article 61.”

Article 57 (7): ”Compensation rules according to Article 59 and Article 59 and where

applicable Article 61 also apply if offered day-ahead cross zonal capacities are lower than the

amount of non-nominated long-term transmission rights in case of physical transmission rights

and the total amount of long-term transmission rights in the case of financial transmission

rights.”

Specific compensation rules for curtailments triggered by the event to ensure operation remains

within operational security limits are described by HAR as follows:

Article 59 (2): “If specified in the relevant annexes to these HAR, a cap shall be applied to the

compensations on specific bidding zone borders. The cap shall be determined as the total

amount of congestion income collected by the concerned TSOs on the respective bidding zone

border in the relevant calendar year, deducting all remunerations…”

Article 59 (3): “In case of direct current interconnectors, the cap shall be determined as the

total amount of congestion income collected by the concerned TSOs on the bidding zone border

in the relevant month, deducting all remunerations paid according to Article 40 and Article 48

and compensations paid according to Article 60and where applicable Article 61for the

considered month. The total amount of congestion income in one month is defined as the sum

of a twelfth of the revenues raised at yearly auction on the concerned bidding zone border and

the revenues generated by the monthly auction and congestion income from other timeframes

which occurred during this month on the concerned bidding zone border.”

Article 59 (4): “If, before application of the relevant cap described in paragraph 2 or paragraph

3 of this Article, the total calculated compensations of curtailed long-term transmission rights

exceed the relevant cap, the compensations of curtailed long-term transmission rights shall be

reduced on a pro rata basis.”

4 (6)

Baltic Capacity Calculation Region’s Regional Specific Annex to the Harmonised Allocation

Rules for long-term transmission rights in accordance with Article 52 of the FCA Regulation

(hereinafter Regional Specific Annex)7, approved by relevant regulatory authorities, stipulates

the bidding zone borders, where cap on compensation is applicable as follows:

Article 4 (2): “A cap on compensation shall be applicable to the FI-EE bidding zone border in

accordance with Article 59(3) of the HAR.”

Specific reimbursement rules for curtailments due to force majeure are described by HAR as

follows:

Article 60 (1): “In the case of force majeure before the day ahead firmness deadline, holders of

curtailed long term transmission rights shall be entitled to receive a reimbursement equal to

the price of the long-term transmission rights set during the long-term transmission rights

allocation process…”

Issues of concern

Article 2 point (u) of the HAR, which stipulates the definition of force majeure can be broken down into the following sections:: 1) any unforeseeable or unusual event or situation beyond the reasonable control of a party

and/or the relevant TSOs, and not due to a fault of the party and/or the relevant TSOs,

2) which cannot be avoided or overcome with reasonable foresight and diligence,

3) which cannot be solved by measures which are from a technical, financial or economic

point of view reasonably possible for the party and/or the relevant TSOs,

4) which has actually happened and is objectively verifiable, and

5) which makes it impossible for the party and/or the relevant TSOs to fulfil, temporarily or

permanently, its obligations.

Estonian and Finnish TSOs maintain that the volume of already allocated FTRs should be

directly linked to the physical electricity transmission capacity (meaning, the NTC on FI-EE

bidding zone border). According to TSOs an event causing physical damage to cable (for

example damage by a ship's anchor) qualifies as an (1) “unforeseeable or unusual event or

situation beyond the reasonable control of the relevant TSOs, ... which cannot be avoided ...,”.

Therefore, TSOs initiated curtailment of already allocated FTRs, citing “force majeure” as soon

as the details of the event have been determined.

According to the Regional Specific Annex Article 4 (2), a cap on compensations shall be

applicable to the FI-EE bidding zone border in accordance with Article 59(3) of the HAR.

7 Available: https://www.elering.ee/sites/default/files/2022-

09/Baltic%20CCR%20Regional%20Annex%202022.pdf

5 (6)

According to Article 56(4) of the FCA Regulation, “the TSO that invokes force majeure shall

make every possible effort to limit the consequences and duration of the force majeure”. Based

on this provision, ECA raises the question of whether in the occurrence of an event, which is

beyond the control of TSO, the TSOs should not be curtailing the already allocated FTRs and

continue remunerating market participants FTRs from already collected congestion income

(until the set cap is exhausted) to limit the force majeure consequences? It should be noted that

as the amount of collected congestion income depends on the actual power flows and price

difference between the bidding zones on the day-ahead market, which is calculated for each

hour, the amount of TSOs actually collected congestion income will be known only after the

end of FTR product period (month and year in this case).

ECA hereby highlights that depending on the spread between the FTR auction price and the

actual day-ahead price difference, the consequences for market participants may vary. If the

FTR price exceeds the actual price difference, market participants incur higher cost by

purchasing the FTRs than they would have if they had not purchased them. Therefore, the

curtailment of FTRs due to force majeure may have both positive and negative impacts on

market participants, which according to ECA’s understanding will only be known after the end

of the period.

Also, according to ECA’s interpretation, if the decision on whether the curtailment reason can

be defined as force majeure event also depends on application of the “measures that are, from

an economic point of view, reasonably possible for the TSOs” and “limiting the consequences,”

it is impossible for the TSOs to decide on the curtailment reason before the end of the FTR

product period.

Furthermore, Article 25 (1) of the Commission Regulation (EU) 2017/1485 of 2 August 2017

establishing a guideline on electricity transmission system operation (hereinafter SOGL

Regulation) stipulates the following:

“Each TSO shall specify the operational security limits for each element of its transmission

system, taking into account at least the following physical characteristics:

(a) voltage limits in accordance with Article 27;

(b) short-circuit current limits according to Article 30; and

(c) current limits in terms of thermal rating including the transitory admissible overloads.”

This indicates that such limits are related to physical characteristics. Hence, in ECA’s view, this

is not a situation where cross-border capacity is limited as a result of a specific incident in the

network to ensure operation within security limits. Instead, this is a case of a complete outage

of a cross-border connection (due to reasons beyond the TSOs’ control), which leads to a

reduction in cross-border NTC. This prompts ECA to question whether, in such a case, the

allocated FTR quantities should be directly tied to the available NTC between the relevant

bidding zones. Furthermore, in this particular scenario, could the TSOs legitimately apply the

“to ensure operation remains within operational security limits " clause to curtail FTRs, given

that this clause refers to the physical characteristics? In this case, TSOs are not deliberately

limiting NTC to ensure the system operates within security limits from a physical characteristics

perspective; rather, a certain amount of cross-border NTC is simply unavailable due to reasons

beyond the TSOs' control.

6 (6)

Request for ACER’s opinion

ECA hereby requests ACER's opinion on the application of Articles 52, 53, and 56 of the FCA,

as well as Articles 2 (2), 56, 57, 59, and 60 of the HAR. Based on the aforementioned legal

principles and issues of concern, ECA is formally inquiring ACER's opinion regarding the

appropriate FTRs curtailment clause in this particular situation. Whether the TSOs’ obligation

towards allocated FTRs is physical or financial, and what should TSOs take into consideration

while initiating curtailment of already allocated FTRs and deciding whether the triggering event

for this situation FTRs’ curtailment can be classified as force majeure event. Specifically, we

are asking:

1. Should the amounts of already allocated FTRs be directly dependent from the value of

net transfer capacity between the bidding zones, considering the particular situation and

SOGL Regulation definition of operational security limits? Also, if the TSOs are not

deliberately limiting NTC (of cross-border connection) to ensure the system operates

within security limits from a physical characteristics perspective, but a certain amount

of cross-border NTC is unavailable due to reasons beyond the TSOs’ control,

particularly due to the occurrence of “an unforeseeable or unusual event or situation

beyond the reasonable control of the relevant TSOs, which cannot be avoided”, then, in

such a case, are the TSOs even permitted to invoke the clause "to ensure operation

remains within operational security limits" for curtailing FTRs?

2. If the value of net transfer capacity between bidding zones should significantly decrease

due to occurrence of “an unforeseeable or unusual event or situation beyond the

reasonable control of the relevant TSOs, which cannot be avoided”, then would

occurrence of such an event provide sufficient cause for TSOs for curtailing the amounts

of already allocated FTRs with reference to force majeure event?

3. Or alternatively if the FTRs are purely financial instruments, then mere occurrence of

“an unforeseeable or unusual event or situation beyond the reasonable control of the

relevant TSOs, which cannot be avoided”, which results in significant reduction of net

transfer capacity between bidding zones, cannot provide sufficient cause for TSOs for

curtailment of already allocated FTRs with reference to force majeure event, unless the

TSOs have exhausted a cap on compensations which is applicable in accordance with

Article 59 (3) of the HAR?

If you have any questions regarding the circumstances of the described situation, please do not

hesitate to contact us at your earliest convenience. We look forward to receiving ACER’s

opinion as soon as possible.

Sincerely,

Evelin Pärn-Lee

Director General

1

Armin Ilisson - KA

From: Armin Ilisson Sent: esmaspäev, 20. jaanuar 2025 16:15 To: Elering AS Cc: Marilin Tilkson Subject: RE: Väljaminev kiri Attachments: 7-1725-0001-016-1 14.01.2025 Väljaminev kiri.asice

Tere Konkurentsiamet on Elering AS-i (Elering) poole pöördunud 14.01.2025 kirjas nr 7-17/25-0001-016-1. Lisaks eelnimetatud kirjas soovitud teabele palub Konkurentsiamet Eleringil kirjeldada Soome-Eesti piiril pikaajaliste ülekandeõiguste arveldamisega (sh soetamisega ning tasustamisega) seotud protsessi ning erinevate osapoolte ülesandeid ja millised osapooled omavahel lepinguid/kokkuleppeid sõlmivad. Muuhulgas palume selgitada milliste sõlmitud kokkulepete alusel (st lepingud või muud õiguslikud alused) toimub Eesti-Soome piiril pikaajaliste ülekandeõigustega arveldamine. Lisaks palume Eleringil esitada sellised vastavad lepingud (või muud kokkulepped), mis on osapoolte vahel sõlmitud pikaajaliste ülekandeõigustega arveldamiseks ja mis käsitlevad pikaajaliste ülekandeõiguste soetamise ning tasustamisega seonduvat. Palume Teil esitada küsitudteave hiljemalt 28.01.2025. Lugupidamisega Armin Ilisson Nõunik Energiaturgude osakond Regulatsiooniteenistus [email protected] +372 667 2437 Konkurentsiamet Tatari 39, 10134 Tallinn www.konkurentsiamet.ee

From: [email protected] <[email protected]> Sent: Tuesday, January 14, 2025 1:04 PM To: Elering AS <[email protected]> Subject: Väljaminev kiri

Tere

2

Konkurentsiamet on saatnud Teile dokumendi. Pealkiri: Pikaajaliste ülekandeõiguste piiramine Soome-Eesti pakkumispiirkondade piiril Registreerimise kuupäev: 14.01.2025 Registreerimise number: 7-17/25-0001-016-1 NB! Dokumendile on kehtestatud juurdepääsupiirang alates 14.01.2025 kuni 14.01.2030, vastavalt AvTS § 35 lg 1 p 17 teave, mille avalikustamine võib kahjustada ärisaladust. Palun kinnitage kirja kättesaamist ja manuse avanemist. Lugupidamisega Armin Ilisson nõunik Konkurentsiamet, Regulatsiooniteenistus, Energiaturgude osakond [email protected] 667 2437 | 667 2400 Tatari 39 | 10134 Tallinn www.konkurentsiamet.ee E-kiri võib sisaldada asutusesiseseks kasutamiseks tunnistatud teavet. Kui te ei ole selle kirja adressaat, palun võtke ühendust saatjaga ning kustutage e-kiri arvutist.

1

Armin Ilisson - KA

From: [email protected] Sent: esmaspäev, 27. jaanuar 2025 15:59 To: Konkurentsiamet Subject: Dokumendi nr 1.1-11/2025/34-3 edastamine Attachments: Väljaminev kiri juurdepääsupiiranguga (vastus digi).asice

ASUTUSESISESEKS KASUTAMISEKS Märge tehtud: 27.01.2025 Juurdepääsupiirang kehtib kuni: 26.01.2030 Alus: AvTS § 35 lg 1 p 17 Teabevaldaja: Elering AS Tere Teile on saadetud Elering AS dokumendihaldussüsteemi kaudu dokument (lisatud manusesse). Pealkiri: Vastus päringule seoses pikaajaliste ülekandeõiguste piiramisega Soome-Eesti pakkumispiirkondade piiril Registreerimise kuupäev: 27.01.2025 Registreerimise number: 1.1-11/2025/34-3

Lugupidamisega

Elering AS Kadaka tee 42 12915 Tallinn tel 715 1222, [email protected] www.elering.ee

Tähelepanu! Tegemist on välisvõrgust saabunud kirjaga. Tundmatu saatja korral palume linke ja faile mitte avada.

1

Armin Ilisson - KA

From: [email protected] Sent: reede, 6. juuni 2025 11:06 To: Konkurentsiamet Info - KA Subject: Dokumendi nr 1.1-11/2025/489-3 edastamine Attachments: Väljaminev kiri juurdepääsupiiranguga (vastus digi).asice

ASUTUSESISESEKS KASUTAMISEKS Märge tehtud: 05.06.2025 Juurdepääsupiirang kehtib kuni: 05.06.2030 Alus: AvTS § 35 lg 1 p 17 Teabevaldaja: Elering AS

Tere Teile on saadetud Elering AS dokumendihaldussüsteemi kaudu dokument (lisatud manusesse). Pealkiri: Elering AS seisukoht Konkurentsiameti eelotsuste kohta kaebuste osas Elering AS tegevuse kohta rahaliste ülekandeõiguste piiramisel Registreerimise kuupäev: 05.06.2025 Registreerimise number: 1.1-11/2025/489-3

Lugupidamisega

Elering AS Kadaka tee 42 12915 Tallinn tel 715 1222, [email protected] www.elering.ee

Tähelepanu! Tegemist on välisvõrgust saabunud kirjaga. Tundmatu saatja korral palume linke ja faile mitte avada.

Page 1 of 11

PUBLIC

OPINION No 02/2025

OF THE EUROPEAN UNION AGENCY

FOR THE COOPERATION OF ENERGY REGULATORS

of 9 April 2025

relating to the curtailment of financial transmission rights and

interpretation of force majeure

THE EUROPEAN UNION AGENCY FOR THE COOPERATION OF ENERGY

REGULATORS,

Having regard to Regulation (EU) 2019/942 of the European Parliament and of the Council of

5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators1,

and, in particular, Article 6(7) thereof,

Having regard to the outcome of the consultation with the European Commission, pursuant to

Article 6(7) of Regulation (EU) 2019/942,

Having regard to the outcome of the consultation with ACER’s Electricity Working Group

(‘AEWG’),

Having regard to the favourable opinion of the Board of Regulators of 2 April 2025, delivered

pursuant to Article 22(5)(a) of Regulation (EU) 2019/942,

Whereas:

1. INTRODUCTION

(1) By email of 28 January 2025, the regulatory authority of Estonia, Konkurentsiamet,

requested ACER to provide an opinion, pursuant to Article 6(7) of Regulation (EU)

2019/942, with regard to difficulties in the application of Commission Regulation

(EU) 2016/1719 of 26 September 2016 establishing a guideline on forward capacity

allocation2 (the ‘FCA Regulation’).

(2) The difficulties with the application of the FCA Regulation relate to an incident on

the Finnish-Estonian (‘FI-EE’) bidding zone border on 25 December 2024, when the

1 OJ L158, 14.6.2019, p. 22. 2 OJ L 259, 27.9.2016, p. 42.

PUBLIC

Opinion No 02/2025

Page 2 of 11

submarine HVDC cable Estlink2 was damaged by a ship’s anchor. This incident

prompted the transmission system operators (‘TSOs’) of Estonia, Elering AS, and

Finland, Fingrid Oyj, to declare an event of force majeure and curtail the allocated

long-term transmission rights (‘LTTRs’) on that bidding zone border. Following this

curtailment, Estonian market participants filed complaints against the TSOs’ invoking

of force majeure. When processing these complaints and investigating whether a

violation in the activities of Elering AS occurred, the Estonian regulatory authority,

Konkurentsiamet, encountered difficulties with the application of the requirements

under Title II, Chapter 6 of the FCA Regulation and provisions in the harmonised

allocation rules (HAR) adopted in accordance with Articles 51 and 52 of the FCA

Regulation.

2. LEGAL CONTEXT

(3) The FCA Regulation lays down rules on the firmness of allocated cross-zonal capacity

in the forward markets.

(4) Article 53 of the FCA Regulation states under paragraph (1) that ‘All TSOs shall be

entitled to curtail long-term transmission rights to ensure operation remains within

operational security limits prior to the day-ahead firmness deadline. …’ Paragraph (2)

of the same article further clarifies that ‘The concerned TSOs on the bidding zone

border where long-term transmission rights have been curtailed shall compensate the

holders of curtailed long-term transmission rights with the market spread.’

(5) Article 56 of the FCA Regulation states under paragraph (1) that ‘In the event of force

majeure, TSOs may curtail long-term transmission rights. …’ Paragraph (3) of that

article specifies that ‘In the event of curtailment due to force majeure the concerned

holders of long-term transmission rights shall receive compensation for the period of

that force majeure by the TSO which invoked the force majeure. In this case, the

compensation shall be equal to the amount initially paid for the concerned long-term

transmission right during the forward allocation process.’ Paragraph 4 of the same

article states that ‘The TSO which invokes a force majeure shall make every possible

effort to limit the consequences and duration of the force majeure.’

(6) Article 54 of the FCA Regulation addresses the possible definitions of caps for the

compensation of curtailed LTTRs. More specifically, paragraph (1) of that article

states that ‘The concerned TSOs on a bidding zone border may propose a cap on the

total compensation to be paid to all holders of curtailed long-term transmission rights

in the relevant calendar year or the relevant calendar month in case of Direct Current

interconnectors.’ Paragraph (2) of the same article states that ‘The cap shall not be

lower than the total amount of congestion income collected by the concerned TSOs on

the bidding zone border in the relevant calendar year. In case of Direct Current

interconnectors, TSOs may propose a cap not lower than the total congestion income

collected by the concerned TSOs on the bidding zone border in the relevant calendar

month.’

(7) Pursuant to Article 52(2)(k) of the FCA Regulation, the HAR ‘shall follow the

principles of non-discrimination and transparency and at least contain the provisions

PUBLIC

Opinion No 02/2025

Page 3 of 11

on firmness and compensation rules pursuant to Article 53 and Article 55.’ ACER

Decision no. 18/20233 approved the latest version of the HAR as set out in Annex I of

that decision. Article 2(2)(u) of the HAR , defines force majeure in line with Article

2(45) of the CACM Regulation, which is also applicable for the FCA Regulation

pursuant to its Article 2, as follows:

‘force majeure’ means any unforeseeable or unusual event or situation

beyond the reasonable control of a party and/or the relevant TSOs, and

not due to a fault of the party and/or the relevant TSOs, which cannot

be avoided or overcome with reasonable foresight and diligence, which

cannot be solved by measures which are from a technical, financial or

economic point of view reasonably possible for the party and/or the

relevant TSOs, which has actually happened and is objectively

verifiable, and which makes it impossible for the party and/or the

relevant TSOs to fulfil, temporarily or permanently, its obligations’.

3. DIFFICULTIES WITH THE APPLICATION OF THE FCA REGULATION

(8) The difficulties described by Konkurentsiamet can be summarised as follows:

(9) The FI-EE bidding zone border comprises two HVDC cables:

˗ Estlink1 with 358 MW capacity, and

˗ Estlink2 with 658 MW capacity.

(10) As defined in the methodology for the regional design of LTTRs for the Baltic

capacity calculation region (‘CCR’) in accordance with Article 31 of the FCA

Regulation, LTTRs are issued for the monthly and yearly timeframe in the form of

financial transmission rights (‘FTRs’) options on the FI-EE bidding zone border.

(11) On 25 December 2024, a ship’s anchor damaged the submarine HVDC cable Estlink2

on the FI-EE bidding zone border.

(12) At the time of the incident, the FTRs which were allocated via the single allocation

platform for the FI-EE bidding zone border accounted for:

˗ 350 MW from the yearly allocations for 2024 and 2025, and

˗ further 300 MW provided by TSOs for the monthly allocation for December 2024

and January 2025.

3 ACER Decision 18/2023 on Harmonised Allocation Rules Amendment.

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(13) As specified in the unavailability notice 4 , the Estlink2 cable is expected to be

unavailable until end of July 2025. Until then the available interconnector capacity on

the FI-EE bidding zone border will be limited to 358 MW.

(14) From 26 December 2024 5 until 30 January 2025, the single allocation platform

published daily messages for the curtailment of FTRs on the FI-EE bidding zone

border from 650 MW allocated to between 337 and 342 MW due to force majeure for

the period from 27 December 2024 until 31 January 2025.

(15) Following the curtailment by the TSOs due to force majeure, Estonian market

participants filed complaints with Konkurentsiamet against the TSO’s decision to

invoke force majeure as ground for the curtailment of FTRs, since in the view of these

market participants the required preconditions for a force majeure event had not been

met.

(16) Konkurentsiamet explained to ACER that they are processing the complaints and, as

a result of these proceedings, if the Konkurentsiamet identifies a violation in the

activities of the TSO, Konkurentsiamet has the right to issue a precept to the TSO to

eliminate the violation. Konkurentsiamet further clarified that, since in this case the

complainants also aim to obtain certain financial compensation from the TSO, the

respective claims are subject to resolution through negotiations between the parties

and, if no agreement is reached, to a ruling in civil court proceedings.

(17) When processing the market participants’ complaints, Konkurentsiamet encountered

difficulties with the application of Articles 52, 53, and 56 of the FCA Regulation, as

well as Articles 2(2), 56, 57, 59, and 60 of the HAR. In this context, it is not clear to

Konkurentsiamet whether the TSOs’ obligation towards allocated FTRs is physical or

financial, and what TSOs should take into consideration when curtailing already

allocated FTRs and invoking force majeure as a reason for this FTRs’ curtailment.

4. THE REQUEST

(18) Konkurentsiamet requested ACER’s opinion on the abovementioned difficulties with

the application of Articles 52, 53, and 56 of the FCA Regulation, as well as Articles

2(2), 56, 57, 59, and 60 of the HAR and specifically asked the following questions:

(19) Question 1: Should the amounts of already allocated FTRs be directly dependent from

the value of net transfer capacity between the bidding zones, considering the particular

situation and the definition of operational security limits in Commission Regulation

(EU) 2017/1485 of 2 August 2017 establishing a guideline on electricity transmission

system operation6? Also, if the TSOs are not deliberately limiting net transfer capacity

(of cross-border connection) to ensure the system operates within security limits from

4 https://umm.nordpoolgroup.com/#/messages/79210ee1-3395-4f75-a972-7b03888b107a/5 5 https://www.jao.eu/news/capacity-curtailment-fi-ee-border-delivery-period-2 6 OJ L 220, 25.8.2017, p. 1.

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a physical characteristics perspective, but a certain amount of cross-border net transfer

capacity is unavailable due to reasons beyond the TSOs’ control, particularly due to

the occurrence of “an unforeseeable or unusual event or situation beyond the

reasonable control of the relevant TSOs, which cannot be avoided”, then, in such a

case, are the TSOs even permitted to invoke the clause "to ensure operation remains

within operational security limits" for curtailing FTRs?

(20) Question 2: If the value of net transfer capacity between bidding zones were to

significantly decrease due to occurrence of “an unforeseeable or unusual event or

situation beyond the reasonable control of the relevant TSOs, which cannot be

avoided”, would then occurrence of such an event provide sufficient cause for TSOs

for curtailing the amounts of already allocated FTRs with reference to a force majeure

event?

(21) Question 3: Alternatively, if the FTRs are purely financial instruments, can then mere

occurrence of “an unforeseeable or unusual event or situation beyond the reasonable

control of the relevant TSOs, which cannot be avoided”, which results in significant

reduction of net transfer capacity between bidding zones, provide sufficient cause for

TSOs to curtail already allocated FTRs with reference to a force majeure event, unless

the TSOs have exhausted a cap on compensations which is applicable in accordance

with Article 59 (3) of the HAR?

5. PROCEDURE

(22) On 28 January 2025, ACER received the request of Konkurentsiamet for an opinion,

according to Article 6(7) of Regulation (EU) 2019/942, on the application of the FCA

Regulation concerning the curtailment of LTTRs on the FI-EE bidding zone border

and the interpretation of force majeure provisions.

(23) Between 28 January 2025 and 18 March 2025, ACER engaged in discussions with the

European Commission and the regulatory authorities. These interactions focused in

particular on:

(a) Possibilities for curtailing LTTRs on the FI-EE bidding zone border and

requirements for invoking force majeure; and

(b) Clarifications concerning the specific case for which Konkurentsiamet requests

ACER’s opinion.

(24) On 10 March 2025, the draft of an opinion replying to the present request of

Konkurentsiamet was submitted to the AEWG for consultation. In its advice of 18

March 2025, the AEWG broadly endorsed the draft ACER opinion and invited ACER

to:

˗ to clarify the reasoning regarding ACER’s competency in this case and the

necessity to issue an opinion,

˗ to reflect in more detail the relation between FTRs and the compensation cap, and

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˗ to clearly differentiate between specific findings related to the respective FI-EE

case and general conclusions.

(25) The AEWG advice also included individual comments from the regulatory authorities

of Finland, Austria, France and Germany concerning:

˗ the mandate for regulatory authorities or ACER to assess whether an event

qualifies as force majeure;

˗ the suggestion to clarify whether the event qualifies as force majeure or not and

an opinion for a possible conclusion;

˗ views on what could be considered as a TSOs’ impossibility to fulfil the financial

obligation to remunerate FTRs with the day-ahead market spread;

˗ application of the cap in the event of force majeure; and

˗ the possibility for TSOs to curtail FTRs on the FI-EE bidding zone border to

ensure operation remains within operational security limits based on Article 57(7)

of the HAR and the regional HAR annex for the Baltic CCR .

(26) ACER consulted with the European Commission based on draft opinion as submitted

for AEWG’s advice in accordance with the requirement pursuant to Article 6(7) of

Regulation (EU) 2019/942.

(27) On 2 April 2025 ACER’s BoR issued a favourable opinion pursuant to Article 22(5)(a)

of Regulation (EU) 2019/942.

6. ASSESSMENT

ACER’s competence to deliver this opinion

(28) According to Article 6(7) of Regulation (EU) 2019/942 where, in a specific case, a

regulatory authority encounters difficulties with the application of the network codes

and guidelines referred to in Regulation (EU) 2019/943, it may request ACER to

provide an opinion. ACER shall deliver its opinion, after consulting the Commission,

within three months of the date of receipt of such a request.

(29) From the information provided by Konkurentsiamet (see Rectial (16)) it is apparent

that Konkurentsiamet is not assessing whether the event qualifies as force majeure

following a request from the TSO under Article 56(5) of the FCA Regulation . Instead,

ACER understands that Konkurentsiamet is processing a specific case, due to

complaints raised by market participants, which falls under their duties as a regulatory

authority to ensure the compliance of their TSO with the FCA Regulation in

accordance with Article 59(1)(b) of Directive (EU) 2019/944.

(30) ACER therefore understands that Konkurentsiamet is entitled to request ACER to

provide an opinion under Article 6(7) of Regulation 2019/942 on the application of

the FCA Regulation and the HAR as adopted in accordance with Articles 51 and 52

of the FCA Regulation, and that ACER is therefore required to provide such opinion.

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(31) For the avoidance of doubt, ACER would like to clarify that with this opinion ACER

is only providing answers to the questions raised by the Konkurentsiamet’s on the

difficulties with applying the requirements of the FCA Regulation for their specific

case, but does not provide an assessment of the actions taken by TSOs or a conclusion

on whether the relevant event qualifies as force majeure or not. Considering the

feedback received in the AEWG advice and to more clearly limit the opinion to the

questions raised by Konkurentsiamet, ACER deleted parts of Recital (49) from the

draft opinion shared with AEWG for advice.

Curtailment to ensure operational security (Question 1)

(32) The amount of cross-zonal capacity to be allocated in the long-term timeframe as

LTTRs should be limited by the amount calculated in accordance with the capacity

calculation methodology pursuant to Article 10 of the FCA Regulation and further

defined by the methodology for splitting of long-term cross-zonal capacity in

accordance with Article 16 of the FCA Regulation. After this cross-zonal capacity has

been allocated via the single allocation platform, the firmness provisions defined

under Title II, Chapter 6 of the FCA Regulation apply. Following an unplanned

outage, Article 53(1) of the FCA Regulation allows TSOs to curtail LTTRs in order

to ensure operation remains within operational security limits.

(33) In case LTTRs are curtailed to ensure operational security according to Article 53(1)

of the FCA Regulation specific compensation rules, including any defined cap, under

Articles 53 and 54 of the FCA Regulation and as further specified in the HAR would

become applicable. A precondition for applying these compensation rules and any

defined cap is thus that the LTTRs have been curtailed. ACER therefore understands

that the conditions for curtailment must be met in the first place, and any right for

TSOs to curtail LTTRs cannot be inferred from the introduction of a cap on the FI-EE

bidding zone border. Furthermore, in ACER’s view, curtailment cannot be based on

Article 57(7) of the HAR, as this provision merely clarifies that the compensation

rules for curtailed LTTRs apply if offered day-ahead cross zonal capacities are lower

than allocated LTTRs. Besides curtailment for operational security reasons, the FCA

Regulation only allows for curtailment prior to the day-ahead firmness deadline in

case of force majeure pursuant to Article 56(1) of the FCA Regulation, but not for any

other reasons.

(34) For long-term cross-zonal capacity allocation which takes place after an unplanned

outage, the outage should be considered in the capacity calculation process and

subsequently limits the amount of LTTRs allocated to the available cross-zonal

capacity on the relevant bidding zone border (e.g. as done when allocating LTTRs on

the FI-EE bidding zone border for February 2025).

(35) The LTTRs on the FI-EE bidding zone border are allocated in the form of financial

transmission rights options (FTR options). In accordance with Article 33 of the FCA

Regulation, such FTR options cannot be physically nominated by the LTTR holders,

but the holders are only entitled to obtain financial remuneration from TSOs equal to

the day-ahead market spread pursuant to Article 35 of the FCA Regulation. Therefore,

ACER understands that the TSOs’ obligations from FTRs are only of financial and

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not of a physical nature. This means that in principle an allocation of FTRs lead to the

financial obligation for the TSOs to remunerate the FTR holders with the day-ahead

market spread, but the FTR holder does not have a possibility to use the FTRs in a

way which could impact a TSOs’ physical operation of the transmission grid.

Considering this lack of physical attributes of the FTR options on the FI-EE bidding

zone border, by default those FTR options cannot have a physical impact which could

endanger operational security limits.

(36) Further, ACER understands that the allocation of FTRs on the FI-EE bidding zone

border has no possible physical impact through the day-ahead capacity calculation

process since the day-ahead capacity calculation methodology pursuant to Article

20(2) of Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a

guideline on capacity allocation and congestion management7 (‘CACM Regulation’)

for the Baltic CCR does not consider previously allocated LTTRs in any way. The

day-ahead capacity calculation process, where an outage is taken into consideration,

may result in coordinated net transmission capacity values for the relevant bidding

zone border lower than allocated in the long-term timeframe. Regardless of the

outcome of the capacity calculation, the firmness of LTTRs is subject to the

requirements defined under Title II, Chapter 6 of the FCA Regulation. Hence, as stated

in Rectial (32), LTTRs may only be curtailed prior to the day-ahead firmness deadline

to ensure operational security (Article 53(1) of the FCA Regulation) or in the case of

force majeure (Article 56(1) of the FCA Regulation).

(37) ACER did not identify a possible physical impact of FTR options on the FI-EE

bidding zone border due to the purely financial nature of FTRs or any other possible

physical impacts from FTRs for this bidding zone border on the operation of the

transmission grid. Therefore, ACER is of the opinion that FTRs on the FI-EE bidding

zone border should not be curtailed for the purpose of ensuring that operation remains

within operational security limits prior to the day-ahead firmness deadline in

accordance with Article 53 of the FCA Regulation.

Conditions for invoking force majeure (Question 2)

(38) Article 56(1) of the FCA Regulation provides that the TSOs may curtail LTTRs in the

event of force majeure. Article 2 of the FCA Regulation provides that the definitions

of the CACM Regulation are also applicable for the purpose of the FCA Regulation.

Article 2(45) of the CACM Regulation contains a definition of force majeure which

corresponds in essence to the definition included in Article 2(2)(u) of the HAR.

(39) In its request for an opinion, Konkurentsiamet referred to the definition of force

majeure in Article 2(2)(u) of HAR, broken down into five sub-conditions:

7 OJ L 197, 25.7.2015, p. 24

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(a) any unforeseeable or unusual event or situation beyond the reasonable control

of a party and/or the relevant TSOs, and not due to a fault of the party and/or

the relevant TSOs,

(b) which cannot be avoided or overcome with reasonable foresight and diligence,

(c) which cannot be solved by measures which are from a technical, financial or

economic point of view reasonably possible for the party and/or the relevant

TSOs,

(d) which has actually happened and is objectively verifiable, and

(e) which makes it impossible for the party and/or the relevant TSOs to fulfil,

temporarily or permanently, its obligations.

(40) Konkurentsiamet’s question 2 (see Recital (18)) asks whether the fulfilment of the

first two criteria in the force majeure definition (i.e. Recital (39)(a) and (b)) provides

already sufficient cause for a TSO to invoke force majeure.

(41) In this regard, ACER understands that the concept of force majeure and its meaning

must be determined by reference to the legal context in which it is to operate and that

force majeure constitutes an exemption situation and therefore should be applied

restrictively. The definition of force majeure provided in Article 2(2)(u) of the HAR

sets out the distinct cumulative conditions that each must be satisfied for an event to

qualify as force majeure. Thus, each condition needs to be assessed and if any of the

five conditions are not met, the event cannot be classified as force majeure.

(42) Therefore, based on the force majeure definition, ACER understands that when TSOs

invoke force majeure, they must demonstrate that the relevant situation fulfils all

conditions. This also includes the requirement, as specifically pointed to by

Konkurentsiamet, that the situation is making it impossible for the TSO to fulfil

temporarily or permanently, its obligations.

(43) Konkurentsiamet described the event as the submarine cable Estlink2 being damaged

by a ship’s anchor resulting in its operational failure. In general, such event is

impacting the TSOs’ physical operation of the transmission grid, which needs to be

done in accordance with the relevant requirements for maintaining operational

security. Furthermore, this event limited the available cross-zonal capacity to be

allocated in the day-ahead timeframe and therefore reduced the day-ahead congestion

income generated at that bidding zone border. The remuneration of LTTRs on that

bidding zone border relates to the day-ahead market spread on the relevant bidding

zone border, which is also reflected in the day-ahead congestion income on that

bidding zone border. Day-ahead congestion income of a bidding zone border can

therefore be directly used by TSOs to remunerate LTTRs. If TSOs allocated a higher

amount of cross-zonal capacity in the long-term timeframe than what they have

available in the day-ahead timeframe, revenue adequacy for remunerating LTTRs with

generated day-ahead congestion income can no longer be provided (e.g. TSOs will

face a financial loss for the cross-zonal capacity volumes which are not available in

day-ahead if the day-ahead market spread is higher than the LTTR price).

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(44) While the TSOs’ obligations from FTR options on the FI-EE bidding zone border do

relate to the event in a financial sense, the conclusions in section 6.16.2 above clarify

that the allocated FTR options on the FI-EE bidding zone border do not imply a

possible physical impact on the TSOs’ operation. The relevant obligation for TSOs

related to FTR options on the FI-EE bidding zone border and the definition of force

majeure in Article 2(2)(u) of the HAR is thus the obligation to remunerate the FTR

holders with the market spread in accordance with Article 35(3)(a) of the FCA

Regulation. In this regard it is to note that, as stated in Article 56 of the HAR, in case

of curtailment of the FTRs due to force majeure before the day-ahead firmness

deadline the holders of those FTRs lose their right to receive such remuneration.

Instead, the FTR holders are entitled to receive reimbursement in accordance with

Article 56(3) of the FCA Regulation and Article 60 of the HAR.

(45) Therefore, the situation of reduced available cross-zonal capacity on the FI-EE

bidding zone border and already allocated FTRs on that bidding zone border impacts

only the TSOs’ financial ability to remunerate the holders of FTRs. In such case, for

invoking force majeure as a justification to curtail FTRs, TSOs would need to consider

whether the event has a financial impact that makes it impossible for the TSOs to

temporarily or permanently fulfil their obligations.

Consideration of the cap on the compensation of LTTRs in the event of force

majeure (Question 3)

(46) The cap for the compensation of LTTRs in accordance with Article 54 of the FCA

Regulation may be used to limit the total compensation to be paid to all holders of

curtailed LTTRs to the total congestion income collected by the TSO on the relevant

bidding zone border.

(47) Article 59 of the HAR further specifies that such cap should consider the congestion

income of the long-term, day-ahead and intraday timeframes and the remuneration of

LTTRs under normal circumstances as well as compensation of curtailed LTTRs. As

specified in Article 59(3) of the HAR and Article 4(2) of the regional HAR annex for

the Baltic CCR pursuant to Article 52 of the FCA Regulation, a monthly cap for the

compensation of curtailed LTTRs is established for the FI-EE bidding zone border.

(48) The cap under Article 59 of the HAR relates to compensation for curtailments to

ensure that operation remains within operational security limits. Further, as specified

under Article 60 of the HAR, reimbursement for curtailments due to force majeure

before the day ahead firmness deadline does not consider the cap but should be

calculated based on the marginal price from the initial LTTR auction or the weighted

average of marginal prices of all the auctions. Considering that, as concluded in

Section 6.2, the curtailment for maintaining operational security does not seem

feasible for FTRs on the FI-EE bidding zone border, the cap would not become

effective.

(49) However, in ACER’s opinion, the status of a cap as defined pursuant to Article 54 of

the FCA Regulation could still serve as one of several factors that could be taken into

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account for considering the TSOs’ financial means to fulfil its obligation of

remunerating FTR options for the FI-EE bidding zone border,

HAS ADOPTED THIS OPINION:

Regulation (EU) 2016/1719 can be interpreted to the following effect:

1. TSOs may curtail long-term transmission rights pursuant to Article 53(1) of

Regulation (EU) 2016/1719, only if the allocated long-term transmission rights would

endanger that operation of the transmission grid remains within operational security

limits prior to the day-ahead firmness deadline. Since financial transmission rights on

the FI-EE bidding zone border cannot have an impact on operational security, they

should not be curtailed pursuant to Article 53(1) of Regulation (EU) 2016/1719.

2. TSOs should not invoke force majeure unless all conditions specified in the definition

of force majeure pursuant to Article 2(2)(u) of the harmonised allocation rules

pursuant to Article 51 of Regulation (EU) 2016/1719 are met.

3. The cap on the total compensation to be paid to all holders of curtailed long-term

transmission rights applies only to the compensation for curtailments to ensure that

operation remains within operational security limits before the day ahead firmness

deadline in accordance with Article 59 of the harmonised allocation rules pursuant to

Article 51 of Regulation (EU) 2016/1719. This cap does not apply to curtailments due

to force majeure before the day ahead firmness deadline in accordance with Article

60 of the harmonised allocation rules pursuant to Article 51 of Regulation (EU)

2016/1719. Since financial transmission rights on the FI-EE bidding zone border

should not be curtailed for operational security reasons in accordance with Article

53(1) of Regulation (EU) 2016/1719, a cap should not be applicable for that bidding

zone border.

This Opinion is addressed to the regulatory authority of Estonia, Konkurentsiamet.

Done at Ljubljana, on 9 April 2025.

- SIGNED -

Fоr the Agency

The Director

C. ZINGLERSEN