Transcript Cost Allocation Methodologies

EU Tariffs Code Update
Based on Refined Draft as of 30th October
NTS Charging Methodology Forum
31st October 2014
EU Tariff Code Timeline
draft PP
consultation
19/12/13 - 20/01/14
consultation
workshop
SJWS 1 SJWS 3 SJWS 5
11/02/14
kick-off WS
15/01/14
14/03/14 09/04/14
SJWS 2 SJWS 4
27/02/14
26/03/14
refined draft NC to
SSP
07/11/14 - 21/11/14
25/06/14
publish initial draft NC
for consultation
refinement WS
24/09/14
NC supported by
ENTSOG
30/05/14
17/12/14
January
Start
30/11/13
PHASE 1:
project plan &
launch
documentation
development
March
May
September
November
PHASE 2:
NC development
PHASE 3:
NC decision-making
01/02/14 - 31/07/14
01/08/14 - 31/12/14
January
Finish
31/12/14
30/11/13 - 31/01/14
LD
Publication
22/01/14
PP
Publication
formal starting
31/01/14
date of NC process
01/01/14
initial draft NC
consultation
NC supported
by stakeholders
30/05/14 - 30/07/14
21/11/14
Deadline for ENTSOG
to submit NC and
accompanying document
to ACER
31/12/14
Key Refined Definitions
 ‘allowed revenue’ means the total revenue that a
transmission system operator is entitled to obtain for the
provision of transmission services and dedicated
services within a given time period under a non-price
cap regime set or approved by the national regulatory
authority;
 ‘transmission services’ means the regulated services
provided by the transmission system operator to all
network users within the entry-exit system for the
purpose of transmission;
Key Refined Definitions
 ‘dedicated services’ means the regulated services
other than transmission services provided by the
transmission system operator to specific network users,
or infrastructure operators, or at specific entry or exit
points;
 ‘regulatory account’ means the account aggregating
under- and over-recovery of the transmission services
revenue;
Cost Allocation Methodologies
 Requirement to recover transmission services revenue
“primarily” by capacity-based charges now amended.
 Requirement now is to recover by capacity-based
charges and, subject to NRA approval, by commoditybased charges.
 Complimentary Revenue Recovery Charge
 Now purely a commodity based charge
 Unresolved issue re NRA assessment of cost-reflectivity,
cross-subsidisation between IPs and non-IPs and
ACER’s role.
Cost Allocation Methodologies
 Variant A of virtual point based methodology
 Now rewritten but slightly higher level
 Attempts to write more detailed version simply recorded
GB approach including policy decisions within model
 But – Publication of “simplified” tariff models now in Code
This should provide relevant transparency on methodology
 Rescaling: restriction now removed on application of
rescaling where CRRC is used
Cost Allocation Methodologies
 Cost Allocation Test
 Text essentially unchanged from previous draft
 How this works for GB still a concern
 Should it be assessed in combination with CRRC test?
 Shorthaul
 No settled view to include (ENTSOG Board to decide)
 Text has been drafted to allow discounted tariffs to be
applied (allows shorthaul and other products that have
restrictions from standard tariffs)
 Some NRAs consider no explicit mention required in
Code
Additional Publication requirements
 A simplified tariff model enabling the network users to
calculate the transmission tariffs applicable for the
current tariff period and to estimate their possible
evolution in the following tariff periods
 Model to be accompanied by the explanations on how to
use such tool.
 Or, sensitivity analyses enabling the network users to
estimate the possible evolution of transmission tariffs in
the following tariff periods.
Publication requirements
 Publication notice period for transmission tariffs
changed:
 At least 30 days before beginning of tariff period (as
before), plus
 “At least thirty days before the annual yearly capacity
auction, the transmission system operator or the national
regulatory authority, as relevant, shall publish
the indicative reference prices and the binding multipliers
and seasonal factors applicable for the tariff period
following such auction”.
Revenue Reconciliation
 Applies to transmission services revenue only
 “Single regulatory account” now “one regulatory
account”
 Reconciliation carried out in accordance with the
applied cost allocation methodology
 Text now amended to allow reconciliation to include
adjusting the CRRC where relevant (i.e. to do the TO/SO
split before applying the cost allocation methodology).
Fixed Price to be allowed at IPs

Aims for including a fixed price
 Enhance stability of transmission tariffs while taking account of the
contribution that the revenues originating from capacity sales under
such approach provide for revenue recovery
 The objective of avoiding cross-subsidisation between network
users;
 Promoting long-term contracts;
 Facilitating the offer of incremental and new capacity;
 Promoting financial stability of transmission system operators.
 Board decision required to ensure that IP can be fixed price
only.
Entry into Force
 1 October 2017 or
 The first day of the month following the date calculated
as twenty four months as from entry into force
 New line inserted re fixed price contracts:
 This Regulation shall not affect the price foreseen in the
contracts concluded before entry into force of this
regulation, where such a price is calculated in a way
other than set out in Article 42(1)(a)*
* i.e. a floating payable price