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FAQs on transaction reporting – Question II.1.1.19

Party A and Party B concluded deal via trading platform. Deal was reported and accepted by ACER in due time. During the contract’s life cycle, due to force major event and/or some mistake one of the parties fails to deliver/accept the energy.

a)  does MP have obligation to report such changes?

b)  does MP have obligation to report the financial part, paid or received, as compensation for non-delivered energy, if any?

if yes, please advise which example could be applied.


Answer:

A force major event should not be considered a life cycle event per se. However, if the terms of the contract are amended, or the contract is cancelled, then a life cycle event should be reported.

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FAQs on transaction reporting – Question II.1.1.20

Could ACER provide us with additional guidance on the distinction between standard contracts traded outside the organised market places and bilateral contracts that are non-standard contracts? It would be useful to have clear guidance on the reporting time line, e.g. T+1 day or T+1 month.


Answer:

The Agency has already provided guidance on the definition of standard contract admitted to trade on organised market places in the TRUM. However, the Agency understands that there might be some circumstances where market participants may not have full visibility to the specifications of the standard contracts traded on organised market places.

Therefore, whenever two market participants enter into a bilateral contract agreed outside an organised market place and they do not have the certainty that their contract is the same as the one traded on organised market places, it can be assumed that the bilaterally agreed contract normally entails elements of customisation.

These elements of customisation distinct the bilateral contract from contracts concerning a wholesale energy product admitted to trading at an organised market place. They may therefore report such a contract on a T+1 month basis and, where the contract has a defined price and quantity, with Table 1 of the Annex to the REMIT Implementing Regulation.

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FAQs on transaction reporting – Question II.1.1.21

We have one question regarding the following contract situation:

There is one contract between company A and a group of contract partner/owner (owner B, owner C and owner D – one production unit with an aggregation of generation units). Company A sells monthly electricity for the production unit (contract partner)¸ having monthly one price and one amount on the invoice. The Acer Code of which owner (owner B, owner C and owner D ???) do we have to report, since the REMIT IT of RRM Services allows only to fill in one Acer Code. Do all owner have to register? The production unit (aggregation of generation units) has > 10 MW.


Answer:

Based on the information provided above, the reporting party has to allocate the delivered volume to the respective contracts (counterparties) and report as many transactions as the number of counterparties.

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FAQs on transaction reporting – Question II.1.1.22

In response to the TSO Y request, exchange X is planning to launch 14 Demand Side Response (DSR) markets for balancing purposes during emergency situations, in Q4 2016.

Background

The TSO is responsible for the stability of the gas grid. The TSO has requested us to introduce 14 DSR markets, as extra instruments used for balancing the system in emergency situations.

The normal status of a DSR market is ’pre-open’. Market participants can submit orders (to refrain from off-taking already contracted gas, no bids) for the event of an emergency (only when the system is short) from up to 7 days in advance to intraday orders. These orders are not visible to other market participants or TSO and expire automatically at the end of each day.

It is only when the TSO requests that the DSR markets be open that the orders become visual to the whole market and the TSO; however it is only the TSO that can lift on these orders. For avoidance of doubt, other market participants cannot lift on those orders.

It must be emphasized that there is a number of specific conditions that need to be met before the TSO can request the DSR markets be opened and the expectation is that the markets will be opened very rarely.

Question

Are orders and trades in the DSR markets considered reportable under REMIT? Or, are these orders and trades exempt from REMIT reporting obligations due to their unique nature of being only for balancing purposes in emergency situations?

It is our understanding that these transactions, including orders to trade, executed on the DSR markets are not reportable under REMIT because they are executed outside of an organised market place, solely for the system balancing purposes.

Firstly, even though exchange X is the platform provider, the DSR markets are purely balancing mechanisms requested by the TSO with the sole purpose of bringing the gas system to equilibrium as per the BAL NC.

Secondly, because the trades can only be executed unilaterally by the TSO at its sole discretion, the DSR markets do not fall under the definition of an organised market place in the Regulation 1348/2014 which requires that multilateral third-party buying and selling takes place.

In addition, since only the TSO can trade with Market Participants there is no possibility of market abuse.


Answer:

It is our view that, the TRUM, available on the REMIT Portal, already addresses this question. Specifically, on page 16 of the TRUM the Agency provides the definition of organised market place, stating that multilateral systems that procure or sell energy on behalf of TSOs only for balancing purposes should not be considered organised market places if those systems act solely on behalf of the TSOs.

In addition, as already stated in Question 1.1.5 of the FAQs on transaction reporting if the platform is not a multilateral system in which multiple third-party buying and selling interests in wholesale energy products are able to interact in a way that results in a contract and therefore not an Organised Market Place has to be assessed by the person who runs the system.

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FAQs on transaction reporting – Question II.1.1.23

Related documents: FAQs, Q 1.1.17: Two companies are subject to REMIT transaction reporting and both registered parties with ACER. Both companies are currently reporting their trades under their separate ACER Code.

On July 1 these companies will merge to one company and will use one ACER Code in the future.

We will therefore rename the new joint company and use the ACER code of one of the previous companies and delete the code of the other.

Do we need to cancel trades already reported as one of the former companies and resend them as new submissions under the merged company and new name with new UTI?

We would like to get guidance on how to proceed for our REMIT reporting!

Example: Company number 1 as a MP is currently reporting trades under REMIT under its own ACER code. On July 1 Company number 1 will be novated and become a new company which will have the ACER Code of Company number 2. What are the implications for trades reported under Company number 1?

Our current interpretation is to cancel all trades reported under Company number 1 and resend them under the name of the new joint company.

Is this correct and will the counterparty be obliged to do the same?


Answer:

As presented in Q 1.1.17 of the FAQs on Transaction Reporting, 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 Companies number 1 and 2 will have to submit an early termination report with Action Type “C” for Cancel the old trade and a new submission with Action Type “N” for the new trades of the Company number 1.

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FAQs on transaction reporting – Question II.1.1.24

Related documents: TRUM 3.2.5 (Page 17); TRUM Annex 2: Example 7.01 and 7.02; FAQ 4th Edition March 2016 (Q1.1.11; Q3.1.11; Q3.1.13).

Can you please clarify the reporting route for the following scenario relating to bilateral gas transactions in the UK:

Party A and Party B enter into a framework agreement for executing bilateral gas swaps between UK entry (beach) and exit (NBP) points.  The purpose of the agreement is to agree on how to share the financial savings (benefit) received by Party A paying only the short haul gas tariff rather than Party B paying gas entry commodity charges and Party A paying exit commodity charges.  The framework states that the mechanism for achieving this benefit will be by executing individual back to back bilateral transactions under the general master agreements for beach and NBP transactions respectively each time the traders agree to transact.

The framework agreement doesn’t set a price or volume and doesn’t place any obligations on either party to enter into any transactions.  Whenever the traders agree to trade under the framework agreement, Trader A and Trader B will agree the period, price and volume for each transaction at the time of entering into the individual back to back transactions with the final prices agreed on any day for the beach and NBP transactions being inclusive of the share of any benefits from the short haul tariff savings as set out in the framework agreement.

Example: In practical terms, each time the traders agree to transact under the framework agreement, Party A will agree a price with Party B to buy a set volume of gas over a set period (day) at the beach under a general master agreement and at the same time agree the price to sell the same volume of gas over the same period (day) to party B at the NBP under a separate master agreement.  Both transactions will be executed as bilateral transactions (outside of an OMP) but are the same as contracts admitted to an OMP and therefore classified as standard contracts in accordance with TRUM section 3.2.5.

Our interpretation is that as the framework agreement setting out the mechanism for agreeing the gas swap is a general agreement that doesn’t define a volume or price, it will not be reportable under REMIT.  However, each time the traders agree to enter into back to back transactions in relation to the framework agreement, both transactions should be reported as separate standard contracts carried out under their respective master agreement and reported using Table 1 on Day +1.  This is our preferred approach and we are seeking ACER’s views on this approach.

However, we can also see similarities to the example 7.01 and 7.02 in the TRUM where the framework would be reported as table 2 (D+30) and the individual executions rolled up and reported monthly as table 1s (D+30).


Answer:

As the price and quantity are set prior to the delivery, the back to back transactions shall be reported via Table 1. The framework contract is not reportable.

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FAQs on transaction reporting – Question II.1.1.25

Please give us your clarification on the following issue.

Notwithstanding the below ACER’s explanation published in updated FAQ:

QUESTION 1.1.12

Reference to Article 3 (1) of Commission Implementing Regulation (EU) No 1348/2014. As for the framework agreements such as EFET General Agreement Concerning the Delivery and Acceptance of Electricity, could you please explain if they also should be reported even if an Individual Contract (in the meaning of the EFET General Agreement) wasn’t concluded? Example: The Parties concluded the EFET General Agreement but they didn’t conclude any Individual Contract (in the meaning of the EFET General Agreement). First Individual Contract was concluded three months after conclusion of the EFET General Agreement.

Our understanding is that such master agreement only sets out the rules for trading activities of the two counterparties of a contract, but does not set any obligation to the two parties. In our opinion, the conclusion of such a general agreement of the Delivery and Acceptance of Electricity, i.e. the agreement sets out the general terms for trading, but does not specify the price setting of volume optionality, e.g. the amount of electricity, time and place of delivery and price, is not a reportable contract. Furthermore, only the Individual contracts concluded under the terms of a General Agreement Concerning the Delivery and Acceptance of Electricity shall be reported to the Agency.

Could you please inform us if there is a need to report (backload) the EFET General Agreement in which counterparties agree on maximum yearly gas volume that can be delivered under this contract (not an obligation to any of the parties). Does the following wording make the framework contract non-standard, that have to be reported according to the REMIT:

Ҥ 4 Primary Obligations For Delivery and Acceptance of and Payment For Natural Gas

At the end of §4.1(a) insert: “The amount of Contract Quantities for relevant Total Supply Periods agreed under all Individual Contracts entered hereunder shall not exceed ______ (________) MWh per year.”

According to Ukrainian legislation, the approximate maximum gas volume is a fundamental condition of the contract, due to the Clause 1 of the Regulation on the form of the international agreements (contracts), N201 dd 06.09.2001: “The conditions that need to be defined in the international agreement (contract), if the Parties of such agreement (contract) do not agree on the different defining of the contract conditions and such arrangement does not release the contract of subject, object, purpose and other fundamental conditions, without confirming of which between the parties such contract can be considered as non-executed, or invalid due to the disregard of the provision on the contract form applying under the  applicable Ukrainian law, are the follows:….4. The quantity and quality of goods”

Also for your information, such approximate maximum volume in all already executed EFET General Agreements is variable and is agreed based on the ability of the counterparty to supply. In addition, I would like to emphasize on the fact that this indication of the volume in the Election Sheet is not an obligation to the Seller to deliver and to the Buyer to off-take. This is just an approximate maximum limit, which was approved by Ministry of Economic Development and Trade.

We have several EFET GA executed before the April, 7th, which are all outstanding and in which the approximate maximum gas volume was specified. Thus, we would highly appreciate if you could give us your official opinion on this issue as soon as possible, so we would be ready to backload them in case of need till the July, 6th.


Answer:

In the light of Question 1.1.11 we do not consider EFET General Agreement with defined maximum amount of delivery of gas per year reportable. The inclusion of the maximum volume in the contract is specific to the national law and does not make the EFET General Agreement a non-standard contract.

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FAQs on transaction reporting – Question II.1.1.26

Related documents: FAQ: Question: 1.1.17

Can you please clarify if the EMIR approach to Novations will be applied.

Scenario 1: Trade being fully novated

Will we be required to send a cancel/ exit for the trade (old UTI) against pre novation party and a ‘new’ submission for the trade (New UTI) against the new party? i.e. same UTI cannot be used post novation

Scenario 2: Trade to be split by Novation

Will we be required to send a modify (old UTI) for the trade remaining with the original party and a ‘new’ for the trade (New UTI) with new party?

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” for Cancel the old trade and e.g. MP1 and MP3 a new submission with Action Type “N” for the new trade between MP1 and MP3 with a new UTI.

Novation of trades: MP 1 will rename itself and become MP 3 with all codes (ACER, LEI etc) from MP 1. Do we need to modify any trades or do we just need to change the data in CEREMP?

MP 2 will merge with MP 3 to one legal entity MP 3 which comprises the assets of former MP 2 and MP 3: do we need to early terminate trades for MP 2 and submit new trade reports for MP 3? Can we resubmit the complete trades under the merged company (MP 3) or do we actually need to split trades in delivered and undelivered segments? Are any differences between table 1 and table 2 to be taken into account?

Example: MP 2 has a deal with MP X (external party) for cal 2016. A merger between MP 2 and MP 3 takes place on August 1. Are the deals already reported and settled to be early terminated and submitted as new under MP 3? Does MP X to do the same? Has MP X to be informed/asked to do the same?

Since we had already submitted a question to ACER previously and received no feedback as to now we would ask you to reply by June 3 in order for us to do necessary preparations.

If we do not receive a response from ACER we will proceed with our best effort: we will send early terminations for open trades for MP 2 and submit new reports for MP 3 without splitting the trades.


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, MP2 and MPX have to submit an early termination report with Action Type “C” for Cancel the old trade and MPX and MP3 have to provide a new submission with Action Type “N” for the new trade between MPX and MP3 with a new UTI.

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FAQs on transaction reporting – Question II.1.1.27

We started to report form April the 7th, 2016 and we reported all our standing contracts in backload and added, as it happened, execution of them. All the transactions were accepted.

Now one of our supplier, a company, from outside the EU, asked us to report for it as well. And here is where we have a problem. When we reported our contracts (3) in backload with this supplier he didn’t have an ACER code then and we reported that contract, and later execution, using the ACERNONMP.EU code. Now our supplier informs us that he has his ACER code now and asks us to report for him as well. All contracts were reported and accepted as well as all execution.

We have reported again those contracts and transactions with correct ACER code, and we would like to delete the ones with the ACERNONMP.EU code. My question is how we should do that: report it as error or report denouement?


Answer:

As specified in the FAQ 2.6.2 a modification report with the updated ACER code should have been reported. It is necessary to modify the original report with the updated ACER code.

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FAQs on transaction reporting – Question II.1.1.28

Related documents: the answer to question no. 3.1.1 from Section II.3.1 of the document Frequently Asked Questions (FAQs) on REMIT Transaction Reporting

Having regard to the obligations imposed on the participants in the wholesale electricity and gas markets under Article 8(1) of Regulation (EU) no. 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (REMIT) as well as Commission Regulation (EU) no. 1348/2014 of 17 December 2014 on data reporting, implementing Article 8(2) and Article 8(6) of Regulation (EU) no. 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency (Implementing Regulation), given emerging new doubts as to interpretation, the participants in the wholesale electricity and gas markets in xxxxxx, who are members of the xxxxx Association of Energy Trading (hereinafter TOE), consider it necessary to ask ACER to explain the reporting practices regarding contract entered into by Seller (Party A) and Buyer (Party B), who under a single contract purchases electricity/gas meant for both further resale by the Buyer (Party B) and Buyer’s own purposes.

Under such contracts, after the end of a billing period, Buyer (Party B) shall determine the percentage of the electricity/gas volume allocated to further resale and how much of the total electricity/gas Buyer (Party B) consumed for own purposes.

The question considers the following types of contracts:

  1. OTC without trade balancing service, based on a product listed on an organized market place (base, peak, etc.);
  2. OTC without trade balancing service, not based on a product listed on an organized market place, e.g. schedule-based (but with volume and price determined by the time of conclusion of the contract);
  3. OTC with trade balancing service, settled on the basis of electricity meter readings.

In the case of contracts described in Items 1 and 2, the total contract volume (the volume sold by Party A to Party B) is determined by the time of conclusion of the contract, but the share of the volume allocated to resale by Buyer (Party B) and the share of the volume allocated for Buyer’s own purposes remains unknown until after the service is provided.

In the case of contract described in Item 3, the total volume of sale is unknown when the contract is concluded. Instead, it is defined after the service is provided. Similarly, the breakdown of the total volume into the resold and own purposes becomes known only after the service is provided.

It is important to note that according to the Xxxx law, the entity reselling to end users, who are the customers purchasing electricity/gas in order to satisfy their own demand, has to purchase a specific number of certificates of origin (e.g. from renewable sources of energy, from cogeneration, energy efficiency certificates), proportionally to the volume supplied to such customers.

Moreover, the sale of electricity/gas for own purposes of the end user is subject to excise duty. The cost of such certificates of origin as well as the amount of excise duty are reflected in the price of electricity/gas sold to the end user, increasing it. Seller (Party A), who purchases electricity not for own purposes but for further resale, is not obliged to purchase a specific number of certificates of origin, and therefore such customer buys electricity at a price including neither the cost of certificates of origin nor the amount of excise duty.

For the above reasons, the discussed type of contract determines two different prices: Price X for electricity/gas to be further resold by Buyer (Party B), to which Seller (Party A) does not have to add the cost of purchasing certificates of origin or excise duty (lower price); and Price Y for electricity/gas to be consumed by Buyer (Party B), which includes the cost Seller (Party A) incurs in relation to purchasing certificates of origin and the amount of excise duty (higher price). Both Price X and Price Y are specified in the contract as fixed and uniform prices (i.e. they are not set down as a formula indicating separate constituents of the electricity/gas value, the value of certificates of origin and the amount of excise duty).

The above means that in the case of the contracts described in Items 1 and 2 above, even though the total sale volume is known when the contract is signed, the total price invoiced by Seller (Party A) and paid by Buyer (Party B) is known only after the delivery, since the total price depends on the way the volume is divided, according to the allocation and the application of Price X and Price Y to the respective parts of the volume. On the other hand, in the case of those contracts, the total value of the “black” energy sold (excluding the value of certificates of origin and excise duty) is known as early as at the time of concluding the contract, since the value is determined by Price X.

Therefore, it is necessary to obtain ACER guidelines, addressing the following question:

(i) Should the contract described above be reported in accordance with the electricity/gas price specified in the contract, excluding the cost of certificates of origin and excise duty (i.e. Price X) for the entire volume, irrespective of the allocation of the electricity/gas sold,

(ii) or should both prices (Price X and Price Y) resulting from such a contract be reported, broken down into the volume of energy allocated for further resale and separately for the energy allocated for consumer’s own purposes,

(iii) or should a part of contract including the volume of energy allocated for further resale according to the “black” energy price (Price X) be the only part subject to reporting, even though for this volume the contract stipulates the application of Price Y (including the cost of certificates of origin and excise duty)?

TOE members request that a binding interpretation of the presented question be issued by acknowledging that the reporting model proposed below is correct in the light of the REMIT Regulation and implementing regulations, and that no other model fully pursues the objectives of the Regulation.

In the opinion of the enquirers (PL Markets participants), the types of contracts described above are subject to reporting, according to the electricity/gas price determined for the part of contract subject to further resale (Price X), for the entire energy volume under the contract, irrespective of the allocation of energy, because the price is the “black” energy price with no additional constituents (the cost of certificates of origin, excise duty).

Therefore, the types of contracts described in Items 1–3 above shall be reported in the following manner:

  1. The contract specified in Item 1 shall be reported as a standard contract (since its features correspond to the contract listed on an organized market place), in which the total amount of energy and the “black” energy price are known when the contract is signed.
  2. The contract described in Item 2 shall be reported as a non-standard contract, in which the total amount of energy and the “black” energy price are known when the contract is signed (i.e. immediately in accordance with Table 1).
  3. The contract described in Item 3 shall be reported as a non-standard contract, in which the “black” energy price and the volume shall be reported after the service is provided when the billing period has finished (i.e. the contract shall be reported according to Table 2 and executed according to Table 1).

The above stance is based on the answer to question no. 3.1.1 from Section II.3.1 of the document Frequently Asked Questions (FAQs) on REMIT Transaction Reporting, wherein the Agency points out that additional fees, taxes and costs shall not be subject to REMIT reporting. Moreover, it should be pointed out that the aim of the REMIT regulation is to provide objective and reliable information regarding the prices of electricity/gas on wholesale markets in the European Union.

Therefore, submitting reports in which, due to national specificities, any price constituents other than the price of electricity/gas itself such as additional taxes (e.g. excise duty) or other constituents related to the execution of state policy regarding renewable sources of energy or energy efficiency shall result in the submitted information not fulfilling the primary goal of such reporting, since it shall not provide reliable information on the price of electricity/gas on the wholesale market in Xxxx. Moreover, a report encompassing information on the price including all the derivatives mentioned above would make it impossible for the Agency to carry out simple and reliable evaluation of the relations between the prices of electricity/gas on separate state markets within the European Union, which would therefore negate the primary goal of the Regulation.


Answer:

In our understanding there are at least two contracts subject to REMIT reporting:

(1)   Contract for the entire energy volume between Party A and Party B, and

(2)   Contract subject to further resale between Party B and other party

Therefore, the types of contracts described in Items 1–3 above shall be reported in the following manner:

  1. The contract specified in Item 1 shall be reported as a standard contract (since its features correspond to the contract listed on an organized market place), in which the total amount of energy and the “black” energy price are known when the contract is signed.
  2. The contract described in Item 2 shall be reported as a non-standard contract, in which the total amount of energy and the “black” energy price are known when the contract is signed (i.e. immediately in accordance with Table 1).
  3. The contract described in Item 3 shall be reported as a non-standard contract, in which the “black” energy price and the volume shall be reported after the service is provided when the billing period has finished (i.e. the contract shall be reported according to Table 2 and executed according to Table 1).

If the total volume is partially allocated (resold) to another party it should be reported as a separate contract between Party B and the other party.

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