Option to reset natural gas tariffs at Italian entry points proposed

Some Italian shippers are lobbying the Italian regulator to introduce an option to reset transport capacity bookings at Italian entry points, ICIS has learnt.

This would allow some shippers with long-term capacity at some entry points, including the ones in southern Italy, to cancel current bookings and make new bookings with the introduction of EU-wide capacity allocation mechanisms (CAM) rules in Italy.

During Gas Year 2014/2015, gas transport group Snam is expected to progressively introduce monthly, seasonal, yearly and multi-yearly bundled capacity ( see ESGM 29 October 2014 ).

Booking short-term capacity could be more convenient than current long-term bookings that some companies have in place, as it would allow them to change existing bookings. For example, capacity booked at entry points in southern Italy is largely underused, as flows from Algeria and Libya have substantially decreased compared with previous years, but companies that had booked long-term transport capacity are still paying for capacity that is not used.

Some companies claim that shippers that have long-term capacity contracts in place could be discriminated in comparison with other competitors that could get access to new tariffs with CAM.

Reset clause

To prepare for the EU-wide network code on transport tariffs, which still needs to be finalised and approved by EU institutions, EU shipper representatives are pushing for a way to reset clauses in long-term capacity bookings under the new tariff network code. The idea is not popular among European transmission system operators (TSOs) that fear they could lose out of this.

Against a background of lower gas demand in Europe in recent years, together with a higher proportion of tariffs priced on a floating basis likely to come in under new EU tariffs rules, EU shippers would like to have the opportunity to adapt their booking strategies to this new market reality ( see ESGM 9 July 2014 ).

The proposal of implementing the reset clause for transport tariffs across Europe is shared by most of market participants, while the idea to implement it only at Italian entry points does not find agreement from the whole Italian market.

Some shippers said that implementing the reset clause only in Italy could create discrepancies with rules in other countries.

Moreover, it could lead to the risk that the Italian regulator could charge Snam’s recovery of revenue to shippers with the introduction of new tariffs at entry points, some shippers said.

“We calculated that the new tariff would be higher than the CVos tariff for winter 2014/2015,” one shipper said. “This would raise a barrier to cross-border trade,” he added.

“At the moment tariffs at Italian entry points are like a crossed subsidy,” another shipper said, referring to tariffs at southern versus northern entry points as an efficient mechanism.

Proposal

ICIS understand that a proposal on the possibility to partially or totally reset existing long-term transport capacity contracts has been presented by companies and industry associations to the Italian regulator. Towards the end of September, Snam highlighted in a note to the regulator that the introduction of measures of existing contracts is feasible, provided that it would not result in any change to the TSO’s full capacity revenue attainment.

“In the event of early termination of the contract, charges today are the remaining value of the contract,” Snam said in an email to ICIS on Thursday.

The Italian regulator was not available for comment at the time of publication, but ICIS understands from sources close to the regulator that AEEGSI might favour a standard solution across Europe rather than implement the reset clause only in Italy and that it might wait so see how the European discussion evolves before to take a decision on this matter. Matilde Mereghetti