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FAQs on transaction reporting – Question II.3.1.50

There is a type of transaction that occurs in the UK (and perhaps elsewhere) referred to Gas-Retro-Deals. These are physical trades executed after the gas day at beach terminals. Shippers are incentivised to enter into such deals on occasion to reduce transportation costs or imbalances. These are done after delivery but before settlement. Therefore, they would have a timestamp after the delivery start date.

We do not believe an example is required here but if it necessary, please let me know.

We believe that Gas-Retro-Deals fall within the scope of ‘…day after markets.’ We believe this is a common understanding amongst industry participants who trade such contracts. We would appreciate confirmation from ACER on this interpretation. In addition, any other guidance ACER would like to provide at the same time on the reporting of such contracts would also be helpful.


Answer:

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

In the Agency’s view, a balancing trade is a contract between a party and a System Operator (SO), in most cases TSO, who is in charge of keeping the energy in the network/system (either gas or electricity) in balance.

It is our understanding that in “…day after markets”, and any other retro-deal market, [added] where an SO or TSO is not involved, market participants balance/adjust their positions with other market participants. If this is the case, these contracts should be reported by both parties as wholesale energy products.

In the Agency’s view, balancing trades are well defined in Articles (2)9 to (2)11 of COMMISSION IMPLEMENTING REGULATION (EU) No 1348/2014, in the sense that they are related to balancing energy and services:

(9) ‘balancing energy’ means energy used by TSOs to perform balancing;

(10) ‘balancing capacity (reserves)’ means the contracted reserve capacity;

(11) ‘balancing services’ means

  • for electricity: either or both balancing capacity and balancing energy;
  • for natural gas: a service provided to a TSO via a contract for gas required to meet short term fluctuations in gas demand or supply.

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.

Last update: 20/07/2018   RSS_Icon Subscribe to this Page’s RSS