ACER publishes today its annual report on the implementation of the Inter-Transmission System Operator Compensation (ITC) mechanism for 2023. 

What is the ITC mechanism?

The ITC mechanism, coordinated by the European Network of Transmission System Operators for Electricity (ENTSO-E), compensates transmission system operators (TSOs) for the costs of hosting cross-border power flows, including power losses and infrastructure investments. This compensation is financed through the ITC Fund, also managed by ENTSO-E. European TSOs contribute and receive money from the ITC Fund depending on how much electricity they import and export across national borders, as well as on the volume of transits they carry through their networks. 

The ITC mechanism is part of Europe's electricity infrastructure cost-sharing framework, which also includes cross-border cost allocation and congestion income distribution. In 2023, 35 parties participated in the mechanism, covering most of Europe.

ACER is responsible for overseeing the yearly implementation of the ITC mechanism and reporting its findings to the European Commission.

What are the report's key findings? 

• In 2023, the ITC fund reached a record high of nearly €1.24 billion, marking the fifth consecutive year of record values, with a 105% increase compared to 2022.

• The cost of power losses varied significantly, ranging from €56 to €400 per MWh, due to different procurement strategies and hedging instruments. These differences raised concerns about fairness for consumers.

• The average cost of losses rose by 165% (reaching €202 per MWh), with one third of ITC parties experiencing three- to six-fold increases in their losses, because of unprecedented heights and volatility of electricity wholesale prices in 2021, 2022 and 2023.

• Denmark, Austria, Switzerland, Poland, Slovakia and Czechia received over 75% of the total net compensation, while Italy and Norway paid more than half of the total net contributions.

• Perimeter countries (non-participating countries connected to the ITC parties’ networks), including Belarus, Morocco, Russia, Turkey, Ukraine and Moldova, contributed €16.7 million to the fund.

• Errors in Austria's electricity load data caused incorrect compensations for 2022 and 2023, leading to voluntary corrective payments by 20 ITC parties. 

• ENTSO-E improved its audit process by incorporating ACER data, enhancing transparency and raising data quality standards for both EU and non-EU ITC parties.

What are the next steps?

ACER reiterates its recommendations for further improving the ITC mechanism, including:

• incorporating more granular information on the measured volume of losses;

• implementing ex-post reconciliation of loss costs; and

• using forward markets to determine the value of losses when their valuation and coverage are market-based. 

Finally, ACER acknowledges that the current ITC mechanism, particularly its infrastructure fund, together with cross-border cost allocation and congestion income distribution does not fairly distribute the costs and benefits of cross-border electricity trade in Europe. ACER sees the need to review existing mechanisms to share costs and benefits of electricity network infrastructure arising from cross-border trade.

Access all ACER ITC monitoring reports.

On 7 March 2025, ACER submitted its proposal for a new EU-wide network code on demand response to the European Commission. This is the result of close collaboration with network operators and extensive consultation.

What is demand response?

Demand response is when consumers (retail and industrial) intentionally adjust their electricity consumption in response to a change in the electricity market price or a financial incentive to increase/decrease/shift the timing of their electricity consumption. This can be done for the purpose of balancing supply and demand or for solving congestion in the grid. For example, retail consumers can provide balancing services through bi-directional charging of their electric vehicles (EVs). Demand response development will enable lowering electricity supply costs (which are a key driver of electricity bills).  

Demand response in electricity markets is increasingly important to support more variable renewable generation such as wind and solar (with variable output that must be balanced), being added to the power grid. 

Why does this network code matter?

This network code will ensure that demand response resources (such as consumers, storage providers, and distributed generation) can fully participate in wholesale electricity markets, providing much needed flexibility to an evolving power system driven by renewable energy and thereby contributing to energy security and the transition to clean energy. 

To achieve this, the network code and the related amendments to existing regulations (balancing, system operation, and demand connection) cover four main areas:

• Market access: The new EU-wide rules will make it easier for smaller energy players to participate in electricity markets. A new European registry will standardise how demand response is measured, ensuring fairness and consistency.

• Service provider qualification process: New measures will make it easier for all resources to provide services to system operators, with simpler prequalification, product verification, and a national system for managing participation.

• Procurement processes: Clear rules will ensure that system operator services (such as congestion management and voltage control) are procured transparently and efficiently, with any exceptions to market-based methods requiring justification. Guidelines will also prevent distortions between different electricity markets.

• System operators’ coordination: Stronger collaboration between distribution and transmission system operators will help integrate more renewables, address congestion and voltage control issues, and prevent system disruptions. Clear rules will ensure that actions in one part of the system do not create problems elsewhere.

The process

In May 2024, ACER received the electricity system operators’ (EU DSO Entity and ENTSO-E) proposal for the draft network code, including the amendments to the three related electricity regulations. ACER revised the draft and consulted on it in autumn 2024. After making final amendments, ACER now submitted its proposal to the European Commission. 

What are the next steps?

The Commission will review the proposal and initiate the process of establishing the Demand Response (DR) Regulation and amending the three related regulations. Once adopted by Member States, these will become legally binding across the EU.

Get involved!

ACER will hold a webinar on 27 March 2025 to present its proposal for the network code on demand response, along with amendments to the three related electricity regulations. Register for free here.

Today, ACER releases its report on the Hungarian gas transmission tariffs directed at Magyar Energetikai és Közmű-szabályozási Hivatal (MEKH), the national regulatory authority (NRA) of Hungary.

The report assesses whether the proposed reference price methodology (RPM) complies with the requirements of the Network Code on Harmonised Transmission Tariff structures (NC TAR). 

What is the proposed RPM about?

The NRA proposes to:

• Apply a postage stamp RPM complemented by a 90% discount at entry points from storage and 100% discounts at exit points from storage. It also suggests applying a 50/50 entry-exit split but is open for adjustments within a 40/60 to 60/40 range subject to stakeholder feedback.
• Adopt an in-kind flow-based charge (commodity-based tariff). However, taking into consideration inputs received from stakeholders, MEKH already informed ACER about its intent to switch back to a monetary flow-based charge (already in place since 2021).
• Introduce two non-transmission services, respectively for gas odorisation and for connecting users to the network. 

What are the key findings? 

After analysing the consultation document, ACER concludes that: 

• The RPM largely complies with requirements set in Article 7 of the NC TAR. 
• ACER could not assess the compliance of the proposed flow-based charge, as the relevant NRA decision is only available in Hungarian. However, given MEKH’s intent to switch to a monetary flow-based charge, ACER referred to its 2021 analysis, assessing the compliance of the tariffs proposed at that time.
• The proposed non-transmission services also comply with EU rules. 

What does ACER recommend? 

ACER recommends that the NRA, when adopting its final decision:

• Ensure the compliance of the commodity-based tariffs with the NC TAR, particularly considering that the monetary flow-based charge will be applied instead of the in-kind one (e.g. stakeholders were consulted upon the latter, but not the former).
• Reconcile the proposed non-transmission services as required by Article 17(3) of the NC TAR.

See all ACER reports on national tariff consultation documents. 

The fine imposed on Energi Danmark A/S (Energi Danmark) is based on a report made by the Danish energy regulatory authority (Danish Utility Regulator, DUR) in March 2024, which was referred to the Danish State Prosecutor for Serious Economic and International Crime. 

This penalty comes under the REMIT Regulation (EU) No 1227/2011, which prohibits market manipulation and seeks to protect the integrity and transparency of the EU’s wholesale energy markets.

According to energy regulator (DUR) and the Danish state prosecutor, the misconduct, which took place on 3 January 2020, included five cases of electricity market manipulation and one attempt to do so in violation of Article 5 of REMIT. Through its behaviour, called 'cross-zonal capacity hoarding', the company acquired all, or a significant share of, the capacity available on an electricity transmission connection between two bidding areas by trading with itself. In this way, Energi Danmark prevented other market participants from using the capacity, thereby creating or increasing a price difference between the two bidding areas. 

DUR estimated the financial gain from the conduct at DKK 80,693 (approximately EUR 10,800). The prosecutor fined Energi Danmark 380,000 DKK (approximately EUR 50,900), which Energi Danmark has accepted to pay. 

In December 2018, Energi Danmark had already agreed to pay a fine of DKK 750,000 (approximately EUR 100,500) for violating the same REMIT regulation prohibition of market manipulation, which DUR emphasised as an aggravating circumstance in its report. 

The EU Agency for the Cooperation of Energy Regulators (ACER) welcomes this third decision related to the hoarding of cross-border electricity transmission capacity in Denmark. ACER emphasises the importance of vigorous enforcement to enhance public trust in the EU’s electricity markets and protect European consumers from market abuse.

Access DUR’s press release (in Danish).

Access ACER’s Guidance Note on cross-zonal capacity hoarding. Also check the ACER REMIT Guidance (6.1^st edition) for more information on the types of trading practices which could constitute market manipulation under REMIT.

See the latest table of REMIT breach sanction decisions adopted by national regulatory authorities.

Interested in further information on enforcement decisions under REMIT? Check out ACER’s REMIT Quarterly reports.

Peak-shaving products are market-based tools that enable market participants to reduce their electricity consumption during peak demand periods in exchange for compensation.

Under the 2024 Electricity Market Design (EMD) Regulation, the Council can declare a regional or EU-wide electricity crisis if wholesale prices become excessively high. In such cases, Member States can instruct system operators to use peak-shaving products to reduce power demand, helping to stabilise the grid and lower prices.

ACER assessment

The EMD Regulation mandates ACER to assess the potential impact of developing peak-shaving products on the EU’s electricity market under normal market conditions. This assessment should also evaluate whether these products can be introduced without disrupting the functioning of electricity markets or redirecting demand response services towards peak-shaving products.

In February 2025, ACER established an Expert Group to provide guidance on the topic. To further strengthen this assessment, ACER will gather inputs from stakeholders through a public consultation from 20 March 2025 until 17 April 2025. 

Next steps

Based on the findings of ACER’s assessment (expected in summer 2025), the European Commission may propose amendments to the Electricity Regulation to introduce peak-shaving products beyond electricity price crisis situations. 

Update as of July 2025: After engaging with stakeholders, ACER has concluded that the drawbacks of introducing peak-shaving products under normal conditions outweigh the potential benefits. Therefore, ACER does not recommend amending the existing legal framework to allow their use outside of electricity price crisis situations. 

On 31 January 2025, ACER received a proposal from the Nominated Electricity Market Operators (NEMOs) for the Market Coupling Operation (MCO) integration plan.

What is the MCO integration plan?

The MCO integration plan aims to integrate NEMOs from Energy Community countries into the EU’s electricity day-ahead and intraday market coupling system. To achieve this, the plan should include:

• a detailed explanation of how the integration will work;
• a proposed timeline for implementation; and
• an assessment of how the integration may impact MCO functions.

The plan should also align with the existing MCO framework, which defines how EU NEMOs collaborate to establish and perform MCO functions (e.g. market coupling operations, algorithm management, capacity data processing), needed to ensure that electricity markets across countries operate efficiently.

Why is a decision needed?

The Capacity Allocation and Congestion Management Regulation, as adapted and adopted for the Energy Community, requires all NEMOs to submit a proposal for the MCO integration plan to ACER, regulatory authorities and the Energy Community Regulatory Board.

ACER is responsible for reviewing and approving the plan, ensuring it aligns with the EU electricity market framework.

What are the next steps?

ACER expects to decide on the MCO integration plan by July 2025. Update from 19 June 2025: This ACER Decision is delayed until further notice.

Contact information 

Interested parties may contact ACER on this matter at ACER-ELE-2025-001@acer.europa.eu by 31 March 2025 at the latest.

Relevant documents

All NEMOs' proposal for the MCO integration plan.

Explanatory note.

Today, ACER releases its report on the Swedish gas transmission tariff directed at the Swedish National Regulatory Authority (NRA), Energimarknadsinspektionen (Ei), and Transmission System Operator, Swedegas.

The report assesses whether the proposed Reference Price Methodology (RPM) complies with the requirements of the Network Code on Harmonised Transmission Tariff structures (NC TAR). 

What are the key findings? 

After analysing the consultation document, ACER concludes that:

• Most of the required information is provided, however, the forecasted contracted capacity, tariff comparison between periods, and detailed information on some non-transmission services are missing. 

• The input parameters of the proposed RPM do not fulfil the transparency requirements of the NC TAR. As a result, ACER concludes that the proposed RPM is not fully compliant with the transparency principle.

• While the choice of the postage stamp methodology is well justified, limitations identified in the allowed revenue estimation and revenue reconciliation raise concerns about the cost reflectivity of the proposed tariff. Consequently, ACER cannot conclude that the proposed RPM complies with the cost-reflectivity principle. 

• The proposed RPM achieves a reasonable level of cross-subsidisation compared to the alternative capacity-weighted distance methodology while complying with the principles of non-discrimination, volume risk, and the prevention of distortions in cross-border trade. 

• The information provided on the three non-transmission services (fees for extra area consumption, capacity allocation for summer and winter periods, and capacity allocation for daily capacity products) is insufficient to assess the compliance with the NC TAR principles.

What does ACER recommend? 

ACER recommends that the NRA, when adopting its decision:

• Includes the missing elements and clarifies inconsistencies in the calculation of input parameters for the tariff-setting process, ensuring stakeholders fully understand the methodology. 

• Specifies the start of the regulatory period for the proposed RPM and the applicability of the consulted tariff.

• Provides the missing information on the three additional non-transmission services. 

ACER welcomes the steps taken by the NRA to realign the allowed revenue with Article 17 of Renewable Gas, Natural Gas and Hydrogen Regulation, ensuring it reflects the TSO’s actual costs, as long as they correspond to those of an efficient and structurally comparable network operator. 

Additionally, ACER appreciates that the TSO and NRA followed its recommendation in the 2024 tariff report and conducted another consultation on the applied methodology. 

See all ACER reports on the national tariff consultation documents.