Parties who have a dispute with the system operator on how the system operator exercises its duties and powers under the Electricity Act 1998 ("E-Act") can submit such a dispute to the Authority for Consumers and Markets ("ACM"). In this blog post, we discuss such a ruling by the ACM.
The Frontier Power / Liander case
Frontier Power International Limited ("Frontier Power") is a UK-based entity that intends to develop an interconnector between the UK and the Netherlands, the NU-link. For this reason, in June 2022 Frontier Power requested TenneT TSO B.V. ("TenneT") to connect NU-link to the Dutch transmission system with a transmission capacity of 1.2 to 1.4 gigawatts by 2031. While doing so, Frontier Power did not request to be connected to a specific location.
In response to Frontier Power's request, TenneT investigated in respect of several locations whether sufficient transmission capacity was available as of 2031. TenneT did this through a so-called Quick scan based on TenneT's Investeringsplan Net op Land 2022-2031 (TenneT's investment plan for the period 2022-2031 regarding its onshore transmission system).
In August 2023, after having examined several locations, TenneT definitively announced that a connection with firm transmission capacity at the considered locations was not possible. In doing so, TenneT indicated its willingness to conduct new analyses as soon as the investment plans for 2024 could be calculated.
Party positions
In short, Frontier Power took the position that TenneT is acting in violation of the connection obligation under Article 23 of the E-Act by not offering a connection to the transmission system. Frontier Power also argued that TenneT acted in violation of the transportation obligation under Article 24 of the E-Act, among other things because the alleged congestion problems to which TenneT referred would only occur during a limited number of hours.
TenneT argued that it is not obliged to realise a connection since it cannot also offer transportation capacity for it. If TenneT did have to realise the requested connection, this would result, according to TenneT, in it having to use scarce capacity to realise a connection that serves no practical purpose. According to TenneT, if Frontier Power's complaint were to be upheld, it would lead to an undesirable precedent whereby other parties could try to obtain a connection without transportation capacity via the same route, with all the consequences this entails for grid planning and prioritisation of resource deployment.
TenneT further argued that it is not obliged to make an offer for the transportation of electricity because there is reasonably no capacity available.
Assessment of the dispute
The ACM ruled - in so far as relevant here - in favour of Frontier Power and concluded that TenneT, first of all, was in breach of Article 23 of the E-Act by not offering a connection. The ACM considered that TenneT's assertion that it has to deploy scarce capacity to realise a connection of such a nature and size, which in its view serves no practical purpose and may result in an undesirable precedent, does not relieve TenneT of its connection obligation. After all, there is no basis for this in the E-Act and the relevant grid codes.
Secondly, TenneT was also unsuccessful with regard to the complaint based on Article 24 of the E-Act. On the basis of the facts, the ACM considered that TenneT had sufficiently substantiated that the transportation capacity requested by Frontier Power would result in the available capacity being exceeded, all as referred to in Article 9.5(4) of the Electricity Grid Code. However, according to the ACM, TenneT should subsequently have examined the possibilities referred to in Article 9.6(1)(a) to (e) of the Electricity Grid Code before it could refuse the request for transportation capacity. TenneT wrongly failed to do the latter, which means that TenneT wrongly concluded that it does not reasonably have any transportation capacity available.
The ACM's conclusion is therefore that TenneT acted in violation of both Articles 23 and 24 of the E-Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.