What Types of Capacity Contract Are There?

Modified on: Wed, 6 Apr, 2022 at 10:18 AM



Starting in 2022, PRISMA will offer a contract management service to TSOs. If a TSO to whom you have an assignment subscribes to this service, you will be able to receive and download capacity contracts directly on the platform.

In general, there are three types of capacity contract: 

(1) Frame Contracts (FMCT)

(2) Legacy Contracts (LECT)

(3) Derived Contracts (DECT)

Contract Types

1. Frame Contract (FMCT): a frame contract is a general agreement between the shipper and the operator which serves as a precondition for booking capacity on the primary and the secondary market. So, it does not entitle the shipper to use capacity for any specific runtime, but rather establishes the framework for future transactions. Normally, if you have an assignment to a TSO, you need to request a FMCT unless a LECT for a capacity deal already exists.

2. Legacy Contract (LECT): a legacy contract is a capacity contract concluded outside the PRISMA Platform and subsequently uploaded into our system. Usually resulting from a deal in the primary market, this contract can be the basis for future transactions, e.g., secondary market offers. LECTs can span multiple years (multi-year contracts)

3. Derived Contract (DECT): as the name already suggests, a derived contract is a contract derived from a LECT or another DECT after a secondary market transaction. If your counterpart has a LECT and sells you capacity on the secondary market through the assignment procedure, you will receive a DECT before or after the TSO approves the trade.

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