ECJ to rule on German-Austrian power price zone split appeal next year

08 November 2017 15:51 Source:ICIS

The European courts expect to make a decision next year over the German-Austrian power price bidding zone split.

The European Court of Justice (ECJ) is to rule on an appeal filed by Austrian regulator E-Control over the decision to split the zone.

The decision could potentially delay or avert the split, set for 1 October 2018, originally requested by European regulator umbrella body ACER.

The split is likely to increase power prices and complicate hedging in Austria, which is a less-well supplied and smaller market than Germany.

Competence?

After the ACER appeal board rejected complaints by E-Control and other Austrian stakeholders against ACER’s decision to split the zone, E-Control and German regulator Bundesnetzagentur announced mid-May that they had agreed how and when to split the joint zone.

Meanwhile, E-Control submitted a complaint against ACER, dated 29 May, to the ECJ. It requested that the court annul the decision of ACER’s appeal board.

But according to E-Control, an assumption on the part of the ACER board that the body had the competence to change bidding zone configuration was mistaken.

Also, the board did not conduct a meaningful assessment of the appeal, hence an acceptance of ACER’s decision that was based on a flawed definition of congestion, E-Contol claimed.

Austrian transmission system operator APG made a similar complaint against ACER to the ECJ in May. APG has taken part in discussions preparing for the split with a disclaimer that it reserves the right to take a final decision regarding the split only after the ECJ proceedings, and an ongoing European bidding zone review being carried out by grip operator umbrella body ENTSO-E, have been finalised.

Decision time

The ECJ can take 9-12 months from receiving a complaint until a hearing, a spokeswoman for the court said. A judgement will follow 3-6 months after the hearing. “So it will be sometime next year before this case reaches a final decision,” the spokeswoman said.

Considering ECJ received E-Control’s complaint on 29 May, the decision should come at the end of May 2018 at the earliest and in at November the latest.

European review

The bidding zone review ENTSO-E is conducting adds uncertainty over the split. The review is mandated by the EU network code on capacity allocation and congestion management, which was adopted in 2015.

Early computations for the study indicated the German-Austrian zone should stay intact or actually be enlarged (click here to read story).

The European Commission said in June it accepts the split as a temporary fix until a wider bidding zone setup in the EU has been agreed.

But while the process for finding out optimal bidding zone configuration is clear, it is less clear how results translate into decision-making, the commission said.

German split threat

ACER requested the zone split to reduce loop flows (see ICIS Briefing for more background).

The split should reduce loop flows, but they may remain somewhat high even after it, as they are partly caused by insufficient transmission capacity within Germany.

This has prompted fears that Germany would be forced to split into two zones looking ahead. The German energy ministry plans to include a clause in existing regulation that stipulates the country is a single price zone. laura.raus@icis.com

By Laura Raus