FAQs on transaction reporting – Question II.3.1.49

What constitutes “delivery” for the purposes of REMIT? We are particularly interested in what constitutes the delivery in the context of LNG supplies.

According to ACER’s Q&A (III.3.36), “ACER considers any importation or offloading of LNG in any LNG facility (including flanges that connect the LNG vessel to the LNG terminal) in the EU as delivery in the Union as far as the delivery of the product takes place in the European Union“. This suggests that “delivery” means the physical delivery of the product.

However, in FAQ #3.1.21, ACER states that “in the Agency’s view contracts for the supply of LNG before the entry flange of an EU LNG regasification terminal, for example an exchange of title on the high seas outside the EU, are not subject to transaction reporting“. This suggests that title transfer constitutes delivery of the product.

We note that Incoterms definitions, which are commonly used in the LNG sector, of delivery relate to the physical delivery / transfer of risk and are silent on transfer of title, separating the concept of delivery into two. For example,

In a DES transaction “delivery” occurs at the time when the goods are placed at the disposal of the buyer on board the vessel at the named port of destination in such a way as to enable them to be removed from the vessel by the buyer. At the point of delivery, the risks transfer from the seller to the buyer. In a DES scenario, delivery is tied to the physical delivery / transfer of risk, and not to the transfer of title; and

In an FOB transaction, “delivery” occurs at the time when the goods are on board the vessel at the named port of shipment (i.e. the location where the LNG is passed over the ship’s rail). At the point of delivery, the risks transfer from the seller to the buyer. Again, in an FOB scenario, delivery is tied to the physical delivery / transfer of risk, and not to the transfer of title.

Does REMIT distinguish between the physical delivery of LNG into the EU and the transfer of title to the LNG?

Example 1:

A contract for the supply of LNG has the following characteristics:

transfer of title between the buyer and the seller happens in international waters; and after the title is transferred to the buyer, the seller delivers on a DES basis to the flange of an EU regasification terminal.

Is this contract subject to REMIT? Does the seller have to register as a market participant / report this transaction?

Example 2:

A contract for the supply of LNG has the following characteristics:

the seller delivers the goods on an FOB basis; the named port of shipment is outside of the EU; and transfer of title to the goods happens in the EU.

Is this contract subject to REMIT? Does the seller have to register as a market participant / report this transaction?


Answer:

In the Agency’s view, REMIT does not distinguish between the physical delivery of LNG into the EU and the transfer of title to the LNG. We believe that market participants know where the delivery takes place and they should be able to derive their own conclusions.

In addition, whenever market participants (MP) may have any doubts about the delivery point, we would recommend (MP A) to report the transaction in any case, even if the other counterparty (MP B) would not agree with (MP A). In this case (MP A) would not take the risk of not reporting a reportable contract according to REMIT. The EIC for the destination delivery point can be reported in this case.

We also recommend market participants to read Questions 3.1.21, 3.1.22, 3.1.23 and 3.1.24 of the FAQs on transaction reporting document which, in the Agency’s view, would help to understand the scope of LNG contracts under REMIT.

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FAQs on transaction reporting – Question II.3.5.6

We experienced several novations in the past and were confronted with different proposals on how to report such events to ACER. Could you please further specify the different data fields which need to be populated?

Could you please provide more clarity about the precise reporting requirements in case of novation? What values have to be reported?

Supply contract for gas for 1.4.16-1.4.17 was concluded on 15.02.2016. Novation agreement was signed on 15.12.2016 with effective date on 01.01.2017.

For the old transaction the following scenarios are possible:

Scenario Start of delivery End of delivery Contract date Termination date Event
(fields table 1 / 2) (# 49 / # 42) (# 50 / # 43) (#30 / #12) (#43 / – ) (# 58 / #45)
Reported 1.4.16 1.4.17 15.2.16   NEW
A 1.4.16 1.4.17 15.12.16 1.1.17 Cancel
B 1.4.16 1.1.17 15.12.16 1.1.17 Cancel
C 1.4.16 1.1.17 15.12.16   Modify

 

For the reporting of the new contracts the following scenarios are possible:

Scenario Start of delivery End of delivery Contract date Event
(fields table 1 / 2) (# 49 / # 42) (# 50 / # 43) (#30 / #12) (# 58 / #45)
I 1.4.16 1.4.17 10.2.16 NEW
II 1.4.16 1.4.17 15.12.16 NEW
III 1.1.17 1.4.17 10.2.16 NEW
IV 1.1.17 1.4.17 15.12.16 NEW

 


Answer:

All the open trades have to be novated with the name of the new legal entity to notify the change of the counterparty to the contract. In order to report a novation, an early termination with the old UTI and a new trade with a new UTI should be reported.

Both market participants, MP1 and MP2 have to submit an early termination report with Action Type “C” to cancel the old trade and MP1 and MP3 have to provide a new submission with Action Type “N” for the new trade between MP1 and MP3 with a new UTI. In addition:

  • The early termination should be reported with the timestamp/contract date of the early termination agreement day.
  • The termination date refers to the date the contract ceases to exist, and not the agreement date (timestamp/contract date, see above).
  • “Modify” should not be used.

RSS_Icon Last update: 08/12/2017  

FAQs on transaction reporting – Question II.3.1.48

XXX is considering to supply (i.e. sell) liquefied natural gas (LNG) to wholesale customers by means of LNG trucks. For this purpose, XXX will enter into one or more LNG sales agreements with one or more wholesale customers.

Do the above-mentioned LNG sales agreements between XXX and its wholesale customers qualify as transactions which are required to be reported to ACER in accordance with Article 8(1) of REMIT in conjunction with Article 3 of REMIT Implementing Regulation (EU) No 1348/2014?

Example: XXX will transport and deliver the LNG sold under such agreements to these wholesale customers by means of LNG trucks (i.e. in trucks that are suitable for the transportation of certain volumes of LNG).

Please note that the delivery point is neither the truck loading facility nor the fuelling station but it is potentially any physical point between the truck loading facility and the flange of the unloading facility where the LNG has to be delivered (and possibly re-gasified) on behalf of the wholesale customer.

As already expressed by ACER in the FAQs on fundamental data and inside information document (Q. 3.2.2) “LNG truck loading is out of scope for reporting fundamental data reporting. For the same reason, the Agency believes that transaction for the supply to LNG trucks are non-reportable.”

Given that, in our opinion it is not entirely clear, reason for which we are asking a further clarification, what “supply to LNG trucks” means exactly in this context (supply to trucks might mean from storage to truck or from a fuelling station to an LNG powered truck).

In our opinion any transaction where LNG is delivered either “to truck” or “by truck” or “in truck” has not to be reported.


Answer:

In the FAQs on transaction reporting document (Question II.3.1.26) it is written:

“The Agency has already clarified in the FAQs on fundamental data and inside information document (Q. 3.2.2) that LNG truck loading is out of scope for reporting fundamental data reporting.

For the same reason, the Agency believes that transaction for the supply to LNG trucks are non-reportable.” 

Please note that this answer only addresses the “loading” of LNG trucks issue raised in Question 3.1.26:

“Downstream LNG transactions, for example LNG truck loading and LNG marine fuel deliveries. These transactions are in scope as they are understood to take place at or after the entry flange of an EU LNG regasification terminal. Similar guidance to pipeline gas applies for reporting.”

However, the case described in Question II.3.1.26 is different than the one described in the above question.

In general, if the LNG is sold to a truck, it may not be reportable – see Question II.3.1.26. However, if the LNG is sold from the truck to any system connected to the network (e.g. National Transmission System, Distribution Network, LNG facility, storage etc.), then the contract would be reportable.

In any case when the contract counterparties are already REMIT market participants and if there are any doubts regarding the reporting, we would recommend to report the transaction, even if the other counterparty would not do so.

In this case the reporting market participant(s) would not take the risk of not reporting a reportable contract according to REMIT. The EIC for the destination delivery point (or the National Transmission System, Distribution Network, LNG facility, storage etc. connected to) can be reported in this case.

RSS_Icon Last update: 08/12/2017  

FAQs on transaction reporting – Question II.3.1.8

How to report a bilateral contract (initially classified as a non-standard contract and also reported in a non-standard format) in cases of any price fixing events (e.g. the client exercises an option)? This especially concerns such events which could be interpreted as a standard contract in a stand-alone perspective. (Vanilla) options are considered as being standard contracts (Table 1) and reportable in Phase 1 if executed over an OMP or identical to a product admitted to trading over an OMP (although the REMIT reporting requirement would be met if the trade falls within the scope of EMIR and has been reported as such).


Answer:

[UPDATED] based on additional input provided by the Agency’s stakeholders

Please see the example in Annex II to the TRUM. In Section 2 of the annex there are several examples on how to report bilaterally traded contracts and executions under those non-standard contracts.

If the price fixing event (e.g. the client exercises an option) is related to a non-standard contract reported with Table 2, then the event should be reported as execution with (Table 1) under the framework of a non-standard contact and not be interpreted as a standard contract. Please see Q. 3.1.28 whether the execution should be reported as EXECUTION or BILCONTRACT contract, also considering that examples reported in Annex II to the TRUM are non-exhaustive.

On the contrary, vanilla options that are considered as standard contracts should be reported with Table 1 and reportable in Phase 1 if traded over an organised market place and do not have reportable executions associated to them.

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FAQs on transaction reporting – Question II.3.3.1

I would like to discuss another trading example and ask you how to report it. Below you’ll find my reporting proposal.

Scenario:

  • buy, “strip of daily option”, gas, bilateral, physical settlement, price 0,5 €/MWh,
  • total deal volume 27.000 MWh within three month (December – February), exercising the option is just possible at 15 days per month on a day ahead basis,
  • December quantity 0-20 MW, volume = 7.200 MWh,
  • January quantity 0-25 MW, volume = 9.000 MWh,
  • February quantity 0-30 MW volume = 10.800 MWh,
  • strike price 30 €/MWh.

Could you please help me in that case?


Answer:

[UPDATED] based on additional input provided by the Agency’s stakeholders

Our understanding is that the option described above can be reported with Table 2 as a non-standard contract. Its executions shall be reported with Table 1.

Please see Q. 3.1.28 whether the execution should be reported as EXECUTION or BILCONTRACT contract, also considering that examples reported in Annex II to the TRUM are non-exhaustive.

RSS_Icon Last update: 10/07/2017  

FAQs on transaction reporting – Question II.3.4.7

Reference to documents: TRUM 2.0 page 20

We  would like to discuss a trading example and ask you how to report it:

Scenario:

  • Company A sells electricity (bilateral, physical settlement) to Company B for the whole year to spot market conditions
  • Company B pays twelve equal monthly payments to Company A. The amount of the payments is estimated before the beginning of the year. The estimation is based on the volume that was sold the year before and the estimated prices in this year. The monthly bills therefore don’t display a volume.
  • At the end of the year, there is a final invoice. The final invoice is offset with the twelve payments. The final invoice displays the sold volume in this year (it is calculated after the whole year) and the calculation of the difference between the twelve monthly payments and the sold volume to a specific price (derived by the spot market). The final invoice can be positive or negative depending on whether the sum of the monthly payments is above or below the sold volume x sold price.

In our understanding we should use REMIT Table 2 scheme to report the contract (no quantity and price is known before the final invoice). And for the execution it is our understanding that we report the transaction for the whole year using the final invoice with the defined price and volume at the end of the year (table 1)?

In our understanding we shouldn’t report the monthly payments (TRUM 2.0 page 20) because there is no specifying of an outright volume and price.


Answer:

Based on the information provided above, it is our view that the contract should be reported by using Table 2 and one EXECUTION at the end of the year. Please note that this would apply only to contract with pre-payments.

RSS_Icon Last update: 10/07/2017  

FAQs on transaction reporting – Question II.3.4.8

The question is about submitting the notional amount (Data Field R1.38). We would do so in a monthly rhythm. There are three dates where we get new information about the amount in month M, i.e. M+1WD, M+14WD, and 2M-10WD (WD being working days). The initial amount could be corrected twice in the course of two month following the month of delivery.

We wonder if we are to correct execution messages as well and if we have to do so every month separately or after the end of the calendar year for the whole delivery year.

In the FAQ document we found Question 3.4.3 which reads that “…the Agency currently would not expect any life-cycle event based on actual values available from the DSOs.” How is this quote to be interpreted to the effect of submission of executions?


Answer:

As stated in FAQ 3.4.3 there is no expectation to update submitted EXECUTION reports unless Market Participants prefer to do so.

RSS_Icon Last update: 10/07/2017  

FAQs on transaction reporting – Question II.3.6.4

Related documents: II.3.6 of the Frequently Asked Questions

Question relates to the reporting of executions under back loaded nonstandard contracts.

According to II.3.2 of FAQs, an execution completed before 7 April 2016 does not need to be reported. Executions with delivery period extending beyond 7 April 2016 need to be reported. However, as the deadline for backloading of nonstandard contracts is 7 July 2016, the questions are:

  1. Does an execution with a delivery period ending before the nonstandard contract is back loaded need to be reported?
  2. If yes, what is the deadline for reporting such an execution? Should it be reported within 30 days of the end of the delivery period, even if this is a date earlier than 7 July 2016 (in which case the nonstandard contract should be back loaded not later than the date of reporting of the execution)? Or should such an execution be reported only when the nonstandard contract is back loaded, even if this falls later than 30 days from the end of the delivery period of the execution.

Answer to the second question of II.3.6 of FAQs (which probably should be properly marked as question 3.6.2, instead of 3.6.1) suggests that only executions with delivery periods ending after a nonstandard contract is actually back loaded are reportable. This would mean that executions with delivery period ending after 7 April 2016 but before the nonstandard contract is actually back loaded (which can happen by 7 July 2016) would not be reportable at all. We are not clear if this was the actual intention of the Agency.

As a follow up question: when new executions of a back loaded contract are reported after the backloading is done, do the data reported by each of the counterparties regarding such executions need to match? Many Xxxx market participants are reporting to me that they have significant difficulties in agreeing with some counterparties how the historical contracts are to be reported and it is quite likely that several back loaded contracts will be reported by each of the respective counterparties differently (with non-reconciled data). I would greatly appreciate your input on this. My understanding is that in case of back loaded contracts both data reported by the two counterparties under table 2 and data reported under table 1 for executions of back loaded contracts are not required to match.


Answer:

Executions under the framework of non-standard contracts with a delivery period ending before the nonstandard contract is back loaded do not need to be reported.

Criteria for back loading are more relaxed. Please refer to TRUM Annex II, e.g. Example 4.05 to see the differences in the back loaded contract reported by two counterparties.

RSS_Icon Last update: 10/07/2017  

FAQs on transaction reporting – Question II.3.1.15

Reference to documents: TRUM V2.0 , 3.2.6, page 20

TRUM V 2.0 3.2.10, pages 26-26; TRUM Annex II v 2.0* (2015-11-16) pages  6-9; TRUM Annex II v 2.0*, example 3.09

Reporting of Executions in case of a standard/non – standard Option contract (volume optionality)

As understood, EXECUTIONS need to be reported in case volume is not defined when concluding the contracts.

However, it is not clear if the same logic applies with Option contract with a definite strike prices and delivery period. As described in TRUM, an option exercise is not considered a lifecycle event. In the example 3.09 (option via a broker platform), it is not clear whether any subsequent event (“execution”) needs to be reported in order to specify the final volume.

A swing option, traded outside OMP

-fixed premium

-fixed strike price

-fixed delivery period

-maximum daily volume

-minimum total volume (for the entire delivery period)


Answer:

[UPDATED] based on additional input provided by the Agency’s stakeholders

The reporting of these type of flexible contracts is based on the reporting of non-standard contracts with Table 2 followed by EXECUTION or BILCONTRACT contract EXECUTION (s) no later than 1 month after the price and the volume are known. Please see Q. 3.1.28 whether the execution should be reported as EXECUTION or BILCONTRACT contract, also considering that examples reported in Annex II to the TRUM are non-exhaustive.

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FAQs on transaction reporting – Question II.3.1.39

As we do not find a relevant transaction reporting examples suitable to our case, please find enclosed the description of our specific transaction and how we propose to submit it.

For its procurement of grid losses, TSO X tenders on yearly basis a certain amount of power to the market:

  • This is a yearly shaped profile with a fixed volume, e.g. 10 lots à 43395 MWh per lot for the year 2017 (8760 hours) were tendered in 2015/ 2016 with a certain shape.
  • Market participants willing to participate in the tender could offer their prices for the overall profile (e.g. EUR 31, 69) and the market participants with the cheapest price are contracted.
  • We consider that as a non-standardized transaction, but with a fixed volume and price, so will use TABLE 1 for reporting, see example below.
  • For field 40 “Quantity / Volume” we will use the average clip size rounded with two decimal places, i.e. 43.395 MWh / 8760 hours = 4,95 MW.
  • In field 54 “Load Delivery Intervals” we enter “00:00/24:00” per default.

Please find the complete example and how we intend to report in the Excel file enclosed.

We would welcome, if you could approve our suggestion and add the example to the ANNEX II of the TRUM, so we could communicate accordingly to our counterparties.


Answer:

Based on the information provided above, it is our understanding that this is a BILATERAL contract with shaped profile. Each hour with different quantity and price should be reported in the report.

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