Harmonization of Cross Border
Transmission Tariffs between
Portugal and Spain (CNE/ERSE)
Public hearing
15th SG Meeting S-GRI
Madrid, 7th February 2012
1

Consulta
sobre
harmonização
das tarifas de
ContextPública
– SGRI
WP
2011-2014
interligação de gás natural entre Portugal e Espanha
SGRI WP 2011-2014 includes some short term priorities
for SP-PT interconnections:
• Harmonized and coordinated mechanisms for capacity
allocation and congestion management at interconnections
• Regulated TPA tariff harmonization, starting with cross
border tariffs in MIBGAS
• Hub-to-hub trade development
• …
2

Consulta
harmonização
das
Context Pública
– Joint sobre
task of
CNE and ERSE
tarifas de interligação de gás natural entre
Some milestones of MIBGAS:
Portugal e Espanha
•
ERSE and CNE approved a position document on the priorities for MIBGAS
development, sent to Governments on September, 2011
•
Portuguese Gov committed in the Memorandum of Understanding (w/ EC,
ECB, IMF) to take measures that accelerate MIBGAS development through
regulatory convergence, namely promoting the harmonization of tariffs, CAM
and CMP in the interconnection networks
•
CNE and ERSE have done a joint study on CBT tariffs at the SP-PT IPs,
with the aim of setting up a public consultation on tariff harmonization and
identifying any other obstacles to the internal gas trading
•
The study was published through Public Hearing process on Jan,18th, 2012
3

Case study methodology
Assessment of case studies based on the supply of a
CCGT/industrial cons. from a MIBGAS entry point (LNG
terminal/interconnection).
For each case study:
•
•
•
Entry costs into the transmission network are assessed as well as
regasification costs
Transmission costs include one country or two countries depending on the
origin and destiny of the supply
Costs for using underground storage or for balancing purposes are not
considered
4

Consulta
Pública sobre
harmonização das
CBT comparison
methodology
tarifas
interligação
Examplede
of the
study results: de gás natural entre
Industrial consumer
located in Portugal
Portugal
e Espanha
1,37
0,38
0,95
0,49
PT
0,54
1,50
ES
Industrial
2,92
Gas supply from Portugal
Gas supply from Spain
Vs
0,95+0,49 = 1,44 €/MWh
1,37+0,38+1,5+0,54 = 3,79 €/MWh
Supplying the consumer bringing gas from SP has an added cost
of 2,35 €/MWh due to CB Tariffs, entering the transmission system
5

Consulta
Pública sobre
harmonização das
CBT comparison
methodology
tarifas
interligação
Examplede
of the
study results: de gás natural entre
Industrial consumer
located in Spain
Portugal
e Espanha
1,37
0,54
0,95
0,49
PT
0,78
0,61
ES
Industrial
2,33
Gas supply from Portugal
Gas supply from Spain
Vs
0,95+0,49+0,78+0,61 = 2,83 €/MWh
1,37+0,54 = 1,91 €/MWh
Supplying the consumer bringing gas from PT has an added cost
of 0,92 €/MWh due to CB Tariffs, entering the transmission system
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
Summary results from the case studies
Summary results of the added costs observed by shippers who supply
their customers using the interconnection
Unit.: €/MWh
Cross border tariff payments for importing gas
through the interconnection (€/MWh)
Consumer
location
Consumer
type
Without
regasification costs
With
regasification costs
Spain
Industrial
1,3
0,9
Spain
CCGT
2,0
1,6
Portugal
Industrial
1,9
2,4
Portugal
CCGT
2,9
3,3
• Importing gas through the neighbouring country represents always an added
transmission cost
• The added cost depends on the consumption profile (capacity price)
• LNG regasification costs can either contribute to lower or raise the added costs
since average regasification cost is lower in PT (for the case studies)
7
• % Impact on total grid access prices depends on exit tariff prices in each country

Main conclusions
Access costs are higher when the transmission system
of the neighbour country is used, partly due to the cost
for the use of its transmission system and also because
of the cross border tariffs are not harmonized in both
systems
Note: Parallel development of harmonized CAM in SP-PT border
will help much in establishing convergent and coherent
pricing and allocation of capacity at interconnections
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
Harmonization of cross border tariffs
CBT are a particular case of gas network tariff
•
•
Should comply at least with the same principles recommended for the
development of the gas network tariff
According to the Gas Directive 2009/73/CE, the European Gas Regulation
715/2009, the European Working Group for Tariffs and the recommendations
by the Council of European Energy Regulators, tariffs or charges for the use
of the gas transmission network should comply with the following principles:
-
Cost recovery and cost reflectivity
Facilitate efficient gas trade, hub development and market liquidity
Non discriminatory
Ensure high levels of transparency
Adaptability to the specificities of the network
ensure that any differences in tariff conditions applied to different customers for
similar services should reflect underlying costs.
Coherence check with the Target Model and the FGs under
discussion
•
•
Study establishes the baseline on CBT (present situation)
Stakeholder views are welcome designing target scenario & interim steps
9

Building blocks approach to market integration
Cross Border
Tariffs
CAM
2012-13
MIBGAS
market
integration
CMP
And integrate
released capacity
in the CAM
Rules of
balancing
10

Consulta
Pública sobre
harmonização
das tarifas (I)
de
Public hearing
poses
some questions
interligação de gás natural entre Portugal e Espanha
.
.
.
Question 1: Would you agree with the analysis made on current
market situation and on the major issues affecting cross
border trade between Portugal and Spain?
Question 2: How do you think that transmission network costs
should be allocated at cross border IP (both in Spain and
Portugal), taking into account the defined principles (coherence,
transparency, cost recovery and cost reflectiveness, etc) and the
starting situation of the regulatory tariff framework in both
countries?
Question 3: Which do you feel are the most important aspects
where harmonization (apart from the cross border tariffs
harmonization) can contribute significantly to short term market
integration?
11

Consulta
Pública sobre
harmonização
das tarifas (II)
de
Public hearing
poses
some questions
interligação de gás natural entre Portugal e Espanha
.
.
Question 4: How would you implement the proposed step-wise
approach, aiming for a more integrated market in the longer
term?
Question 5: Would you identify new issues you think are
important to create a favorable cross border trade environment?
How would you set the timing and prioritization for the
discussion on these issues?
12

Consulta
Pública sobre harmonização das tarifas de
Participation
interligação de gás natural entre Portugal e Espanha
.
All comments from the stakeholders to the questions
raised in the Public Hearing should be sent to ERSE or
CNE until February, the 17th, 2012
[email protected]
|
[email protected]
If comments are not to be publicly identified they must be explicitly
marked as confidential
13

Next steps
1.
Receive, analyse and publish comments from
stakeholders to the Public Hearing
2.
NRAs will issue a proposal, where necessary, of
measures to foster market integration through
cross border tariff harmonization
3.
European target model for market integration will
provide guidance for short term developments
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