3.2 Disputes concerning terms and conditions under EU electricity guidelines
Electricity Regulation (EC) No. 714/2009 in the Third IEM package and the subsequent Electricity Regulation (EU) 2019/943 of the Clean Energy package both set out procedures for the adoption of more detailed network codes and guidelines for the electricity market.(1)Electricity Regulation (EC) No. 714/2009 provides the legal basis for adopting network codes and guidelines in Articles 6 and 18, respectively. The new Electricity Regulation (EU) 2019/943 sets out similar legal bases in Articles 59 and 61. It would go far beyond the scope of this article to provide detailed description and analysis of this elaborate legislation and its adoption process.(2)For a more thorough analysis, see L. Hancher, A.-M. Kehoe and J. Rumpf, ‘The EU Electricity Network Codes and Guidelines; A Legal Perspective’, Research Report Florence School of Regulation (2020). The point we would like to make here is merely related to access to justice as a fundamental right in challenges raised under the legislative framework.
The network codes may cover a wide range of areas, such as network security and reliability rules, network connection rules and rules regarding harmonised transmission tariff structures, as well as a number of other areas.(3)See further Article 8(6) of the Electricity Regulation. In addition, the Commission may adopt guidelines for practice following similar procedures.(4)Article 18 of the Electricity Regulation 714/2009 and Article 59 of Electricity Regulation 2019/943. They are adopted as Commission Regulations pursuant to a process where the European Network for Transmission System Operators for Electricity (ENTSO-E) and the EU Agency for the Cooperation of Energy Regulators (ACER) play central roles in the drafting process.
Four electricity network codes and four guidelines have so far been adopted as Commission Regulations.(5)For further information and access to the codes, see: https://electricity.network-codes.eu/network_codes/ (last visited 17 December 2020). The guidelines adopted are Commission Regulations (EU) 2015/1222 establishing a guideline on capacity allocation and congestion management (CACM),(6)We should note here the potential relevance of fundamental rights to the operation of rules on capacity allocation and congestion management. In short (as discussed further below in section 3.3 on renewables support schemes), contractual rights to transmission capacity may count as possessions under fundamental rights law (Art. 17 EU Charter FRs and Article 1 of the First Protocol to the ECHR), such that prima facie interference with them by regulatory rules such as CACM will require justification on public interest grounds, following the structure discussed above in section 3.1.2 on ownership unbundling and fundamental rights. To our knowledge, to date the fundamental rights dimension has never been raised in (any dispute concerning) the application of these CACM rules. (EU) 2016/1719 establishing a guideline on forward capacity allocation (FCA), (EU) 2017/1485 establishing a guideline on electricity transmission system operation (SOGL) and (EU) 2017/2195 establishing a guideline on electricity balancing (EB).
A specific feature of the guidelines is that they provide a basis for adopting even more specific terms and conditions (TCMs). Approximately 200 TCMs need to be adopted and a large number of actors are involved in the process.(7)ACER’s Annual Activity Report 2017. All four guidelines establish a system where national regulatory authorities (NRAs) shall adopt further TCMs based on proposals primarily from the TSOs (and in some cases from the Nominated Electricity Market Operators (NEMOs), i.e. the power exchanges) within a number of areas comprised by the guidelines. Some TCMs shall apply to all Member States and therefore be adopted by all NRAs,(8)See e.g. Commission Regulation (EU) 2017/1485 (SOGL), Article 6(2). some are applicable on a regional basis and shall be adopted by the NRAs in the region,(9)See e.g. SOGL Article 6(3). and some are applicable on a State-by-State basis and shall be adopted individually by each and every NRA.(10)See e.g. SOGL Article 6(4).
In cases where the NRAs are not able to reach agreement on a TCM, or where the NRAs decide to forward the case, ACER may adopt the final TCM.(11)See further Electricity Regulation (EU) 2019/943 Articles 5 and 6(10). ACER may also provide its opinion on a draft TCM earlier in the process. Moreover, in the new Electricity Regulation 2019/943, ACER also has the legal powers to revise and approve TCMs where all EU NRAs need to agree pursuant to the guidelines.(12)Electricity Regulation (EU) 2019/943, Article 5(2).
Given that the TCMs may in practice turn out to be of great importance for electricity market design within a number of areas, ACER's powers to decide on TCMs are of considerable importance. Parties challenging the decisions of ACER may bring them before ACER's Board of Appeal.(13)See Article 28 of Electricity Regulation (EU) 2019/943 as well as Articles 25-27 on the composition etc, of the Board of Appeal. A recent and important case before the General Court, Aquind v. ACER, concerned, inter alia, a complaint that the Board of Appeal had only carried out a limited review of the complex technical and economic assessments involved in the case.(14)Case T-735/18, Aquind Ltd. v. ACER (judgment 18 November 2020), ECLI:EU:T:2020:542. This raises some interesting questions from the perspective of access to justice as a fundamental right.(15)See Article 47 of the EU Charter of Fundamental Rights.
In Aquind v. ACER, the applicant had submitted a request for an exemption from the access conditions for its Aquind interconnector. The national NRAs in France and the UK had not been able to agree on the exemption request and the case was forwarded to ACER, whicrh refused the request for an exemption. ACER's decision was appealed to the Board of Appeal, which upheld ACER's decision. In its decision, the Board of Appeal held, with reference to case law, that ACER's economically and technically complex assessments were subject to a limited judicial review by the Board of Appeal and that it was confined to ruling on whether ACER had committed manifest errors in its assessments.
The Court disagreed with the Board of Appeal, emphasizing, inter alia, that the establishment of the Board of Appeal was part of a general tendency under EU law to establish appellate bodies where agencies have been given significant decision-making powers in complex issues.(16)Case T-735/18, para. 51. The interpretation of the then prevailing Electricity Regulation (EC) 714/2009 did not, in the Court's opinion, support a limited scope of review parallel to the Court's own limited reviews of complex technical and economical decisions by the administration. Rather, the Court held that a limited review by the Board of Appeal would entail that the Court, when a case is brought before it, would carry out a limited review of a limited review.(17)Case T-735/18, para. 58. Consequently, the decision of the Board of Appeal was annulled by the General Court.
Carrying out a full review of complex technical and economic assessments as required by the Court can, however, be a challenging task for a Board of Appeal with limited time and resources. Given the ongoing process of establishing a large number of TCMs for the European energy market, there is every reason to assume that the number and complexity of appeals will only increase over time. If such a development is not followed by corresponding increases in the resources made available to the Board of Appeal, it may simply not be possible to carry out full reviews of decisions within acceptable time limits. This, in turn, may raise questions relating to whether such a system guarantees access to justice as a fundamental right for applicants challenging ACER decisions.