CONCLUSIONS OF THE 2ND

HIGH LEVEL REGIONAL CONFERENCE ON LOOP-FLOWS

31 OCTOBER 2012

There is wide agreement among stakeholders that a mix of short, medium and long-term measures are necessary to appropriately tackle loop-flows. Developing short-

term 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 cross-

border 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.