Shippers fear increase in natural gas transmission tariffs

20 January 2014 15:24 Source:ICIS

A change in gas transmission tariffs that will be introduced by a new EU-wide code leaves shippers uncertain over what they will have to pay, stakeholders have warned.

This may increase short-term bookings, with stakeholders expecting a potential increase in tariffs to have a detrimental impact on some existing contracts signed by gas shippers.

With the introduction of the planned methodology, expected in October 2017, gas tariffs will be composed of a reserve price and an auction bid premium ( see ESGM 16 January 2014 ).

The reserve price will depend on the revenue stream of grid operators, as set annually by regulators. As a result, certain gas transmission tariffs might increase up to 20% while others will decrease.

At a workshop on gas tariffs organised by ENTSO-G last week, stakeholders said a long-term contract signed in the past taking into account different tariff levels might, from 2017, be subject to higher [or lower] gas tariffs.

In most European countries, apart from Germany and partially the UK, shippers do not have the right to terminate long-term contracts, despite the fact these contracts might become uneconomic if higher tariffs are implemented.

Decisions on whether shippers can or cannot terminate long-term contracts or reduce their length must be taken at national level.

Mitigating measures

According to ACER, mitigating measures can be applied in advance of 1 October 2017 “as a means of smoothing the glide path to any new anticipated tariff level”, as well as up to 24 months after 1 October 2017 in some cases.

The cases in which the measures could be applied would include when moving to new tariff levels by 1 October 2017 affects the execution of specific contracts or tariffs.

Mitigating measures could also apply if implementation by 1 October does not coincide with commencement of the gas year or regulatory period in any individual country, ACER said.

However, stakeholders said that mitigating measures introduced by ACER in the gas tariffs framework guidelines are not sufficient to avoid the risk s associated with a large gas tariff change, partially because they will be valid only two years after the implementation date. Matilde Mereghetti

By Matilde Mereghetti