Electricity: Towards a Capacity Allocation and Capacity Management Regulation (CACM) 2.0? Public consultation is open!

The Commission Regulation (EU) Regulation 2015/1222 of 24 July 2015 establishing a guideline on capacity allocation and congestion management ("CACM") provides binding rules for the implementation and operation of an EU-wide single market coupling and capacity calculation in the day-ahead and intraday timeframes.

Market coupling consists of coupling the order books of different power exchanges with a view to trading on one power exchange, via the mechanism of supply and demand, the surplus of electricity offered for trade on other power exchanges, thereby optimizing the use of interconnector capacity across the entire coupled area.

In this context of market coupling, CACM sets forth a whole set of mandatory rules that apply to the “single day-ahead coupling” and the “single intraday coupling” concerning trades where market players take physical positions .

On 22 January 2020, ACER received a request by the European Commission to provide a recommendation on reasoned amendments to the CACM Regulation in accordance with Article 60(3) of the Regulation (EU) 2019/943 on the internal market for electricity ('Electricity Regulation').

ACER published on 15/4/21 ACER a public consultation on proposed amendments to the CACM Regulation with the objective to gather views and information from all stakeholders including market participants, transmission system operators, nominated electricity market operators, consumers, end-users and, where relevant, competition authorities.

The currently proposed improvements concern:

  • General improvements
  • MCO Governance (Title I Art 7-10, Title II, Ch7)
  • Single day-ahead and intraday coupling (Title II, Ch4-6)
  • Costs & Congestion Income distribution (Title II, Ch8, Title III ex. Art 74)
  • Capacity Calculation (Title II, CH1 (Art 14-31))
  • Remedial Actions (Title II, Ch3 (Art 35, 74))
  • Bidding Zone Review (Title II, Ch2 (Art 32-34)).

Inputs received from the consultation will inform ACER in preparing the final recommendation to the European Commission towards the end of 2021.

Input can be submitted until 10 June 2021 23:59h.

In an earlier contribution Régine Feltkamp assessed:
- the content of CACM against CACM's objectives,
- the impact of CACM on the exercise of power exchanges activities,
- the new rules CACM introduces regarding certain elements of the governance of single day-ahead and intraday market coupling (terms, conditions or methodologies, cooperation, costs).

The general conclusion at that time was that CACM has, as a mandatory EU-wide framework, certain advantages, but:

  • for certain elements the necessity of the provided rules is questionable in light of the objectives, especially as regards the prior designation scheme for power exchanges,
  • the governance approach is complex and the implementation of the new framework gives rise to substantial costs,
  • the framework is not complete,
  • the framework gives rise to several legal uncertainties, in particular in respect of the cooperation obligations, decision making and cost sharing and cost recovery.

These are subjects that now are under change.

On MCO governance, ACER proposes to improve the definition of tasks for the Market Coupling Operator(s), NEMOs and TSOs, including a clear specification and separation of regulated and non-regulated tasks. ACER also proposes the development and organisation of Market Coupling Operator(s) including the improvement of the MCO plan and the organisation of the MCO (including the assessment of the governance model). The he regulatory framework for cross border clearing and settlement is also included.

Regarding the costs of single day-ahead and intraday coupling, ACER proposes to focus on the area of cost identification, cost sharing and cost recovery. This would include a regulatory framework for MCO function costs, clarification of the cost-sharing key, enhancement of the cost report content and its role in cost recovery process. ACER intends also to provide proposals to ensure the consistency of congestion income distribution methodologies across timeframes.

As expert in CACM matters we are closely following up on this. Feel free to contact Régine Feltkamp if you have any questions.

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