The Order of 14 July 1998 established the legal regime applicable to external agents for the implementation of intra-Community and international exchanges of electrical energy in development as provided for in the Royal Decree of 14 July 1998. Decree 2019/1997 of 26 December 1997 on the organisation and regulation of the market for the production of electrical energy, which in its Articles 34 to 37 developed, in turn, as provided for in Law 54/1997 of 27 November of the Electricity Sector of intra-Community and international trade.

Article 13 of the Law provides for the general principles to govern these exchanges.

Subsequently, the Royal Decree Law 5/2005 of March 11, of urgent reforms for the boost to productivity and for the improvement of public procurement changes paragraphs 2, 3 and 6 of article 13 of the Law of the Sector Electricity in the field of intra-Community and international trade.

Also, Articles 33 and 34 of the Electrical Sector Law are amended by entrusting the Market Operator and the System Operator with the settlement of the markets and operations that are of their respective competencies.

Royal Decree 1454/2005 of 2 December 2005 amending certain provisions relating to the electricity sector, adapts the regulations relating to the electrical sector to the provisions of Royal Decree Law 5/2005, of 11 of In March, urgent reforms to boost productivity and improve public procurement, and to the Council of Ministers Agreement of 25 February 2005, adopting mandates to implement measures to boost public procurement, were urgently needed. productivity.

For its part, Regulation (EC) No 1228/2003 of 26 June 2003 of the European Commission regulates the procedures used to allocate the capacity for exchange in interconnections between countries of the European Union, providing for the coordination of the allocation mechanisms between the systems linking interconnections and allowing Member States to establish a more detailed regulation of the arrangements contained therein.

Therefore, it is necessary to adapt the mechanisms of management of interconnections to the aforementioned regulations, also considering the desirability of being established separately in a single standard.

In the case of the interconnection between Spain and France, due to the different moment of implementation of the respective organized production markets in both countries, different allocation mechanisms have been used both sides of the pipeline.

January 2005, the National Energy Commission presented a report setting out the common position with its French counterpart, the Committee on the Regulation of Energy (CRE), on the mechanism for managing the interconnection between Spain and France, in which it recommended the replacement of the current system by a single mechanism applied jointly, with the participation of the operators of the systems and the markets of both countries.

This new mechanism is the one that is collected by this Order. It is composed of two complementary processes, one of them based on the allocation of physical capacity by means of explicit auctions on different time horizons, and another of a short term based on a mechanism of Coupling of the Organized daily markets of France and Spain.

In the case of the interconnection between Spain and Morocco the current system is maintained, including modifications that the experience acquired since its application has advised. This same system will continue to be applied in the interconnection between Spain and Portugal until a common position is adopted for both systems to establish, as in the case of interconnection with France, a single mechanism applied in a way

In its virtue, I have:

Article 1. Object.

The purpose of this Order is to establish the applicable regime for the realization of intra-Community and international exchanges of electrical energy.

Article 2. Scope.

1. This Order shall apply to producers, self-producers, external agents, distributors, marketers and consumers.

2. It shall also apply to system and market operators in the field of their competences.

Article 3. Subjects enabled for exchanges.

1. The subject of the production market referred to in Article 13 of Law 54/1997 of 27 November 1997 in the electricity sector may freely establish intra-Community and international energy trade in accordance with the conditions laid down in the are established in the provisions of the development of the aforementioned Law and in this Order.

2. By way of derogation from the preceding subparagraph, energy acquisitions in other Community countries outside the scope of the Iberian Electricity Market or in third countries for the purpose of carrying out import operations may not be made by operators who have the status of Dominant Operators in the electricity sector, in accordance with Article 13 (7) of Law 54/1997 of 27 November of the Electrical Sector.

Article 4. Integration and treatment of intra-Community and international trade in the production market.

1. Intra-Community imports may be channelled through any of the forms of procurement that are authorised in the development of Law 54/1997, in the electricity sector.

2. The Government may prohibit specific, even intra-Community export operations involving a certain risk for the supply of electricity in accordance with Article 10.2.a) of Law 54/1997 of 27 November 1997. of the electrical sector.

3. The integration of intra-Community and international trade in the production market shall be governed by the following:

In the process of accepting offers from the Spanish Production Daily and Intradiary Market and in the process of accepting bilateral contracts with physical delivery, the maximum total hourly energy to be imported or exported by subject of the production market will be limited at any time by the maximum commercial capacity published by the Operator of the Spanish System in each sense, increased by the maximum commercial capacity published by the Operator of the Spanish System in opposite direction between Spain and the corresponding external electrical system.

In the process of matching offers, acceptance of bilateral contracts with physical delivery and solution of technical restrictions and congestion in international interconnections, energy exchange programs in the International interconnections per subject of the production market shall consist of whole numbers of MWh.

Article 5. Other revenue and costs applicable to intra-Community and international trade.

1. Energy purchases for the production of electricity export operations shall pay:

The tolls and losses to be established for international exchanges in accordance with Article 13.6 of Law 54/1997, for the use of transport and distribution networks that allow the placement of electric power acquired at points of interconnection with the external electrical systems, except in the case of international electricity transits through the Spanish electricity system and the operations of the export of electricity through of interconnections with those neighbouring electrical systems corresponding to countries with the establishment of reciprocal agreements.

The cost of security and security and supply costs that correspond, with the exception of exports to EU countries.

Adjustment services that correspond, except for exports to Community countries that will only deal with the payment of the deviations in which they may incur.

2. They shall not be entitled to the charge for the power to import electricity.

Article 6. Resolution of congestion on interconnections.

1. The resolution of congestion on intra-Community and international interconnections shall be carried out in compliance with the technical or safety criteria, without the possibility of a reserve of capacity except for trade in regulation whose management corresponds to the System Operator, as provided for in Article 36 of Royal Decree 2019/1997.

2. The mechanisms for resolving the congestion of interconnections shall be governed by the principles laid down in Annexes I and II to this Order. These mechanisms will be the object of development in the operating procedures and the rules of operation of the Spanish production market.

Single transient arrangement. Transitional period.

As long as the operating procedures developed in Annex I of this Order and the adaptation of the rules of operation of the market to the provisions of this Order have not been approved, the mechanism for the Resolution of the technical congestion of the interconnection between Spain and France shall be governed by the provisions of Annex II.

Single repeal provision. Regulatory repeal.

The seventh and ninth paragraphs of the Order of 14 July 1998 laying down the legal regime applicable to external agents for the conduct of intra-Community and international trade in the electrical energy and how many provisions of equal or lower rank are opposed to the provisions of this Order.

Final disposition first. Development.

1. For the interconnection between Spain and France, within a maximum period of one month following the publication of this Order, the System Operator, in cooperation with its French counterpart, shall submit to the Ministry of Industry, Tourism and Trade a Proposal for a review of the operating procedures developed for the implementation of Phase 1 of the congestion management mechanism described in Annex I to this Order. Within the same period, the Market Operator shall submit to the Ministry of Industry, Tourism and Trade a proposal to adapt the operating rules of the electricity market to the provisions of the market.

2. The deadline for the System Operator and the Market Operator, in cooperation with their respective French counterparts, to submit to the Ministry of Industry, Tourism and Trade the proposed revision of the operating and rules procedures For the implementation of Phase 2 of the congestion management mechanism described in Annex I of this Order, it shall be six months from the date of entry into force of Phase 1, in accordance with the provisions of the previous paragraph.

3. The date of entry into force of Phase 3 provided for in Annex I shall be fixed by the General Secretariat of Energy by means of the relevant Resolutions approving the procedure for the operation of the system and the adaptation of the rules of the relevant market.

Final disposition second. Entry into force.

This Order shall enter into force on the day following that of its publication in the Official Gazette of the State, except as provided for in Article 4 (3), which shall enter into force within 30 days.

Madrid, 30 December 2005.

MONTILA AGUILERA

ANNEX I

Principles of the freezing resolution mechanism in the Spain-France interconnection.

The mechanism for resolving possible congestion of interconnection between Spain and France will be governed by the following principles:

1. The management of this international interconnection will be carried out through a mechanism composed of two complementary processes. One of them will be based on the allocation of physical capacity by means of explicit auctions in different time horizons and the other will be articulated within the Daily Market of Production and based on a Coupling in the Markets organized newspapers in France and Spain. The first of the processes will be managed by the System Operator and the second by the Market Operator. The management of both processes will be carried out by the operators in a coordinated manner with their respective French counterparts.

2. Prior to each of the auction sessions for the award of the exchange capacity developed in paragraph 3 of this Annex, the System Operator, in collaboration with its French counterpart, shall publish the available for export and import for award in that session. In the same way, it shall make public the maximum capacities provided for in each direction of flow for each programming period deducted from the capacity reserved for regulatory exchanges.

It will also publish, also in collaboration with its French counterpart, and in accordance with what is established in the relevant operating procedure, the volumes and prices resulting from the explicit auction processes of capacity as set out in paragraphs 3 and 4 of this Annex.

3. The process based on explicit auctions of capacity should be developed, on a proposal from the System Operator, in coordination with its French counterpart, in a specific operating procedure, which must be approved by means of a resolution of the General Secretary of Energy, prior to the report of the National Energy Commission and will respect the following principles:

3.1 The procedure shall establish the temporary areas of the auctions, which may not exceed one year, and the distribution of the exchange capacity between the different processes and time areas.

The total capacity offered in this explicit auction process will take into account the overlap of firm transactions in both directions of flow, avoiding at all times that the total allocation of capacity of place to a balance net of exchange programmes that exceeds the expected capacity in the corresponding sense of flow and programming period.

3.2 The System Operator, in coordination with its French counterpart, will allocate the exchange capacity on the basis of the prices offered, starting the allocation for the highest price offer and continuing to exhaust the available capacity for that auction.

3.3 The allocation of swap capacity will generate a firm payment obligation for the successful tenderer that will be a function of the price and the volume of capacity allocated in the different time horizons, as is the case set out in the specific operation procedure for the development of explicit auctions. There shall be no payment for capacity allocation in those cases where the total number of applications does not reach the capacity offered in that auction in the same sense of flow.

3.4 The acquired capacity may be put up for sale in subsequent explicit auctions by the contracting parties or may be transferred to third parties by bilateral agreement, the change of ownership must be notified. of the rights, and all of this in the form and deadlines that are collected in the aforementioned system operation procedure.

3.5 The use of the allocated capacity in explicit auctions for the execution of a bilateral contract with physical delivery will be notified to the system operators prior to the relevant market session. The Spanish production journal and the French organized market, within the time limits set by the corresponding operating procedure, thus giving rise to the existence of a firm transaction. The unused capacity will be offered in subsequent capacity allocation processes.

3.6 The Spanish System Operator, in coordination with its French counterpart, will establish an explicit auction system on intraday horizon or other possible post-auction capacity allocation mechanisms. (a) to enable the use of exchange capacity to be maximised. In the corresponding system operation procedure this capacity allocation mechanism shall be defined on the intraday horizon.

3.7 The System Operator will verify, in coordination with its French counterpart, that the subjects submitting a bilateral contract for its implementation have sufficient guarantees, according to the legislation in force in its system, to deal with the deviations that could result from the energy associated with the bilateral contract. Failure to comply with those requirements shall be associated with the non-acceptance of such a transaction.

3.8 The requirement for specific guarantees to cover the economic obligations arising from the participation of the subjects in the auction system shall be established in the relevant operating procedure. The System Operator will verify, in coordination with its French counterpart, that the subjects participating in the auction system have sufficient guarantees to deal with all outstanding payments, including those for the capacity offered in a given explicit auction.

4. The process based on the Market Coupling will be developed in the Rules of Operation of the Spanish Daily Market and will respect the following principles:

4.1 Before each session of the Spanish Daily Market and the organised market in France, the system operators will send to the market operators information on the exchange capacity. available in the interconnection in each of the two directions of flow, importer and exporter, for consideration in the relevant bidding process. This capacity value shall be established by the system operators, taking into account the capacity corresponding to the physical rights of capacity the use of which has been made effective through the scheduling of firm transactions, as well as the overlapping of firm transactions in both directions of flow, and once deduced from the reserved capacity for regulatory exchanges.

4.2 The participation in the market coupling process will be articulated through the presentation of bids for the purchase and sale of energy in the national markets. On the Spanish side, all the authorised subjects for the purchase or sale of energy in the Spanish production market will be able to participate in the Market Coupling process, without the need for the authorization referred to by the Article 13 (2) and (3) of Law 54/1997 of the Electrical Sector. Similarly the authorised subjects on the French side will present their offers of purchase or sale of energy in the organized market of France.

The external agents will participate in this mechanism, to all intents and purposes as any other agent of the Spanish Daily Market, being all the capacity allocations made jointly and symmetrically by the Operator of the Spanish Production Daily Market and by its French counterpart.

4.3 The Spanish Production Daily Market Operator, in coordination with its French counterpart, will take into account when making the appeal of the Daily Market the available commercial capacity, communicated by the operators of the system in accordance with paragraph 1 of this paragraph, ensuring at all times that the net balance of exchange programmes does not exceed the expected capacity in the corresponding sense of flow and programming period.

4.4 The offers of purchase and sale of energy that are programmed in the process of coupling of markets will be liquidated at the marginal price resulting for the corresponding programming period, in the Daily Market (a) Spanish production or in the organised market of France, where such an offer of purchase or sale of energy has been submitted.

4.5 The liquidation of the Spanish Daily Market and the organised market in France after the application of the Market Coupling process will result in income equal to the product in every hour of the difference between prices between the two markets for the exchange capacity actually used in the framework of the Market Coupling process.

In this respect the capacity used by the holders of bilateral contracts whose use has been notified to the System Operators prior to the corresponding session of the Daily Market will not be taken into account. The Spanish Electrical System Operator shall manage these revenues in accordance with paragraph 6.

4.6 The persons who have the capacity allocated in the explicit auction process described in paragraph 3, decide to waive their use in accordance with point 3.4, shall obtain a charge equal to the product of that capacity for the difference between the price of the organised market in France and the resulting price in the Spanish production market.

5. The actions to be carried out in the event of a reduction of the capacity of exchange with respect to the initially planned, will be developed through a procedure of operation of the system according to the following principles:

5.1 If the exchange capacity is reduced prior to the notification of its use as described in paragraph 3.5., the System Operator shall proceed to the publication of the new exchange capacity values and, the time limit for the notification of use shall be completed, where necessary, the allocation by pro rata of the available capacity between those bilateral contracts with physical delivery for which the implementation has been notified. The owner of the reduced capacity will receive an economic compensation valued on the basis of the positive difference between the market price of the destination of the bilateral contract with physical delivery and the resulting price in the source market for the same.

5.2 On the other hand, if the reduction in exchange capacity occurs after the nomination of programs of any type of transaction (bilateral contract with physical delivery or assignment in the process of Market coupling), the programmed capacity will be considered firm and will be guaranteed by the System Operators through coordinated balancing actions on both systems, using the respective adjustment systems for this purpose. generation-demand, except in cases of force majeure where the provisions of paragraph 5.1 are applied; previous.

6. The revenue obtained by the system operators as a result of the capacity auctions and the Market Coupling process will be used primarily for the compensation of the rights lost in the event of a reduction in capacity, (a) the procedure for the operation of the system. The remaining revenue will be distributed to 50% between the two interconnected systems.

In the cases referred to in point 5.2, the costs of the coordinated balancing actions on both systems shall be shared between these systems in accordance with the arrangements for the operation of the system. The costs which, if any, correspond to the Spanish system shall be borne by the revenue derived from the auction processes and the Market Coupling.

The resulting net income or costs will be included in the costs for the calculation of the access charges and will be subject to the liquidation process established Royal Decree 2017/1997 of 26 December, for which it is organised and regulates the procedure for the settlement of the costs of transport, distribution and marketing at tariff, of the permanent costs of the system and of the costs of diversification and security of supply.

7. If it is deemed necessary in view of the operation of the mechanisms provided for in this Annex 1, it may be possible, by means of a resolution of the General Secretariat for Energy, to establish limitations on the maximum value of interconnection capacity which may be be acquired or used by each subject.

8. Without prejudice to paragraphs 1 to 5, both of which are inclusive, the implementation of the described congestion management mechanism shall be carried out progressively, according to the Phases set out below:

8.1 Phase 1: This will be characterized by the following:

Of the two processes described in paragraphs 3 and 4, only the explicit auction mechanism provided for in paragraph 3 shall apply.

In the event that the subject holder of an allocation of capacity does not notify the use of such capacity for the scheduling of bilateral contracts within the time limits set before the Spanish Daily Market, such capacity may be reallocated to other subjects, by means of explicit auctions in daily and intraday horizons, as provided by the system's operating procedure, without giving the initial holders the right to compensation referred to in point 4.6.

The allocated capacity on a daily basis, including the reallocation referred to in the previous paragraph, may be used for both the execution of bilateral contracts with physical delivery and for the programming of transactions in the Spanish production daily market, as provided for in the relevant system operating procedure, without giving the initial holders the right to the compensation referred to in point 4.6.

The compensation referred to in point 5.1 shall not apply. in the case of capacity reduction. A transitional compensation method shall be defined in the relevant system operating procedure.

8.2 Phase 2: Characterized by:

Introduction of the Market Coupling process, paragraph 4, with a limited reserve for this process, a capacity value which in no case may be greater than 15% of the total capacity envisaged in the corresponding sense of flow.

In the event that the capacity allocated in explicit auctions is not used for the scheduling of bilateral contracts prior to the Daily Market, such capacity may be reallocated to other subjects through the Coupling process. of markets, without giving the initial holders the right to the compensation referred to in point 4.6.

The compensation referred to in point 5.1 shall not apply, and in the case of capacity reduction. A transitional compensation method shall be defined in the relevant system operating procedure.

8.3 Phase 3: Characterized by:

Application without limitation of the provisions of paragraphs 1 to 5, including.

The capacity-sharing between the explicit auction processes and the Markets Coupling will be established in the Resolution setting out the entry into force of this Phase.

ANNEX II

Principles of the mechanism for the resolution of congestion in the Spanish-Morocco interconnection and the Spain-Portugal interconnection

The mechanism for the resolution of possible congestions in the Spanish-Morocco interconnection and in the Spain-Portugal interconnection will be governed by the following principles:

1. The System Operator will make public, at a one-week notice, the maximum import and export capacity with each of the neighboring countries for each programming period of the organized production market, deduced the capacity reserved for primary regulatory exchanges.

2. Once the appeal has been made, having taken into consideration both the transactions presented to it and the balances by interconnection and flow of the bilateral contracts with physical delivery to be executed, the latter information The operator of the System shall be notified by the Operator of the System if there are congestion and in what sense of flow.

3. In the above, the Market Operator will distribute proportionally among the total of the affected transactions derived from the market of organized production and the set of bilateral contracts with physical delivery affected the limitation on the volume of energy to transit to which congestion is taking place.

4. Once the distribution between the two blocks of operations has been carried out, the following shall be carried out:

(a) For the affected transactions of the organised market, the economic supply presented for each programming period on the organised production market will be considered and will be withdrawn in the event of congestion. export, those bidding blocks that would have been offered at a lower price and, in the case of import, the bidders at higher prices.

(b) In the case of bilateral contracts with physical delivery affected by congestion, the System Operator shall award the available capacity in the interconnection, using the specific offers for this purpose. for the allocation of capacity, expressed in €/MWh, submitted by its holders to the System Operator, with the capacity being awarded on the basis of the highest price offer until it reaches that which completes the said capacity. The price of the last offer allocated in each programming period shall set the marginal hourly price of the capacity allocation in that period, the price to be used for the settlement of this capacity allocation process. by auction.

The revenues obtained by the System Operator as a result of this auction will be integrated as revenue for the calculation of the access rates and will be submitted to the settlement process established in the Royal Decree Regulation (EC) No 206/97 of the European Parliament and of the Council of 26 December 1997 on the procedure for the settlement of the costs of transport, distribution and marketing at tariff, the permanent costs of the system and the costs of diversification and security of supply.