ACER natural gas transmission tariff assessment to be released by month-end

The Agency for the Cooperation of Energy Regulators (ACER) has agreed to release, by the end of the month, an initial assessment on how proposed natural gas transmission tariffs would impact European markets at a national level.

At an industry workshop on Wednesday, ACER also said this assessment would be used in the development of a corresponding EU-wide network code, which the European Network of Transmission System Operators for Gas (ENTSO-G) is currently drafting.

At present, European countries calculate their transmission tariffs in different ways, with some using similar methodologies to the four included by ACER in its framework guidelines. But other states, like the Czech Republic, use a completely different method.

A draft of ACER’s impact assessment shows the Czech Republic, Poland and Latvia will have the most work in adapting to the new tariff methodologies. Inversely, Italy and Estonia are among the countries that will have the fewest changes to implement (see map).

The tariff network code aims to harmonise the way in which gas transmission tariffs are calculated across Europe, making trading across the continent simpler and more transparent.

New tariffs calculation

Under the planned rules, the cost of gas transmission tariffs will be composed of a reserve price – which is primarily calculated according to a selected cost allocation methodology – and the auction bid premium.

As the reserve price will depend on the revenue stream of grid operators, as set annually by regulators, the out-turning tariffs will have a floating price.

Once the network code comes into force, which is expected in 2016, national regulators are then expected to hold consultations on which methodology will be used. The cost-effectiveness of the methodologies will also have to be reviewed every four years.

The four methodologies included within ACER’s framework guidelines are: postage stamp; matrix approach; capacity weighted distance; and virtual point based approach. The latter two methodologies consist of two variations each.

ENTSO-G input

At the same workshop on Wednesday, ENTSO-G representatives said the organisation would try, “if possible,” to merge some of the variances of the four methodologies when writing the tariff code.

This would reduce the number of methodologies that could be applied at a national level, and simplify the process of tariff harmonization.

ENTSO-G also said the guidelines on gas tariffs were longer and more detailed than previous frameworks.

Last December, the European Commission formally asked ENTSO-G to prepare a network code on the gas transmission tariffs, based on ACER’s framework guidelines, which were published on 30 November 2013. The code will have to be ready by 31 December 2014. Matilde Mereghetti