
TITLE I
Article 1 

1. This Regulation lays down a detailed guideline on electricity balancing including the establishment of common principles for the procurement and the settlement of frequency containment reserves, frequency restoration reserves and replacement reserves and a common methodology for the activation of frequency restoration reserves and replacement reserves.
2. This Regulation shall apply to transmission system operators (‘TSOs’), distribution system operators (‘DSOs’) including closed distribution systems,  the regulatory authority..., third parties to whom responsibilities have been delegated or assigned and other market participants.
3. This Regulation shall apply to all transmission systems and interconnections  within the jurisdiction of Great Britain  except the transmission systems on islands that are not connected with other transmission systems via interconnections.
4. This Regulation shall apply to all TSOs in Great Britain.  Where a TSO does not have a function relevant to one or more obligations under this Regulation,  the Secretary of State or the regulatory authority  may provide that the responsibility to comply with those obligations is assigned to one or more specific TSOs.
5. Where a load-frequency control (‘LFC’) area consists of two or more TSOs, all TSOs of that LFC area may decide, subject to the approval by the relevant regulatory authorities, to exercise one or more obligations under this Regulation in a coordinated manner for all scheduling areas of the LFC area.
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8. This Regulation shall apply to all system states defined in Article 18 of Regulation (EU) 2017/1485.
Article 2 
Except where stated in this Article, for the purposes of this Regulation, the definitions in Article 2 of  Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast), Article 2 of Commission Regulation (EU) No 543/2013 and Article 3 of Commission Regulation (EU) 2017/1485 apply.
The following definitions shall also apply:

((1)) ‘balancing’ means all actions and processes, on all timelines, through which TSOs ensure, in a continuous way, the maintenance of system frequency within a predefined stability range as set out in Article 127 of Regulation (EU) 2017/1485, and compliance with the amount of reserves needed with respect to the required quality, as set out in Part IV Title V, Title VI and Title VII of Regulation (EU) 2017/1485;
((2)) ‘balancing market’ means the entirety of institutional, commercial and operational arrangements that establish market-based management of balancing;
((3)) ‘balancing services’ means balancing energy or balancing capacity, or both;
((4)) ‘balancing energy’ means energy used by TSOs to perform balancing and provided by a balancing service provider;
((5)) ‘balancing capacity’ means a volume of reserve capacity that a balancing service provider has agreed to hold and in respect to which the balancing service provider has agreed to submit bids for a corresponding volume of balancing energy to the TSO for the duration of the contract;
((6)) ‘balancing service provider’ means a market participant with reserve-providing units or reserve-providing groups able to provide balancing services to TSOs;
((7)) ‘balance responsible party’ means a market participant or its chosen representative responsible for its imbalances;
((8)) ‘imbalance’ means an energy volume calculated for a balance responsible party and representing the difference between the allocated volume attributed to that balance responsible party and the final position of that balance responsible party, including any imbalance adjustment applied to that balance responsible party, within a given imbalance settlement period;
((9)) ‘imbalance settlement’ means a financial settlement mechanism for charging or paying balance responsible parties for their imbalances;
((10)) ‘imbalance settlement period’ means the time unit for which balance responsible parties' imbalance is calculated;
((11)) ‘imbalance area’ means the area in which an imbalance is calculated;
((12)) ‘imbalance price’ means the price, be it positive, zero or negative, in each imbalance settlement period for an imbalance in each direction;
((13)) ‘imbalance price area’ means the area for the calculation of an imbalance price;
((14)) ‘imbalance adjustment’ means an energy volume representing the balancing energy from a balancing service provider and applied by the connecting TSO for an imbalance settlement period to the concerned balance responsible parties, used for the calculation of the imbalance of these balance responsible parties;
((15)) ‘allocated volume’ means an energy volume physically injected or withdrawn from the system and attributed to a balance responsible party, for the calculation of the imbalance of that balance responsible party;
((16)) ‘position’ means the declared energy volume of a balance responsible party used for the calculation of its imbalance;
((17)) ‘self-dispatching model’ means a scheduling and dispatching model where the generation schedules and consumption schedules as well as dispatching of power generating facilities and demand facilities are determined by the scheduling agents of those facilities;
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((22)) ‘connecting TSO’ means the TSO that operates the scheduling area in which balancing service providers and balance responsible parties shall be compliant with the terms and conditions related to balancing;
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((26)) ‘transfer of balancing capacity’ means a transfer of balancing capacity from the initially contracted balancing service provider to another balancing service provider;
((27)) ‘balancing energy gate closure time’ means the point in time when submission or update of a balancing energy bid ... is no longer permitted;
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((33)) ‘validity period’ means the period when the balancing energy bid offered by the balancing service provider can be activated, where all the characteristics of the product are respected. The validity period is defined by a start time and an end time;
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((46)) “day-ahead market gate closure time” has the meaning given in Article 2 of Commission Regulation (EU) 2015/1222, as it applied in EU law immediately before  IP completion day;
((47)) “day-ahead market time frame” has the meaning given in Article 2 of Commission Regulation (EU) 2015/1222, as it applied in EU law immediately before  IP completion day;
((48)) “demand facility” has the meaning given in Article 2 of Commission Regulation (EU) 2016/1388, as it applied in EU law immediately before  IP completion day;
Article 3 

1. This Regulation aims at:
(a) fostering effective competition, non-discrimination and transparency in balancing markets;
(b) enhancing efficiency of balancing as well as efficiency of ... national balancing markets;
(c) integrating balancing markets and promoting the possibilities for exchanges of balancing services while contributing to operational security;
(d) contributing to the efficient long-term operation and development of the electricity transmission system and electricity sector ... while facilitating the efficient and consistent functioning of day-ahead, intraday and balancing markets;
(e) ensuring that the procurement of balancing services is fair, objective, transparent and market-based, avoids undue barriers to entry for new entrants, fosters the liquidity of balancing markets while preventing undue  market distortions;
(f) facilitating the participation of demand response including aggregation facilities and energy storage while ensuring they compete with other balancing services at a level playing field and, where necessary, act independently when serving a single demand facility;
(g) facilitating the participation of renewable energy sources and  supporting the achievement of any target specified in an enactment for the share of energy from renewable sources.
2. When applying this Regulation,  the Secretary of State, the regulatory authority, and system operators shall:
(a) apply the principles of proportionality and non-discrimination;
(b) ensure transparency;
(c) apply the principle of optimisation between the highest overall efficiency and lowest total costs for all parties involved;
(d) ensure that TSOs make use of market-based mechanisms, as far as possible, in order to ensure network security and stability;
(e) ensure that the development of the forward, day-ahead and intraday markets is not compromised;
(f) respect the responsibility assigned to the relevant TSO in order to ensure system security, including as required by  any enactment;
(g) consult with relevant DSOs and take account of potential impacts on their system;
(h) take into consideration agreed ... standards and technical specifications.
Article 4 

1. TSOs shall develop the terms and conditions or methodologies required by this Regulation and submit them for approval to the  regulatory authority  within the respective deadlines set out in this Regulation.
2. Where a proposal for terms and conditions or methodologies pursuant to this Regulation needs to be developed and agreed by more than one TSO, the participating TSOs shall closely cooperate. TSOs ... shall regularly inform the  regulatory authority  about the progress of developing these terms and conditions or methodologies.
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Article 5 

1. The regulatory authority  shall approve the terms and conditions or methodologies developed by TSOs under  paragraph 4.
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4. The proposals for the following terms and conditions or methodologies shall be subject to approval by  the regulatory authority... on a case-by-case basis:
(a) the exemption to publish information on offered prices of balancing energy or balancing capacity bids due to market abuse concerns pursuant to Article 12(4);
(b) where appropriate, the methodology for allocating costs resulting from actions taken by DSOs, pursuant to Article 15(3);
(c) the terms and conditions related to balancing pursuant to Article 18;
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(f) the exemption to separate procurement of upward and downward balancing capacity pursuant to Article 32(3);
(g) where appropriate, the additional settlement mechanism separate from the imbalance settlement, to settle the procurement costs of balancing capacity, administrative costs and other costs related to balancing with balance responsible parties pursuant to Article 44(3);
(h) the derogations to one or more provisions of this Regulation pursuant to Article 62(2);
(i) the costs relating to the obligations imposed on system operators or assigned third entities in accordance with this Regulation pursuant to Article 8(1);
(j) the exemption, for the geographical area in which the procurement of balancing capacity has taken place, from the requirement to allow balancing service providers to transfer their obligations to provide balancing capacity pursuant to Article 34(1);
(k) the exemption from the requirement to apply imbalance settlement periods of 15 minutes pursuant to Article 53(2);
on which  the Secretary of State  may provide an opinion to the ... regulatory authority.
5. The proposal for terms and conditions or methodologies shall include a proposed timescale for their implementation and a description of their expected impact on the objectives of this Regulation. The implementation timescale shall not be longer than 12 months after the approval by the  regulatory authority, except where  the regulatory authority agrees  to extend the implementation timescale or where different timescales are stipulated in this Regulation. ...
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8. Any party may complain against a relevant system operator or TSO in relation to that system operator's or TSO's obligations or decisions under this Regulation and may refer the complaint to the relevant regulatory authority which, acting as dispute settlement authority, shall issue a decision within two months after receipt of the complaint. That period may be extended by a further two months where additional information is sought by the relevant regulatory authority. That extended period may be further extended with the agreement of the complainant. The relevant regulatory authority's decision shall be binding unless and until overruled on appeal.
Article 6 

1. Where  the regulatory authority requires  an amendment in order to approve the terms and conditions or methodologies submitted in accordance with  paragraph 4  of Article 5, the relevant TSOs shall submit a proposal for amended terms and conditions or methodologies for approval within two months following the requirement from the  regulatory authority. The regulatory authority shall decide on the amended terms and conditions or methodologies within two months following their submission.
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3. TSOs responsible for developing a proposal for terms and conditions or methodologies or  the regulatory authority... may request amendments of those terms and conditions or methodologies. The proposals for amendments to the terms and conditions or methodologies shall be submitted to consultation in accordance with the procedure set out in Article 10 and approved in accordance with the procedure set out in Article 4 and Article 5.
Article 7 
TSOs responsible for establishing the terms and conditions or methodologies in accordance with this Regulation shall publish them on the internet following approval by the  regulatory authority  or, where no such approval is required, following their establishment, except where such information is considered as confidential in accordance with Article 11.
Article 8 

1. Costs related to the obligations imposed on system operators or assigned third entities in accordance with this Regulation shall be assessed by the  regulatory authority.
2. Costs considered as reasonable, efficient, and proportionate by the  regulatory authority  shall be recovered through network tariffs or other appropriate mechanisms as determined by the regulatory authority.
3. If requested by the  regulatory authority, system operators or assigned entities shall, within three months of the request, provide the information necessary to facilitate the assessment of the costs incurred.
4. Any costs incurred by market participants in meeting the requirements of this Regulation shall be borne by those market participants.
Article 9 
The   ... transmission system operator, shall organise stakeholder involvement regarding the balancing market and other aspects of the implementation of this Regulation. Such involvement shall include regular meetings with stakeholders to identify problems and propose improvements related to the integration of the balancing market.
Article 10 

1. TSOs responsible for submitting proposals for terms and conditions or methodologies or their amendments in accordance with this Regulation shall consult stakeholders, including the  regulatory authority, on the draft proposals for terms and conditions or methodologies and other implementing measures for a period of not less than one month.
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5. At least the proposals pursuant to points (a), (b), (c), (d), (e), (f), (g)  , (i), (j) and (k)  of Article 5(4) shall be subject to public consultation ....
6. TSOs responsible for the proposal for terms and conditions or methodologies shall duly consider the views of stakeholders resulting from the consultations undertaken in accordance with  paragraph 5, prior to its submission for regulatory approval. In all cases, a sound justification for including or not including the views resulting from the consultation shall be provided together with the submission and published in a timely manner before or simultaneously with the publication of the proposal for terms and conditions or methodologies.
Article 11 

1. Any confidential information received, exchanged or transmitted pursuant to this Regulation shall be subject to the conditions of professional secrecy laid down in paragraphs 2, 3 and 4.
2. The obligation of professional secrecy shall apply to any person subject to the provisions of this Regulation.
3. Confidential information received by the persons or regulatory authorities referred to in paragraph 2 in the course of their duties may not be divulged to any other person or authority, without prejudice to cases covered by ... the other provisions of this Regulation or  any other enactment.
4. Without prejudice to cases covered by  any other enactment,  the regulatory authority, bodies or persons who receive confidential information pursuant to this Regulation may use it only for the purpose of carrying out their duties under this regulation, except where written consent has been provided by the primary owner of the data.
Article 12 

1. All entities referred to in Article 1( 2) shall provide TSOs with all the relevant information to fulfil their obligations laid down in paragraphs 3 to 5.
2. All entities referred to in Article 1( 2) shall ensure that information in paragraphs 3 to 5 is published at a time and in a format that does not create an actual or potential competitive advantage or disadvantage to any individual or companies.
3. Each TSO shall publish the following information as soon as it becomes available:
(a) information on the current system balance of its scheduling area or scheduling areas, as soon as possible but no later than 30 minutes after real-time;
(b) information on all balancing energy bids from its scheduling area or scheduling areas, anonymised where necessary, no later than 30 min after the end of the relevant market time unit. The information shall include:
((i)) type of product;
((ii)) validity period;
((iii)) offered volumes;
((iv)) offered prices;
((v)) information on whether the bid was declared as unavailable;
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(e) aggregated information on balancing energy bids no later than 30 min after the end of the relevant market time unit, which shall include:
((i)) total volume of offered balancing energy bids;
((ii)) total volume of offered balancing energy bids separately per type of reserves;
((iii)) total volume of offered and activated balancing energy bids ...;
((iv)) ...
(f) information on offered volumes as well as offered prices of procured balancing capacity, anonymised where necessary, no later than one hour after the results of the procurement have been notified to the bidders;
(g) the initial terms and conditions related to balancing referred to in Article 18 at least one month before the application and any amendments to the terms and conditions immediately following approval by the  regulatory authority;
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4. Subject to approval pursuant to Article 18, a TSO may withhold the publication of information on offered prices and volumes of balancing capacity or balancing energy bids if justified for reasons of market abuse concerns and if not detrimental to the effective functioning of the electricity markets. A TSO shall report such withholdings at least once a year to the relevant  regulatory authority.
5. No later than two years after entry into force of this Regulation, each TSO shall publish the information pursuant to paragraph 3 in a commonly agreed harmonised format ....
Article 13 

1. A TSO may delegate all or part of any tasks with which it is entrusted under this Regulation to one or more third parties in case the third party can carry out the respective function at least as effectively as the delegating TSO. The delegating TSO shall remain responsible for ensuring compliance with the obligations under this Regulation, including ensuring access to information necessary for monitoring by the  regulatory authority.
2. Prior to the delegation, the third party concerned shall demonstrate to the delegating TSO its ability to meet the tasks to be delegated.
3. In the event that all or part of any tasks specified in this Regulation are delegated to a third party, the delegating TSO shall ensure that suitable confidentiality agreements in accordance with the confidentiality obligations of the delegating TSO have been put in place prior to the delegation. After delegating all or part of any tasks to a third party, the delegating TSO must inform the ... regulatory authority and publish this decision on the internet.
4. Without prejudice to the tasks entrusted to TSOs pursuant to Directive 2009/72/EC as it applied immediately before  IP completion day,  the Secretary of State, or where applicable  the  regulatory authority, may assign tasks or obligations entrusted to TSOs under this Regulation to one or more third parties. ... Prior to the assignment, the third party concerned shall demonstrate to the  Secretary of State, or where applicable the ... regulatory authority, its ability to meet the task to be assigned.
5. In the event that tasks and obligations are assigned to a third party by  the Secretary of State or the regulatory authority, references to TSO in this Regulation shall be understood as referring to the assigned entity. The ... regulatory authority shall ensure regulatory oversight of the assigned entity in respect of the assigned tasks and obligations.
TITLE II
CHAPTER 1
Article 14 

1. Each TSO shall be responsible for procuring balancing services from balancing service providers in order to ensure operational security.
2. Each TSO shall apply a self-dispatching model for determining generation schedules and consumption schedules. ...
Article 15 

1. DSOs, TSOs, balancing service providers and balance responsible parties shall cooperate in order to ensure efficient and effective balancing.
2. Each DSO shall provide, in due time, all necessary information in order to perform the imbalance settlement to the connecting TSO in accordance with the terms and conditions related to balancing pursuant to Article 18.
3. Each TSO may, together with the reserve connecting DSOs within the TSO's control area, jointly elaborate a methodology for allocating costs resulting from actions of DSOs pursuant to paragraphs 4 and 5 of Article 182 of Regulation (EU) 2017/1485. The methodology shall provide for a fair allocation of costs taking into account the responsibilities of the parties involved.
4. DSOs shall report to the connecting TSO any limits defined pursuant to paragraphs 4 and 5 of Article 182 of Regulation (EU) 2017/1485 that could affect the requirements set out in this Regulation.
Article 16 

1. A balancing service provider shall qualify for providing bids for balancing energy or balancing capacity which are activated or procured by the connecting TSO .... Successful completion of the prequalification, ensured by the connecting TSO and processed pursuant to Article 159 and Article 162 of Regulation (EU) 2017/1485 shall be considered as a prerequisite for the successful completion of the qualification process to become a balancing service provider pursuant to this Regulation.
2. Each balancing service provider shall submit to the connecting TSO its balancing capacity bids that affect one or more balance responsible parties.
3. Each balancing service provider participating in the procurement process for balancing capacity shall submit and have the right to update its balancing capacity bids before the gate closure time of the procurement process.
4. Each balancing service provider with a contract for balancing capacity shall submit to its connecting TSO the balancing energy bids ... corresponding to the volume, products, and other requirements set out in the balancing capacity contract.
5. Any balancing service provider shall have the right to submit to its connecting TSO the balancing energy bids  ... for which it has passed the prequalification process pursuant to Article 159 and Article 162 of Regulation (EU) 2017/1485.
6. The price of the balancing energy bids ... pursuant to paragraph 4 shall not be predetermined in a contract for balancing capacity. A TSO may propose an exemption to this rule in the proposal for the terms and conditions related to balancing set-up pursuant to Article 18. Such an exemption shall ... be accompanied with a justification demonstrating higher economic efficiency.
7. There shall be no discrimination between balancing energy bids ... submitted pursuant to paragraph 4 and balancing energy bids ... submitted pursuant to paragraph 5.
8. For each product for balancing energy or balancing capacity, the reserve providing unit, the reserve providing group, the demand facility or the third party and the associated balance responsible parties pursuant to Article 18(4)(d), shall belong to the same scheduling area.
Article 17 

1. In real time, each balance responsible party shall strive to be balanced or help the power system to be balanced. The detailed requirements concerning this obligation shall be defined in the proposal for terms and conditions related to balancing set up pursuant to Article 18.
2. Each balance responsible party shall be financially responsible for the imbalances to be settled with the connecting TSO.
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Article 18 

1. No later than six months after entry into force of this Regulation  TSOs  shall develop a proposal regarding:
(a) the terms and conditions for balancing service providers;
(b) the terms and conditions for balance responsible parties.Where a LFC area consists of two or more TSOs, all TSOs of that LFC area may develop a common proposal subject to the approval by the  regulatory authority.
2. The terms and conditions pursuant to paragraph 1 shall also include the rules for suspension and restoration of market activities pursuant to Article 36 of Regulation (EU) 2017/2196 and rules for settlement in case of market suspension pursuant to Article 39 of Regulation (EU) 2017/2196 once approved in accordance with Article 4 of Regulation (EU) 2017/2196.
3. When developing proposals for terms and conditions for balancing service providers and balance responsible parties, each TSO shall:
(a) coordinate with the TSOs and DSOs that may be affected by those terms and conditions;
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(c) involve other DSOs and other stakeholders throughout the development of the proposal and take into account their views without prejudice to public consultation pursuant to Article 10.
4. The terms and conditions for balancing service providers shall:
(a) define reasonable and justified requirements for the provisions of balancing services;
(b) allow the aggregation of demand facilities, energy storage facilities and power generating facilities in a scheduling area to offer balancing services subject to conditions referred to in paragraph 5 (c);
(c) allow demand facility owners, third parties and owners of power generating facilities from conventional and renewable energy sources as well as owners of energy storage units to become balancing service providers;
(d) require that each balancing energy bid from a balancing service provider is assigned to one or more balance responsible parties to enable the calculation of an imbalance adjustment pursuant to Article 49.
5. The terms and conditions for balancing service providers shall contain:
(a) the rules for the qualification process to become a balancing service provider pursuant to Article 16;
(b) the rules, requirements and timescales for the procurement and transfer of balancing capacity pursuant to Articles 32 ... and 34;
(c) the rules and conditions for the aggregation of demand facilities, energy storage facilities and power generating facilities in a scheduling area to become a balancing service provider;
(d) the requirements on data and information to be delivered to the connecting TSO and, where relevant, to the reserve connecting DSO during the prequalification process and operation of the balancing market;
(e) the rules and conditions for the assignment of each balancing energy bid from a balancing service provider to one or more balance responsible parties pursuant to paragraph 4 (d);
(f) the requirements on data and information to be delivered to the connecting TSO and, where relevant, to the reserve connecting DSO to evaluate the provisions of balancing services pursuant to Article 154(1), Article 154(8), Article 158(1)(e), Article 158(4)(b), Article 161(1)(f) and Article 161(4)(b) of Regulation (EU) 2017/1485;
(g) the definition of a location for each  balancing  product taking into account paragraph 5 (c);
(h) the rules for the determination of the volume of balancing energy to be settled with the balancing service provider pursuant to Article 45;
(i) the rules for the settlement of balancing service providers defined pursuant to Chapters 2 and 5 of Title V;
(j) a maximum period for the finalisation of the settlement of balancing energy with a balancing service provider in accordance with Article 45, for any given imbalance settlement period;
(k) the consequences in case of non-compliance with the terms and conditions applicable to balancing service providers.
6. The terms and conditions for balance responsible parties shall contain:
(a) the definition of balance responsibility for each connection in a way that avoids any gaps or overlaps in the balance responsibility of different market participants providing services to that connection;
(b) the requirements for becoming a balance responsible party;
(c) the requirement that all balance responsible parties shall be financially responsible for their imbalances, and that the imbalances shall be settled with the connecting TSO;
(d) the requirements on data and information to be delivered to the connecting TSO to calculate the imbalances;
(e) the rules for balance responsible parties to change their schedules prior to and after the intraday energy gate closure time pursuant to  paragraph 4  of Article 17;
(f) the rules for the settlement of balance responsible parties defined pursuant to Chapter 4 of Title V;
(g) the delineation of an imbalance area pursuant to Article 54(2) and an imbalance price area;
(h) a maximum period for the finalisation of the settlement of imbalances with balance responsible parties for any given imbalance settlement period pursuant to Article 54;
(i) the consequences in case of non-compliance with the terms and conditions applicable to balance responsible parties;
(j) an obligation for balance responsible parties to submit to the connecting TSO any modifications of the position;
(k) the settlement rules pursuant to Articles 52, 53, 54 and 55;
(l) where existing, the provisions for the exclusion of imbalances from the imbalance settlement when they are associated with the introduction of ramping restrictions for the alleviation of deterministic frequency deviations pursuant to Article 137(4) of Regulation (EU) 2017/1485.
7. Each connecting TSO may include the following elements in the proposal for the terms and conditions for balancing service providers or in the terms and conditions for balance responsible parties:
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(b) where justified, a requirement for balancing service providers to offer the unused generation capacity or other balancing resources through balancing energy bids ... in the balancing markets after day ahead market gate closure time, without prejudice to the possibility of balancing service providers to change their balancing energy bids prior to the balancing energy gate closure time ... due to trading within intraday market;
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(d) specific requirements with regard to the position of balance responsible parties submitted after the day-ahead market timeframe to ensure that the sum of their internal and external commercial trade schedules equals the sum of the physical generation and consumption schedules, taking into account electrical losses compensation, where relevant;
(e) an exemption to publish information on offered prices of balancing energy or balancing capacity bids due to market abuse concerns pursuant to Article 12(4);
(f) an exemption ... to predetermine the price of the balancing energy bids from a balancing capacity contract pursuant to Article 16(6);
(g) an application for the use of dual pricing for all imbalances  containing the information set out in Article 52(2)(d)(i) and (ii).
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9. Each TSO shall monitor the fulfilment by all parties of the requirements set out in the terms and conditions for balancing within its scheduling area or scheduling areas.
CHAPTER 2
Article 19 
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Article 20 
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Article 21 
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Article 22 
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Article 23 
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Article 24 
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Article 25 
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Article 26 
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Article 27 
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Article 28 

1. Each TSO shall ensure that fall-back solutions are in place in case  the procedure referred to in paragraph 2 fails.
2. Where the procurement of balancing services fails, the concerned TSOs shall repeat the procurement process. TSOs shall inform market participants that fall-back procedures will be used as soon as possible.
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TITLE III
CHAPTER 1
Article 29 
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Article 30 
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Article 31 
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CHAPTER 2
Article 32 

1. All TSOs of the LFC block shall regularly and at least once a year review and define the reserve capacity requirements for the LFC block or scheduling areas of the LFC block pursuant to dimensioning rules as referred in Articles 127, 157 and 160 of Regulation (EU) 2017/1485. Each TSO shall perform an analysis on optimal provision of reserve capacity aiming at minimisation of costs associated with the provision of reserve capacity. This analysis shall take into account the following options for the provision of reserve capacity:
(a) procurement of balancing capacity within control area ..., when applicable;
(b) sharing of reserves, when applicable;
(c) the volume of non-contracted balancing energy bids which are expected to be available ... within their control area ....
2. Each TSO procuring balancing capacity shall define the rules for the procurement of balancing capacity in the proposal for the terms and conditions related to balancing service providers developed pursuant to Article 18. The rules for the procurement of balancing capacity shall comply with the following principles:
(a) the procurement method shall be market-based for at least the frequency restoration reserves and the replacement reserves;
(b) the procurement process shall be performed on a short-term basis to the extent possible and where economically efficient;
(c) the contracted volume may be divided into several contracting periods.
3. The procurement of upward and downward balancing capacity for at least the frequency restoration reserves and the replacement reserves shall be carried out separately. Each TSO may submit a proposal to the  regulatory authority  requesting the exemption to this requirement. The proposal for exemption shall include:
(a) specification of the time period during which the exemption would apply;
(b) specification of the volume of balancing capacity for which the exemption would apply;
(c) analysis of the impact of such an exemption on the participation of  demand facility owners, third parties and owners of power generating facilities from renewable energy sources as well as owners of energy storage units;
(d) justification for the exemption demonstrating that such an exemption would lead to higher economic efficiency.
Article 33 
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Article 34 

1. Within the geographical area in which the procurement of balancing capacity has taken place, the TSOs shall allow balancing service providers to transfer their obligations to provide balancing capacity. The concerned TSO or TSOs may request an exemption where contracting periods for balancing capacity pursuant to Article 32(2)(b) are strictly less than one week.
2. The transfer of balancing capacity shall be allowed at least until one hour before the start of the delivery day.
3. The transfer of balancing capacity shall be allowed if the following conditions are met:
(a) the receiving balancing service provider has passed the qualification process for the balancing capacity for which the transfer is performed;
(b) the transfer of balancing capacity is not expected to endanger operational security;
(c) the transfer of balancing capacity does not exceed the operational limits set out in  Chapter 1  of Part IV Title VIII of Regulation (EU) 2017/1485.
4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. If a TSO does not allow the transfer of balancing capacity, the concerned TSO shall explain the reason for the rejection to the balancing service providers involved.
CHAPTER 3
Article 35 
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TITLE IV
CHAPTER 1
Article 36 
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Article 37 
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CHAPTER 2
Article 38 
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Article 39 
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Article 40 
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Article 41 
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Article 42 
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Article 43 
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TITLE V
CHAPTER 1
Article 44 

1. The settlement processes shall:
(a) establish adequate economic signals which reflect the imbalance situation;
(b) ensure that imbalances are settled at a price that reflects the real time value of energy;
(c) provide incentives to balance responsible parties to be in balance or help the system to restore its balance;
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(e) provide incentives to TSOs to fulfil their obligations pursuant to Article 127, Article 153, Article 157 and Article 160 of Regulation (EU) 2017/1485;
(f) avoid distorting incentives to balance responsible parties, balancing service providers and TSOs;
(g) support competition among market participants;
(h) provide incentives to balancing service providers to offer and deliver balancing services to the connecting TSO;
(i) ensure the financial neutrality of all TSOs.
2. The regulatory authority  shall ensure that all TSOs under its competence do not incur economic gains or losses with regard to the financial outcome of the settlement pursuant to  Chapters 2 and 4  of this Title, over the regulatory period as defined by  the regulatory authority, and shall ensure that any positive or negative financial outcome as a result of the settlement pursuant to Chapters 2 and 4 of this Title shall be passed on to network users in accordance with the applicable national rules.
3. Each TSO may develop a proposal for an additional settlement mechanism separate from the imbalance settlement, to settle the procurement costs of balancing capacity pursuant to Chapter 5 of this Title, administrative costs and other costs related to balancing. The additional settlement mechanism shall apply to balance responsible parties. This should be preferably achieved with the introduction of a shortage pricing function. If TSOs choose another mechanism, they should justify this in the proposal. Such a proposal shall be subject to approval by the ... regulatory authority.
4. Each injection or withdrawal into or from a scheduling area of a TSO shall either be settled in accordance with ... Chapter 4 of Title V.
CHAPTER 2
Article 45 

1. As regards the settlement of balancing energy for at least the frequency restoration process and the reserve replacement process, each TSO shall establish a procedure for:
(a) the calculation of the activated volume of balancing energy based on requested or metered activation;
(b) claiming the recalculation of the activated volume of balancing energy.
2. Each TSO shall calculate the activated volume of balancing energy according to the procedures pursuant to paragraph 1(a) at least for:
(a) each imbalance settlement period;
(b) its imbalance areas;
(c) each direction, with a negative sign indicating relative withdrawal by the balancing service provider, and a positive sign indicating relative injection by the balancing service provider.
3. Each connecting TSO shall settle all activated volumes of balancing energy calculated pursuant to paragraph 2, with the concerned balancing service providers.
Article 46 

1. Each connecting TSO may calculate and settle the activated volume of balancing energy for the frequency containment process with balancing service providers pursuant to paragraphs 1 and 2 of Article 45.
2. The price, be it positive, zero or negative, of the activated volume of balancing energy for the frequency containment process shall be defined for each direction as defined in Table 1:
 Balancing energy price positive Balancing energy price negative
Positive balancing energy Payment from TSO to BSP Payment from BSP to TSO
Negative balancing energy Payment from BSP to TSO Payment from TSO to BSP
Article 47 

1. Each connecting TSO shall calculate and settle the activated volume of balancing energy for the frequency restoration process with balancing service providers pursuant to paragraphs 1 and 2 of Article 45
2. The price, be it positive, zero or negative, of the activated volume of balancing energy for the frequency restoration process shall be defined for each direction ... as defined in the Table 1.
Article 48 

1. Each connecting TSO shall calculate and settle the activated volume of balancing energy for the reserve replacement process with balancing service providers pursuant to paragraphs 1 and 2 of Article 45.
2. The price, be it positive, zero or negative, of the activated volume of balancing energy for reserve replacement process shall be defined for each direction ... as defined in the Table 1.
Article 49 

1. Each TSO shall calculate an imbalance adjustment to be applied to the concerned balance responsible parties for each activated balancing energy bid.
2. For imbalance areas where several final positions for a single balance responsible party are calculated pursuant to Article 54(3), an imbalance adjustment may be calculated for each position.
3. For each imbalance adjustment, each TSO shall determine the activated volume of balancing energy calculated pursuant to Article 45 and any volume activated for purposes other than balancing.
CHAPTER 3
Article 50 
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Article 51 
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CHAPTER 4
Article 52 

1. Each TSO or, where relevant, third party shall settle within its scheduling area or scheduling areas when appropriate with each balance responsible party for each imbalance settlement period pursuant to Article 53 all calculated imbalances pursuant to Article 49 and Article 54 against the appropriate imbalance price calculated pursuant to Article 55.
2. By one year after entry into force of this Regulation, all TSOs shall develop a proposal to further specify ... at least:
(a) the calculation of an imbalance adjustment pursuant to Article 49 and the calculation of a position, an imbalance and an allocated volume following one of the approaches pursuant to Article 54(3);
(b) the main components used for the calculation of the imbalance price for all imbalances pursuant to Article 55 including, where appropriate, the definition of the value of avoided activation of balancing energy from frequency restoration reserves or replacement reserves;
(c) the use of single imbalance pricing for all imbalances pursuant to Article 55, which defines a single price for positive imbalances and negative imbalances for each imbalance price area within an imbalance settlement period; and
(d) the definition of conditions and methodology for applying dual imbalance pricing for all imbalances pursuant to Article 55, which defines one price for positive imbalances and one price for negative imbalances for each imbalance price area within an imbalance settlement period, encompassing:
((i)) conditions on when a TSO may propose to  the  regulatory authority ... the application of dual pricing and which justification must be provided;
((ii)) the methodology for applying dual pricing.
3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. The proposal pursuant to paragraph 2 shall provide an implementation date no later than eighteen months after approval by  the regulatory authority.
Article 53 

1. By three years after the entry into force of this Regulation, all TSOs shall apply the imbalance settlement period of 15 minutes in all scheduling areas while ensuring that all boundaries of market time unit shall coincide with boundaries of the imbalance settlement period.
2. The TSOs of  the GB  synchronous area may jointly request an exemption from the requirement laid down in paragraph 1.
3. The regulatory authority may grant an exemption from the requirement laid down in paragraph 1—
(a) upon a request under paragraph 2; or
(b) on its own initiative.
Article 54 

1. Each TSO shall calculate within its scheduling area or scheduling areas when appropriate the final position, the allocated volume, the imbalance adjustment and the imbalance:
(a) for each balance responsible party;
(b) for each imbalance settlement period;
(c) in each imbalance area.
2. The imbalance area shall be equal to the scheduling area ....
3. Until the implementation of the proposal pursuant to Article 52(2), each TSO shall calculate the final position of a balance responsible party using one of the following approaches:
(a) balance responsible party has one single final position equal to the sum of its external commercial trade schedules and internal commercial trade schedules;
(b) balance responsible party has two final positions: the first is equal to the sum of its external commercial trade schedules and internal commercial trade schedules from generation, and the second is equal to the sum of its external commercial trade schedules and internal commercial trade schedules from consumption;
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Each TSO shall set up the rules for:
(a) the calculation of the final position;
(b) the determination of the allocated volume;
(c) the determination of the imbalance adjustment pursuant to Article 49;
(d) the calculation of the imbalance;
(e) claiming the recalculation of the imbalance by a balance responsible party.
5. Allocated volume shall not be calculated for a balance responsible party which does not cover injections or withdrawals.
6. An imbalance shall indicate the size and the direction of the settlement transaction between the balance responsible party and the TSO; an imbalance can have alternatively:
(a) a negative sign, indicating a balance responsible party's shortage;
(b) a positive sign, indicating a balance responsible party's surplus.
Article 55 

1. Each TSO shall set up rules to calculate the imbalance price, which can be positive, zero or negative, as defined in Table 2:
 Imbalance price positive Imbalance price negative
Positive imbalance Payment from TSO to BRP Payment from BRP to TSO
Negative imbalance Payment from BRP to TSO Payment from TSO to BRP
2. The rules pursuant to paragraph 1 shall include a definition of the value of avoided activation of balancing energy from frequency restoration reserves or replacement reserves.
3. Each TSO shall determine the imbalance price for:
(a) each imbalance settlement period;
(b) its imbalance price areas;
(c) each imbalance direction.
4. The imbalance price for negative imbalance shall not be less than, alternatively:
(a) the weighted average price for positive activated balancing energy from frequency restoration reserves and replacement reserves;
(b) in the event that no activation of balancing energy in either direction has occurred during the imbalance settlement period, the value of the avoided activation of balancing energy from frequency restoration reserves or replacement reserves.
5. The imbalance price for positive imbalance shall not be greater than, alternatively:
(a) the weighted average price for negative activated balancing energy from frequency restoration reserves and replacement reserves;
(b) in the event that no activation of balancing energy in either direction has occurred during the imbalance settlement period, the value of the avoided activation of balancing energy from frequency restoration reserves or replacement reserves.
6. In the event that both positive and negative balancing energy from frequency restoration reserves or replacement reserves have been activated during the same imbalance settlement period, the imbalance settlement price shall be determined for positive imbalance and negative imbalance based on at least one of the principles pursuant to paragraphs 4 and 5.
CHAPTER 5
Article 56 

1. Each TSO of a scheduling area using balancing capacity bids shall establish rules for the settlement of at least frequency restoration reserves and replacement reserves pursuant to the requirements set out in Article 32.
2. Each TSO of a scheduling area using balancing capacity bids shall settle at least all procured frequency restoration reserves and replacement reserves pursuant to the requirements set out in Article 32.
Article 57 
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TITLE VI
Article 58 
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TITLE VII
Article 59 
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Article 60 

1. At least once every two years, each TSO shall publish a report on balancing covering the previous two calendar years, respecting the confidentiality of information in accordance with Article 11.
2. The report on balancing shall:
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) provide the summary analysis of the dimensioning of reserve capacity including the justification and explanation for the calculated reserve capacity requirements;
(c) provide the summary analysis of the optimal provision of reserve capacity including the justification of the volume of balancing capacity;
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Based on previously published reports, the  regulatory authority  shall be entitled to require changes to the structure and content of the next TSO report on balancing.
TITLE VIII
Article 61 

1. When TSOs are required to carry out a cost-benefit analysis pursuant to this Regulation, they shall establish the criteria and methodology for the cost-benefit analysis and submit them to the  regulatory authority  by six months before the start of the cost-benefit analysis. The ... regulatory authorities shall be entitled to ... require amendments to the criteria and methodology.
2. The cost-benefit analysis shall at least take into account:
(a) the technical feasibility;
(b) the economic efficiency;
(c) the impact on competition and integration of balancing markets;
(d) the costs and benefits of implementation;
(e) the impact on ... balancing costs;
(f) the potential impact on ... electricity market prices;
(g) the ability of TSOs and balancing responsible parties to fulfil their obligations;
(h) the impact on market parties in terms of additional technical or IT requirements assessed in cooperation with the affected stakeholders.
3. All concerned TSOs shall provide the results of the cost-benefit analysis to  the regulatory authority, together with a justified proposal on how to address possible issues identified by the cost-benefit analysis.
TITLE IX
Article 62 

1. The regulatory authority  may, at the request of a TSO or at its own initiative, grant the relevant TSOs a derogation from one or more provisions of this Regulation in accordance with paragraphs 2 to 12.
2. A TSO may request a derogation from the following requirements:
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) the  application  of the imbalance settlement period in Article 53(1);
(e) the implementation of the requirements pursuant to Articles 45, 46, 47, 48, 49, ... 54, 55, 56 and 57.
3. The derogation process shall be transparent, non-discriminatory, non-biased, well documented and based on a reasoned request.
4. TSOs shall file a written request for derogation to the ... regulatory authority at the latest six months prior to the day of application of the provisions from which the derogation is requested.
5. The request for derogation shall include the following information:
(a) the provisions from which a derogation is requested;
(b) the requested derogation period;
(c) a detailed plan and timeline specifying how to address and ensure the implementation of the concerned provisions of this Regulation after expiration of the derogation period;
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. The ... regulatory authority shall adopt a decision concerning any request for derogation within six months from the day after it receives the request. That time limit may be extended by three months before its expiry where the ... regulatory authority requires further information from the TSO requesting the derogation. The additional period shall begin when the complete information has been received.
7. The TSO requesting the derogation shall submit any additional information requested by the ... regulatory authority within two months of such request. If the TSO does not supply the requested information within that time limit, the request for a derogation shall be deemed withdrawn unless, before its expiry, alternatively:
(a) the ... regulatory authority decides to provide an extension;
(b) the TSO informs the ... regulatory authority by means of a reasoned submission that the request for a derogation is complete.
8. When assessing the request for derogation or before granting a derogation at its own initiative, the ... regulatory authority shall consider the following aspects:
(a) the difficulties related to the implementation of the concerned provision or provisions;
(b) the risks and the implications of the concerned provision or provisions, in terms of operational security;
(c) the actions taken to facilitate the implementation of the concerned provision or provisions;
(d) the impacts of non-implementation of the concerned provision or provisions, in terms of non-discrimination and competition with other ... market participants, in particular as regards demand response and renewable energy sources;
(e) the impacts on overall economic efficiency and smart grid infrastructure;
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. The ... regulatory authority shall issue a reasoned decision concerning a request for a derogation or a derogation granted at its own initiative. Where the ... regulatory authority grants a derogation, it shall specify its duration. The derogation may be granted only once and for a maximum period of two years, except for the  derogation in paragraph 2(d)  which may be granted until 1 January 2025.
10. The regulatory authority shall notify its decision to the TSO and the Secretary of State.  The decision shall also be published on its website.
11. The  regulatory authority  shall maintain a register of all derogations they have granted or refused and shall provide the  Secretary of State  with an updated and consolidated register at least once every six months ....
12. The register shall contain, in particular:
(a) the provisions from which the derogation is granted or refused;
(b) the content of the derogation;
(c) the reasons for granting or refusing the derogation;
(d) the consequences resulting from granting the derogation.
Article 63 
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TITLE X
Article 64 
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Article 65 

1. This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
2. For Articles 14, 16, 17, 28, 32, 34 to 36, 44 to 49, and 54 to 57, this Regulation shall apply from one year after entry into force of this Regulation.
...Done at Brussels, 23 November 2017.
For the Commission
The President
Jean-Claude JUNCKER