Impacts of a no-deal Brexit on French electricity market mechanisms.
Following the European Parliament’s ratification of the agreement for withdrawal of the United Kingdom from the European Union on 29 January 2020, the United Kingdom ceased to be a Member State of the European Union and became a third country on 31 January 2020 at 00:00 (CET). The transition period during which Union law will continue to apply to the United Kingdom will end on 31st December 2020.
This letter is to inform all market participants of the potential legal and regulatory consequences of a no-deal exit between the United Kingdom of the European Union and that on the 31st December, the United Kingdom will cease to be a part of the Internal Energy Market (IEM). In all cases, RTE will work in close collaboration with the French authorities and the relevant regulators to ensure the proper operation of the electricity markets.
France - England capacity allocation (IFA)
In accordance with the European Commission’s notice to energy market participants of 27 April 2018, as of the withdrawal date, United Kingdom based operators will cease to participate in the single allocation platform for forward interconnection capacity, the European balancing platforms and the single day-ahead and intraday coupling. United Kingdom based NEMOs will become third country operators and will no longer be entitled to carry out market coupling services in the EU.
- A no-deal Brexit will have no impact on annual, monthly and intraday France - England capacity auctions. These auctions are explicit and carried out on the Joint Allocation Office (JAO) platform.
- Concerning daily auctions, the United Kingdom will be decoupled from the IEM on the 31st December 2020. These daily explicit auctions will take place via the Joint Allocation Office (JAO) platform used for the other market timeframes. The market rules associated with these explicit auctions were approved by the CRE which published its deliberation on 17 October 2019.The 1st explicit Day Ahead auction will take place on the 31st December 2020 for the delivery period commencing on the 1st January 2021.
- The nominations for all of the timeframes (including day-ahead auction) are made via the Regional Nomination Platform (RNP).
- BALIT type energy exchanges will be maintained on the IFA interconnector in the event of a no-deal Brexit. They will cease when the implementation of the first European balancing platform TERRE will be operational and active throughout the day on the RTE side. However, starting the commercial Go-Live of IFA2, BALIT will not be available on IFA2.
Starting the 1st January 2021, it shall be necessary to declare electricity imports and exports to customs on both sides of the Interconnector (GB-FR), although no tax is due.
- On the GB side, National Grid shall be taking the responsibility to complete these custom formalities on the customer’s behalf.
- On the FR side, French customs stated that RTE will NOT be permitted to complete the custom formalities, therefore this will be the customers’ responsibility.
The operators concerned are therefore invited to contact the ‘Pôle d'Activité Economique’ (PAE) of the regional customs directorate. The PAE will accompany them in their steps. The directory of customs services can be consulted at the following address: https://www.douane.gouv.fr/carte-interactive-des-services-douaniers-ouverts-au-public.
Registered address of the balance responsible party
The market rules (MA-RE) do not require the registered address of a BRP to be solely in France or in a European Member State
As a result, a supplier of electricity to end consumers or system operators for their losses, domiciled outside of the United Kingdom (and in a state allowing the application of the provisions of the French energy code relative to authorisations of purchase for resale), may be attached to a BRP domiciled in the United Kingdom.
The current market terms and conditions (MA-RE, NEBEF, SSY-f, MECAPA) and contracts in force state that bank guarantees required for financial security must be issued by a credit institution domiciled in a Member State of the European Union, Switzerland or Norway.
Thus, in the case of a no-deal Brexit, RTE will apply the following provisions concerning bank guarantees:
- current first demand guarantees issued by a credit institution domiciled in the United Kingdom before 31st December 2020 remain valid;
- guarantors domiciled in the United Kingdom will no longer be authorised to issue a first-demand guarantee under the terms and conditions and contracts from 1st January 2021.
The capacity mechanism terms and conditions indicate that RTE can require company holders of an account on the register to have "their permanent residence in one of the Member States of the European Union, of the European Economic Area or of Switzerland" and to be "registered for VAT within the European Union".
This faculty will continue to apply post Brexit.
RTE reminds market participants that pursuant to the REMIT regulation, it is their responsibility to be registered with the EU Member State national regulatory authority to participate in the European electricity markets, in particular those organised by RTE.
In this respect, the European Agency for the Cooperation of Energy Regulators (ACER) has published an open letter on 8 January 2019 in which it informs market participants of the consequences of a withdrawal of the United Kingdom from the European Union on the implementation of REMIT and in particular states that market players registered in the United Kingdom who wish to continue to participate in the European Union’s wholesale energy market will need to be registered with a national regulatory authority in the Member State in which they are established or resident or, if they are not established or resident in the European Union, in a Member State where they are predominantly active. ACER invites all parties concerned to start the registration process from now.
For additional information, please contact firstname.lastname@example.org (tel: +22.214.171.124.7000) or your usual sales contact.
Decembre 15, 2020