In 2018 the Agency published a Report on the methodologies and parameters used to determine the allowed or target revenue of gas transmission system operators.

The study reviewed the key aspects of TSO revenue setting as well as the associated methodological approaches employed in the EU, and provided an evaluation based on a conceptual framework developed for this purpose.

Transmission System Operators (TSOs) are monopolies and therefore their revenues are set by the national regulatory authorities. A number of different methodologies are used for this purpose. The most common are the price cap, revenue cap and cost plus methodologies. These methodologies include a number of parameters used to determine the depreciation time of the TSO assets and the cost of capital for TSOs.​
 

The report provides recommendations, while the underlying study offers an overview of the main features used to set the TSOs' allowed revenue. The study looks into the practices setting the regulatory asset base and the cost of capital. In addition, the study provides country sheets describing the methodologies applied per Member State.

The report suggest a number of improvements in the design of the allowed revenue methodologies in order to increase transparency, apply benchmarking, establish EU guidelines for setting the cost of capital, and establish data collection processes that can allow comparisons across TSOs on their efficiency.​

The Network Code on Harmonised Transmission Tariff structures (NC TAR) ensures a transparent process for setting non-discriminatory tariffs with a focus on different kinds of users. The NC TAR increases competitiveness in the EU by requiring network users to be charged efficiently with incurred network costs in a non-discriminatory way, and by enhancing cross-border trade, fostering competition on the gas commodity market and higher price pressure. 

The NC TAR fosters market integration by facilitating cross-border trade thanks to a higher consistency between national tariff structures and the publication of reliable tariff methodologies. The NC TAR should also improve transparency on tariffs and facilitate the active participation of stakeholders in public consultations. These consultations have increased a shared understanding of tariffs and allowed network users to anticipate tariff changes. 

Transmission system operators (TSOs) and national regulatory authorities (NRAs) are obliged for transparency reasons to publish the national tariffs and the elements used to calculate them. The Code also imposes TSOs and NRAs to carry out a consultation on the reference price methodologies used to calculate the tariffs. This demanding process started in 2017 with deadline on 31 May 2019, which was met by most Member States. As a result, tariff transparency improved across the EU​.
 

ACER has to analyse whether each of the consulted tariff methodologies complies with the NC TAR principles. There reports are published individually and contain country-specific comments and recommendations. ACER completed a report on the TSOs' allowed revenue and will complete further work on the multipliers used to calculate tariffs.​

​​​​In the framework of the functionality process, ACER proposes solutions for cases notified on the platform by network users with the contribution of NRAs and ENTSOG. Users usually request practical improvements related to the implementation of the network codes and guidelines. Most cases end with technical and practical improvements, while in some cases policy guidance is needed. ​

What is an auction restriction? 

Since 2017, restrictive conditions have been announced by some TSOs on the PRISMA platform for annual and quarterly auctions in the German NCG market area. The reason was that BNetzA requested TSOs operating in the NCG market area to re-allocate capacities after the annual and quarterly auctions at interconnection points (IP) to distribution exit points.

Why was the case brought forward? 

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These restrictions on capacity marketing at IPs in the NCG market area are contrary to Article 8 NC CAM.

​What is the Agency guidance? 

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The underlying bodies at ACER provided policy guidance using ENTSOG technical inputs. Given the auction-based capacity allocation at IPs of the European Union are different from the capacity allocation processes at distribution exit points governed by national law, capacity cannot be allocated in a straightforward manner in Germany. Here, competing capacities are used by TSOs. The guidance suggests reallocation might be appropriate only exceptionally along with the requirement for TSOs to meet a number of predefined criteria.

What is a Virtual Interconnection Point (VIP)?

The issue was raised at the joint Agency-ENTSOG Functionality Platform where implementation issues with Network Codes can be notified. The European Commission assessed that Article 19(9) of the CAM NC concerns all existing and future capacity contracts and encouraged NRAs and TSOs to solve the problem without further legislative changes. The policy guidance acknowledged the different models and recommended to clarify the CAM NC so that existing contracts can remain at the physical IPs. ​
 

Why was it controversial? 

Market actors had different interpretations of Article 19(9) of the CAM NC on the implications for existing contracts at the physical interconnection points involved in the VIP. In the interpretation of some transmission system operators and national regulatory authorities, existing contracts had to remain at the physical IPs, whereas others thought that also existing contracts should transfer to the VIP.

The issue was raised at the joint Agency-ENTSOG Functionality Platform where implementation issues with Network Codes can be notified. The European Commission assessed that Article 19(9) of the CAM NC concerns all existing and future capacity contracts and encouraged NRAs and TSOs to solve the problem without further legislative changes. The policy guidance acknowledged the different models and recommended to clarify the CAM NC so that existing contracts can remain at the physical IPs. 

​​​​​​​​​​​​​​​​ACER promotes the bundling of standard capacity products. Bundled capacity offers and a single nomination procedure are relevant instruments to ensure the designed capacity allocation mechanisms reach their full potential.

Bundling of capacity products​​

Capacity allocation mechanisms require achieving a necessary degree of harmonisation across the European Union. Bundled capacity is part of the harmonisation goals and requires that capacity is sold in a single bundle, meaning that entry and exit volumes are offered and sold as a single product at every interconnection point in the European Union. The Code has foreseen a voluntary approach to bundle capacity contracts in case of already contracted transport capacity. The new contracts however have to be sold as bundled capacity.

Single nomination​

Single-sided nominations allow users to nominate themselves and their contractual counterparty in a single process. The process is guided by the active transmission system operator, while the counterparty operator follows its lead. The aim is to simplify the administrative burden of the commercial activity.

Capacity conversion​

The Capacity Conversion model allows for a non-discriminatory, free-of charge conversion service for annual, quarterly or monthly firm capacity products. Conversion is beneficial for those network users who hold unbundled capacity at one side of an interconnection point. The network users can acquire bundled capacities in auctions, which means they would purchase both entry and exit capacity in a single capacity bundle. The conversion will prevent network users with unbundled capacity to pay entry or exit capacity charges twice. ​

Rules for incremental capacity propose an EU-wide harmonised and market-based approach to identify a need for incremental capacity, to decide on additional investments at an interconnection point, and to allocate both existing and incremental capacity in an integrated way. Incremental capacity refers to a possible increase of technical capacity currently available at existing Interconnection Points (IPs) or to a newly created interconnection point.

The first and second incremental processes took place in July 2017 and in July 2019, respectively.

2017

Commission Regulation (EU) 2017/459 establishing a network code on capacity allocation mechanisms in gas transmission systems and repealing Regulation.

2015

Agency recommendation on the amendment to the NC CAM to the European Commission for adoption

2014

ENTSOG amendment proposal to the Network Code on CAM submitted to the Agency

2013

Agency guidance to ENTSOG on the development of amendment proposals to the Network Code on Capacity Allocation Mechanism on incremental and new capacity
CEER Blueprint on Incremental Gas Capacity
Impact assessment of policy options on incremental capacity for EU gas transmission

2012

Conclusions of the 22nd Madrid Forum inviting NRAs to develop a blueprint on how 'new build' capacity at interconnection points can be integrated into an EU-wide market-based approach

2011​​

​CEER Gas Target Model concluding that efficient, market-driven and timely infrastructure investments for interconnection capacity are needed to support the completion of the internal energy market

​Agency decision on the incremental capacity project proposal for the Mosonmagyaróvár interconnection point​

​As the National Regulatory Authorities for energy in Austria (E-Control) and Hungary (MEKH) did not agree on a coordinated incremental capacity proposal for the Mosonmagyaróvár interconnection point within the legal deadline, the decision was referred to ACER. The Agency issued a decision to replace the national decisions.​​

To ensure that gas can be traded independently of its location within a market area, network users must be free to book entry and exit capacity independently from each other. The Agency analyses the current restrictions in capacity products and publishes a dedicated Report. ​​

What is a conditional capacity contract?
 

The entry-exit system is a market access model that allows network users to book capacity rights independently at any entry and any exit point of the transmission network. Conditionalities exist when a network user is not allowed to book entry and exit capacities independently from one another, or faces restrictions on freely flowing gas from any entry to any exit point of a market area or zone. They also exist when network users can choose not to use the free and fully allocable firm capacity and commit to a more restrictive contract. In such cases, network users are incentivised to limit their capacity rights by discounts. The current EU legislation recognises firm and interruptible capacity products, while it does not explicitly regulate conditional capacities.​​

​In 2019, the use of conditional products and legacy contracts with contractual limitations occurred in Austria, Belgium, Bulgaria, Germany, Hungary, Luxemburg, the Netherlands, Poland, Romania, Slovakia, and Great Britain. The underlying Study provides a full review of these cases. ​​

ACER recommends the national regulatory authorities and the transmission system operators to:

• Create an EU-wide catalogue of conditional products with product and pricing descriptions;

• Harmonise the discounts of conditional products;

• Study the cross-border effects of conditional products and their tariffs to limit cross-subsidies between transit and domestic users;

• Provide higher transparency about the traded volumes and capacity tariffs of conditional products on the ENTSOG Transparency Platform;

• Perform a cost-benefit analysis for zone mergers potentially creating or increasing the use of conditional products and assess on a case-by-case basis whether conditional capacity products are favourable;

• Terminate transit contracts that do not follow the entry-exit model.

The Agency also recommends to further clarify the definition of the entry-exit model in the EU legislation. ​​​

The Gas Day establishes the trading window for exchanging day-ahead and daily gas products on the EU trading platforms. The Gas Day has a harmonised start and end from 5.00 to 5.00 UTC the following day for winter time, and from 4.00 to 4.00 UTC the following day when daylight saving is applied. The harmonised Gas Day promotes cross-border trading and underpins capacity bundling.​

The proposal aimed to derogate the United Kingdom and the Republic of Ireland from the obligation of adopting the common timeframes of the Gas Day, based on the UK’s upstream industry proposal. ​

ACER did not take the amendment forward because of a lack of justification, market support and of elements showing the benefits of the proposal. ​​​

​​​​​Gas balancing rules (BAL NC) ensure that injections into and withdrawals from the transmission network are managed efficiently by network users. Network users cause imbalances by injecting less or more gas at entry points than what they withdraw at exit points. The accumulation of individual imbalances affects the system as a whole. The harmonised balancing rules make network users responsible for balancing their portfolios, for which they can use a set of standardised short term products – daily or within-day ones. The transmission system operator has a residual responsibility for physical balancing to keep the system within its safe operating limits.

Network users balance their portfolio via the market, where trading platforms and exchanges enable them to sell and buy-products during the Gas Day​​​​. The transmission system operator (TSO) acts on the same platform as the users and its costs for residual balancing interventions are recovered from the imbalanced network users. The TSOs cannot earn or lose revenue due to their balancing activity and shall report their activity transparently.​

The Code has been implemented along three distinct deadlines, which the legislation offered depending on the preparedness of the Member States.

• Countries with more experience with short-term markets or balancing opted for full implementation by October 2015.

• Those who opted for temporary measures, due to information model upgrades, had to finalise implementation by October 2016.

• Countries opting for interim measures were supposed to finish implementation by April 2019.

The Agency's reports showed a high implementation rate in North-West Europe. The least advanced implementation occurred in South-East and East Europe.

The implementation relies on three enablers: information provision, network flexibility, and commercial flexibility. Only when these factors reach a sufficient degree of maturity, network users and transmission system operators are enabled to properly play their roles assigned by the Code. Trading platforms (or balancing platforms in case of interim measures) are important instruments providing opportunities to network users to trade short term standardised products. ​

ACER found the interim measures have not been terminated in time as required by the Code. The Agency recommends that Member States facing implementation delays close their implementation gaps and start an active communication towards the Agency and the European Commission. The Agency will recommend the start of infringement procedures with the European Commission for those Member States lagging significantly behind.​​

​​​​​ACER is responsible for ensuring the effective functioning of the internal gas market and therefore for filling regulatory gaps between the national and the European level. ACER strongly supports the cooperation of national regulatory authorities. If mutual cooperation faces a deadlock in well-defined cases, the Agency can take cross-border actions by using its residual decision-making power.

The Agency can also make recommendations to assist regulatory authorities and market players in sharing good practices and to provide opinions supporting greater compliance with the Guidelines and Network Codes. The Agency works transparently by consulting interested parties throughout its processes and providing opportunities to collect comments and feedback.

ACER has decided on a limited number of cross-border issues, as well as provided opinions for cross-border matters and advised regulators on specific rules in relation to the Guidelines and Network Codes. 

Agency decision for the selection of single capacity booking platform at 'MALLNOW IP' and 'GCP VIP

​On 6 August 2019, the Agency published its Decision for the selection of the gas capacity booking platform to be used at the 'Mallnow' interconnection point and the 'GCP' virtual interconnection point between Germany and Poland. The Decision establishes the RBP platform to provide services until the concerned transmission system operators agree on the permanent use of a booking platform. This Decision was taken after having consulted relevant stakeholders and technical experts. The Agency​​​​​ received offers from three operational gas booking platforms in response to its Open​​​ Call​, which were evaluated based on legal, IT and financial requirements. Based on these elements, ACER concluded that RBP submitted overall the most advantageous offer. 

These provisions apply for a maximum of three years.

​Transport contracts for the offer of bundled capacity products are widely used in the European Union. The CAM NC has introduced several changes that harmonised the capacity contracts across the European Union. The ENTSOG template on General Terms and Conditions in standard capacity contracts collects these elements in a single document.

Having a template that is widely used across the European Union can increase the value and usefulness of bundled capacity products, as well as making the administration of contracts easier for the network users.​

​​ACER believes the ENTSOG Template did not always go as far as would have be​en desirable. The Agency recommended the template should be turned into a ready-to-use contract, increasing its impact across the European Union.​

The Network Code on Capacity Allocation Mechanisms (CAM NC) harmonises how network users can use the gas transmission network to enter or exit a market, and how these capacity rights can be obtained. Different forms of standard capacity products exist: there are long-term (monthly, quarterly and yearly) and short-term (day and within-day) capacity contracts. The use of the transmission network can be unrestricted (firm capacity) or with restrictions (interruptible and conditional capacity products).

To facilitate moving gas across markets, transmission system operators allow the exit from one market area with the right to enter a neighbouring market area at the interconnection points. Virtual trading points in each market place facilitate the exchange of capacity rights, so that network users can easily transfer them.

A harmonised EU-wide auction scheme supports network users to buy capacity on capacity booking platforms. In addition to harmonising rules for existing capacity, the CAM NC provides a harmonised process to build incremental-capacity.

The Guidelines on Congestion Management Procedures (CMP GL) harmonise the approaches to identify and deal with contractual congestion. The presence of contractual congestion implies that some network users cannot get the capacity product of their choice and must rely on mitigating measures to access the market. Such measures are necessary to improve the efficient network usage and the overall market efficiency, and to avoid investment in physical capacity when contracted capacity remains unused. Congestion management​ is strongly connected to capacity allocation, both dealing with network access rights.