Congestion Income Distribution Methodology: A Comprehensive Guide
Understanding Congestion Income
Congestion Income (CI) signifies the monetary value assigned by market participants to cross-border trading opportunities. It highlights the utilization patterns of interconnections and indicates areas where capacity expansion is necessary.
Key Provisions of Commission Regulation EU Article 73
Article 73 of the Commission Regulation EU establishes the framework for the Congestion Income Distribution (CID) methodology. This methodology outlines the principles and procedures for allocating CI among relevant stakeholders.
CID Methodology Development
The CID methodology was developed by all Transmission System Operators (TSOs) to facilitate the distribution of CI derived from forward capacity allocation (FCA). Its aim is to ensure fair and efficient allocation of CI while promoting efficient utilization of cross-border transmission infrastructure.
Purpose of Capacity Allocation and Congestion Management
The Guideline on Capacity Allocation and Congestion Management provides guidance on calculating the capacity available to market participants on cross-border lines. Its objectives include maximizing social welfare, ensuring efficient utilization of network capacity, and fostering competition in the European energy market.
Congestion Income Collection and Distribution
According to the CACM Regulation, Congestion Income refers to revenues generated from capacity allocation. This income is collected and distributed among stakeholders based on predefined criteria and principles outlined in the CID methodology.
Benefits of a Well-Defined CID Methodology
A robust CID methodology promotes transparency, predictability, and fairness in the allocation of Congestion Income. It aids in optimizing the usage of cross-border transmission infrastructure, enabling better planning and investment decisions by market participants.
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