Final details on gas tariff law uncertainties remain

The European Commission revealed its planned changes to final rules on how transmission tariffs across the EU are set last week, but it was the details that were not mentioned that shippers are now losing sleep over.

The commission held a public meeting to highlight changes it planned to make to the network code on gas transmission tariffs last Tuesday (see ESGM 15 December 2015). Uncertainty clouded details of the rules after the Agency for the Cooperation of Energy Regulators (ACER) did not issue a recommendation on the draft law in October – a key step in the rule-making process (see ESGM 16 October 2015).

One notable area in the network code that has been much debated, and yet was given little attention in the commission’s presentation, was floating versus fixed tariffs. Most recently, the European Network of Transmission System Operators for Gas (ENTSOG) proposed regulators from each state publish binding tariffs before annual auctions for transmission capacity (see ESGM 1 April 2015). This was a win for shippers, who had been arguing that the previously proposed floating tariffs system – which allowed TSOs to recoup losses more effectively – would make it impossible for companies to calculate how expensive it would be to ship gas in advance.

To make this compromise, ENTSOG and ACER amended the timing of annual gas capacity auctions under the EU network code on gas capacity allocation mechanisms (see ESGM 20 July 2015).

There was only a minor mention of fixed tariffs in the commission’s presentation on its planned changes to the rules. This was to say fixed tariffs would only be used for large new projects.

“We just don’t know. Without seeing the text it is very hard to see how this all fits together,” said one head of regulatory affairs at a major shipper.

The commission has yet to publish its text on the tariff rules, with the public meeting only highlighting the major changes planned.

Another part of the rules that was not mentioned at the commission’s meeting, was a new clause added into ENTSOG’s latest draft that tariffs in contracts which were agreed on before 29 November 2013 would not be affected. This in particular will be a worry for shippers until the final text reveals this detail, as they will not know whether their company will owe charges for long-term capacity agreed years ago.

Another area of the code that shippers are still concerned about is the commission’s proposals over setting discounts for interruptible capacity tariffs, according to another policy expert from a mid-sized European shipper.

The commission says its rule will be that cheaper tariffs can be set for interruptible capacity points ex ante, or before the capacity is used, but there would still be a possibility to apply discounts afterwards.

“It is not clear exactly how this would work,” the policy expert said.

The tariffs network code will enter into force at the end of 2016, although the commission has allowed countries a cross-over period in implementing certain parts of the code.

The commission will circulate its final text by the end of February, before comitology meetings scheduled for March and June. miriam.siers@icis.com