Fingrid has appealed against ACER’s decision concerning risk hedging opportunities on the bidding zone borders between Finland and Sweden
The European Union Agency for the Cooperation of Energy Regulators (ACER) adopted on the 14th of September 2022 a decision concerning the risk hedging opportunities on the bidding zone borders between Finland and Sweden. Fingrid has filed an appeal against the decision at ACER’s Board of Appeal.
Commission Regulation (EU) 2016/1719 establishing a guideline on forward capacity allocation obliges transmission system operators (TSOs) to issue long-term transmission rights (LTTRs) to support the functioning of the electricity wholesale markets. Exemption is possible if the hedging opportunities of the market participants are otherwise sufficient, or if the relevant national regulators request the TSOs to make available other long-term cross-zonal hedging products to support the functioning of the wholesale electricity markets.
In its decision adopted on the 14th of September 2022, ACER requested the Finnish and Swedish TSOs to make available other hedging products, and to develop the necessary arrangements to this end. In particular, ACER recommends that the TSOs explore EPAD coupling. There are no precedents for such arrangements, which present a number of serious practical and legal difficulties, and their development and implementation will take significantly longer than the implementation of LTTRs – if it is possible at all.
ACER’s decision conflicts with the views of the majority of the Finnish market participants that responded to the consultation, according to which LTTRs should be issued on the bidding zone borders between Finland and Sweden.
Fingrid supports the issue of LTTRs, a tried and tested solution that would complement the existing hedging opportunities available in the electricity markets in the Baltic Sea region and would provide Finnish market participants with new tools for their risk hedging.
Fingrid is concerned about the delay that ACER’s decision will cause to the implementation of long-term hedging products in Finland and filed an appeal against the decision with the ACER Board of Appeal on the 14th of November 2022. The Board of Appeal must decide on the appeal within four months of the lodging of the appeal.
Fingrid must comply with ACER’s decision regardless of the appeal. Fingrid is developing together with Svenska kraftnät a proposal to make available other long-term cross-zonal hedging opportunities, as required by ACER. This is without prejudice to Fingrid’s position that LTTRs are a better solution for the Finnish market. The proposal must be submitted to the Finnish and Swedish national regulatory authorities for approval within six months of the date of ACER’s decision.
More information:
Asta Sihvonen-Punkka, Fingrid Oyj, asta.sihvonen-punkka[at]fingrid.fi, tel +358 50 573 9053
Marina Louhija, Fingrid Oyj, marina.louhija[at]fingrid.fi, tel+358 40 519 0627
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