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Harmonization of Cross Border Transmission Tariffs between Portugal and Spain (CNE/ERSE)

Harmonization of Cross Border Transmission Tariffs between Portugal and Spain (CNE/ERSE) Public hearing 15 th SG Meeting S-GRI Madrid , 7 th February 2012. Context – SGRI WP 2011-2014.

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Harmonization of Cross Border Transmission Tariffs between Portugal and Spain (CNE/ERSE)

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  1. Harmonization of Cross Border Transmission Tariffs between Portugal and Spain (CNE/ERSE) Public hearing 15th SG Meeting S-GRI Madrid, 7th February 2012

  2. Context – SGRI WP 2011-2014 Consulta Pública sobre harmonização das tarifas de 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 • …

  3. Context – Joint task of CNE and ERSE Some milestones of MIBGAS: 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 Consulta Pública sobre harmonização das tarifas de interligação de gás natural entre Portugal e Espanha

  4. 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 Case study methodology

  5. Example of the study results: Industrial consumer located in Portugal CBT comparison methodology Consulta Pública sobre harmonização das tarifas de interligação de gás natural entre Portugal e Espanha Gas supply from Portugal 0,95+0,49 = 1,44 €/MWh Gas supply from Spain 1,37+0,38+1,5+0,54 = 3,79 €/MWh Vs Supplying the consumer bringing gas from SP has an added cost of 2,35 €/MWh due to CB Tariffs, entering the transmission system

  6. Example of the study results: Industrial consumer located in Spain CBT comparison methodology Consulta Pública sobre harmonização das tarifas de interligação de gás natural entre Portugal e Espanha Gas supply from Portugal 0,95+0,49+0,78+0,61 = 2,83 €/MWh Gas supply from Spain 1,37+0,54 = 1,91 €/MWh Vs Supplying the consumer bringing gas from PT has an added cost of 0,92 €/MWh due to CB Tariffs, entering the transmission system

  7. Summary results of the added costs observed by shippers who supply their customers using the interconnection Summary results from the case studies • 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) • % Impact on total grid access prices depends on exit tariff prices in each country

  8. 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 Main conclusions

  9. 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 Harmonization of cross border tariffs

  10. Building blocks approach to market integration And integrate released capacity in the CAM Rules of balancing

  11. Public hearing poses some questions (I) Consulta Pública sobre harmonização das tarifas de 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?

  12. Public hearing poses some questions (II) Consulta Pública sobre harmonização das tarifas de 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?

  13. Participation Consulta Pública sobre harmonização das tarifas de 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 cbtariffs@erse.pt | cbtariffs@cne.es If comments are not to be publicly identified they must be explicitly marked as confidential

  14. Receive, analyse and publish comments from stakeholders to the Public Hearing NRAs will issue a proposal, where necessary, of measures to foster market integration through cross border tariff harmonization European target model for market integration will provide guidance for short term developments Next steps

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