CONCLUSIONS OF THE 2

ND

HIGH LEVEL REGIONAL CONFERENCE ON LOOP-FLOWS 31 OCTOBER 2012

There is wide agreement among stakeholders that a mix of short, medium and longterm measures are necessary to appropriately tackle loop-flows. Developing shortterm measures to address the most urgent problems is without prejudice to the necessary work on long-term solutions which need to be developed in parallel. The Commission welcomes the progress in bilateral negotiations between the German TSO (50Hertz) and the Polish TSO (PSE Operator) and the announcement of both sides that a final agreement is likely to be found in November this year. The Commission expects that the agreed measures should with immediate effect reduce loop-flows and mitigate their impact on the Polish electricity system. The Commission welcomes the announcement that the negotiations between 50Hertz and the Czech TSO (CEPS) are also progressing and expects that a similar agreement can be achieved within the next weeks. Short-term management of loop-flows through contractual arrangements (virtual phase shifting transformers) and installing physical equipment to direct flows (physical phase shifting transformers) should complement each other. The Commission encourages the involved TSOs in Germany, Poland and the Czech Republic to put in place coordinated arrangements for the operation and financing of phase shifting transformers, should their installation become necessary. As both virtual and physical phase shifting transformers require coordination between the involved TSOs, the bilateral agreement or agreements negotiated between the parties should ideally address both measures. The Commission will continue to follow the negotiation process carefully and will not hesitate to intervene should the involved parties not be ready to agree on coordinated interim solutions or take unilateral measures which unduly restrict crossborder trade. It is recognized that the German-Polish and German-Czech contractual arrangements can only provide partial remedies to the European-wide loop-flow problems. Systemic solutions on a European level are therefore necessary to reestablish harmony between market and network operations. Identifying and sharing of appropriate data to analyse and to better understand the implications of unplanned and loop-flows is crucial. The Commission reminds the concerned TSOs that it is indispensable to share these data with the Commission and its consultants who will provide an expert advice on appropriate structural measures. Concerns caused by loop-flows should not prevent market coupling initiatives in CEE, if necessary based on current capacity calculation arrangements as an interim step towards the target of implicit, flow-based capacity allocation.