The Capacity Allocation Mechanisms Network Code (CAM NC) harmonises how Transmission System Operators (TSOs) offer and allocate available gas transmission pipeline capacity to network users. With Europe’s decarbonisation goals and the evolving gas market, the network code, last amended in 2017, now needs to be updated.

To address this, ACER initiated the revision process earlier this year. In autumn, ACER will hold a final public consultation to collect stakeholders’ feedback on its draft proposals.

The revision process

The revision process is informed by new regulatory elements from the hydrogen and gas decarbonisation package, ACER’s initial analysis of the network code's achievements and areas for improvement, alongside continuous dialogue with stakeholders:

• ACER conducted a preliminary analysis (from October 2023 to January 2024) to identify main achievements and potential improvements to the CAM NC (see the scoping consultation and the workshop).
• These findings were shared with the European Commission, which prompted ACER to initiate the revision process.  
• In spring 2024, ACER developed a policy paper proposing potential improvements to the CAM NC, and sought feedback through a public consultation.
• A technical workshop was held in July 2024 to further discuss the proposed revisions with the consultation respondents.

What are the next steps?

ACER will hold a final public consultation from 26 September to 25 October 2024 to ensure the proposed amendments effectively address market needs and deliver the expected improvements.  

The CAM NC revision process will conclude with ACER’s recommendations to the Commission (expected by December 2024), which is responsible for revising the text of the network code.

Today, ACER publishes its report on the Danish non-transmission tariffs proposed by Energinet, Denmark’s Transmission System Operator (TSO). These tariffs cover the costs of Denmark’s emergency supply services, such as filling gas storage and providing emergency gas supply to non-protected consumers.

The proposed methodology includes:

• An ex-ante tariff, calculated using a postage stamp reference price methodology (RPM), which distributes emergency service costs equally among all non-protected consumers.
• An ex-post compensation, which adjusts cost allocation after gas is delivered based on the actual gas volumes received by each non-protected consumer during an emergency.

What are the key findings?

ACER evaluated the compliance of the proposed methodology with the requirements of the Network Code on Harmonised Transmission Tariff Structures (NC TAR) and notes:

• The ex-ante postage stamp tariff does not consider the varying risks of supply interruption among different non-protected customers.
• Non-protected consumers receive equal protection for the first 72 hours after emergency measures begin. After this period, the risk of gas supply interruptions may depend on the remaining gas volumes.
• Designing a cost-reflective ex-ante tariff is highly challenging due to information confidentiality and the uncertainty of supply emergencies.
• In the event of a supply emergency, the ex-post compensation increases cost reflectivity by adjusting the initial tariff to reflect the actual level of interruption for each non-protected customer.
• The consultation document lacks sufficient information on the functioning of the ex-post compensation mechanism.

ACER concludes that the proposed non-transmission tariffs comply with the NC TAR and recommends the Danish regulatory authority to ensure greater transparency by providing more detailed information on the ex-post compensation mechanism in their next decision.

Access all ACER reports on national tariff consultation documents.

Today, ACER releases its report on the Slovakian gas transmission tariffs proposed by Eustream A.S., the Transmission System Operator (TSO) of Slovakia.

The proposed methodology considers the changes in network patterns caused by the 2022 energy crisis. To address these, Eustream proposes:

• Adopting a postage stamp reference price methodology (RPM) with a revenue split of 37.5/62.5 between entry and exit points.
• Using a benchmarking adjustment to lower tariffs and attract additional flows to the network.

What does ACER recommend?

ACER analysed the information provided by Eustream to assess the compliance of the proposed methodology with the requirements of the Network Code on Harmonised Transmission Tariff Structures (NC TAR). Based on this analysis, ACER provides the following recommendations:

• Review the revenue regime applicable to Eustream.
• Apply the benchmarking adjustment only to points of the Slovak network that are in competition with other networks across the EU.
• Clarify how the systematic under-recovery borne by the TSO is managed.
• Assess the split of revenue and capacity between existing contracts (concluded before 6 May 2017 and defined by Article 35 of the NC TAR) and the proposed RPM.
• Review the contracted capacity forecast, which serves as an input to the RPM.
• Justify the level of the proposed risk premium considering the risks faced by the TSO.

What are the next steps?

On 5 June 2024, URSO, the National Regulatory Authority (NRA) of Slovakia, approved Eustream’s tariffs (covering the period from 1 January 2025 to 31 December 2027) after receiving ACER’s preliminary feedback.

ACER invites URSO to consider the recommendations included in this report, either by complementing its motivated decision (published on 5 June 2024) or in the next consultation on the RPM (provided this occurs by 2025).

Access all ACER reports on national tariff consultation documents.

The Gas Balancing Network Code (BAL NC) establishes market-based rules to ensure that gas supply and demand are balanced efficiently within the EU. Its aim is to promote short-term gas wholesale markets by financially incentivising network users to balance their positions using daily or within-day products, thus enhancing market flexibility and efficiency.

ACER annually monitors the effects of the BAL NC implementation and provides key indicators to help better understand balancing actions across Member States.

Today, ACER publishes the highlights of key indicators (also in a dashboard) on the EU gas balancing system for the gas year 2022-2023.

What are the key findings of ACER’s latest analysis?

ACER collected relevant information from Transmission System Operators (TSOs) and National Regulatory Authorities (NRAs) to calculate and assess indicators that track balancing market developments in each Member State. These indicators measure:

• TSOs’ balancing activities, including gas volumes, frequency, and average price spreads of their buying and selling actions.
• Network users’ balancing activities, focusing on imbalance quantities, average imbalance prices, and price spreads to help understand whether network users have sufficient incentives to balance their positions under different national balancing regimes.
• Neutrality indicators, describing the net payments charged or credited to network users per unit of market volume.

ACER analysed key indicators from the EU balancing systems in the gas year 2022-2023, comparing with previous years and among Member States. ACER notes that national policy decisions significantly influence the design of the national balancing regimes, which is reflected in these results.

Key findings include:

• Balancing prices (both for TSOs' and network users' activity) have decreased substantially compared to the previous gas year (2021-2022), aligning with broader wholesale gas market trends.
• These lower prices led to reduced net neutrality positions (net payments charged or credited to network users), marking a positive market development.
• TSO balancing actions, as a share of total market volumes, remained stable compared to the pre-crisis period. However, most systems saw an increase in TSO sell actions year-on-year, suggesting the need for further investigations at the national level to assess potential security of supply implications.

What are the next steps?

ACER recommends NRAs to regularly assess the performance of their balancing regimes and consider adjusting the design based on changing market conditions.

ACER issues its Opinion on the Summer Supply Outlook 2024 published by the European Network of Transmission System Operators for Gas (ENTSOG).

ENTSOG’s Summer Outlook 2024 evaluates the expected gas supply and the capacity of the EU gas infrastructure to meet demand, exports, and storage needs during summer 2024. It focuses on the goal of filling gas storage to 90% by 30 September 2024 (in line with EU’s obligations to reach this level by 1 November). The Outlook considers current gas supply risks and the EU’s remaining dependence on Russian gas supply. Additionally, it includes an analysis of gas supply conditions for the winter 2024/25.

Highlights of ENTSOG’s Summer Supply Outlook

The Outlook presents two scenarios:

• minimised and complete disruption of Russian pipeline supply; and
• Liquified Natural Gas (LNG) supply for Europe modelled across high, reference, and low supply scenarios.

The Outlook’s main findings include:

• New gas infrastructure, especially the LNG terminals set up since autumn 2022, has helped reduce the dependence on Russian pipeline gas by enabling more imports from other gas sources.
• With high storage levels at the start of summer 2024 and assuming an increased LNG supply, the EU gas network is capable of meeting demand and fill storage by the end of the injection season (1 November) without relying on Russian gas.
• If Russian pipeline supply is completely disrupted and LNG supply to Europe is limited, increased withdrawals from gas storage would be necessary to meet demand, resulting in very low storage levels by the end of winter 2024/2025. In this scenario, gas demand would need to be reduced by 15% (from the average of the last 5 years) and additional LNG supply would be required to avoid gas curtailments.
• Ukrainian storage facilities could enhance the gas system flexibility by providing an additional 10 billion cubic meters of storage capacity.
• Gas storage remains crucial for ensuring security of supply, as it provides essential flexibility to the gas system during winter.

What is in the ACER Opinion?

• ACER acknowledges improvements in ENTSOG’s Outlook methodology and appreciates the inclusion of gas supply scenarios addressing major supply risks and uncertainties concerning future Russian gas flows via Ukraine after the end of 2024.
• ACER notes that gas storage filling levels reached 75% in early July, one of the highest levels in the past five summers, which allows for cautious optimism for the summer ahead.
• ACER agrees with ENTSOG’s recommendations for mitigating the risks of gas supply-demand imbalance in a scenario where Russian pipeline supply ceases and LNG supply to EU is limited. Specifically, ACER supports the need for gas demand reduction and increased LNG imports from different sources to ensure adequate security of supply levels for the winter of 2024/25.
• ACER also stresses the importance of closely monitoring gas supply flows and storage filling trajectories.

ACER’s main recommendations to ENTSOG for further improving its Outlook methodology:

• Consider a low LNG supply scenario that excludes Russian LNG supply imports.
• Assess the consistency of Transmission System Operators’ (TSOs’) gas demand projections with estimates from other entities and with European recommendations for gas demand reduction.
• Provide more detailed information on additional LNG import and cross-border capacities introduced by projects recently commissioned and expected to be commissioned in the next six months.
• Include data on the future gas wholesale prices for reference.

Cross-sectoral considerations

The European Network of Transmission System Operators for Electricity (ENTSO-E) also published its summer adequacy assessment for the European electricity system. ENTSO-E Summer Outlook confirms sufficient resource adequacy to meet European consumers’ power demand during the summer months.

Given the high interdependence of the electricity and gas sectors, ACER highlights the importance of a close cooperation between ENTSOG and ENTSO-E to ensure consistent assumptions and results in their respective seasonal outlooks.

Today, ACER releases its second quarterly review of key developments in European gas wholesale markets as part of its 2024 Market Monitoring Report (MMR). The first publication was issued in March 2024.

This report highlights the main trends in Europe’s gas markets in the first half of 2024 and identifies upcoming challenges for Europe arising from global developments (flows via Ukraine, global LNG markets etc.).

What gas market trends did ACER monitoring find?

The report finds volatile prices and supply changes in European gas markets in the first half of 2024:

• Gas prices: at the end of Q1, European gas wholesale prices fell to levels not seen since before the energy crisis but increased in Q2 as markets re-focused on supply risks, including a tighter global Liquefied Natural Gas (LNG) market.
• Price integration has not yet returned to pre-crisis levels, in part due to increased transportation costs. No critical network congestion in Europe’s gas market in the first half of 2024.
• Pipeline and LNG supply: gas pipeline supply to the EU was stable. LNG remained key for EU supply.
• Gas demand fell: in the first half of 2024, gas-fired power generation in the EU decreased by 16% compared to the same period last year.
• Gas storage: In Q2 2024, the EU injected 41 TWh less gas into storage compared to Q2 2023. Despite the slower rate, storages are on course to reach the mandated filling level of 90% by 1 November. The storage level reached in Q2 2024 is one of the highest in the past five summers.

What challenges lie ahead?

• The transportation agreement for Russian gas through Ukraine expires by the end of 2024, and its renewal is unlikely. Landlocked Central European countries will need alternative supply routes, making cross-border trade essential for affordable gas.
• Hurricane season in the Atlantic (from June to October) could affect LNG production and transportation in the Gulf of Mexico, reducing global LNG supply and tightening European gas balances.
• Any delays in concluding the scheduled maintenance of Norwegian upstream gas assets in September could trigger price volatility.
• If gas withdrawals significantly exceed those of the past two winters, EU buyers may need to increase their competitiveness in the LNG markets to replenish stocks in 2025, potentially impacting wholesale prices. Weather conditions will play a key role in exposing or mitigating these risks.
• Several LNG production projects are nearing completion, with first cargoes expected in 2025, which could help stabilise gas prices. Significant additional LNG volumes are anticipated from 2026 onwards, as several large projects are scheduled to come online.

ACER will continue to closely monitor trends in the European gas markets that could lead to short-term volatility for European energy markets. The next update on the European gas wholesale markets will be published in October 2024.

Check out our other 2024 MMR publications.

ACER publishes today its feedback on ENTSOG’s “Implementation Guidelines and other complementary guidance documents” for the Ten-Year Network Development Plan (TYNDP) 2024. ACER welcomes the publication of these guidance documents for the first time, as recommended in ACER’s position paper on Cost-Benefit Analysis (CBA) consistency (March 2023), but calls for some further improvements.

What is the TYNDP?

Every two years, the European Network of Transmission System Operators for Gas (ENTSOG) publishes a non-binding TYNDP which looks forward over a ten-year horizon to identify infrastructure needs, assess projects’ benefits and provide an overview of supply adequacy across Europe. ACER monitors the development and execution of ENTSOG's plan and issues an Opinion on the draft TYNDP, evaluating its alignment with regulatory requirements.

The TEN-E Regulation 2022/869 mandates ENTSOG to consult with all relevant stakeholders and consider their input as part of this process.

What are ENTSOG’s guidance documents about?

From 19 June to 9 July 2024, ENTSOG conducted a public consultation on its guidance documents for the TYNDP 2024 including on the:

• elements required to perform project-specific cost-benefit analyses (CBAs) for the TYNDP 2024,
• methodology for assessing hydrogen and natural gas system needs for the TYNDP 2024, and
• methodology for identifying hydrogen infrastructure gaps for the Infrastructure Gaps Report 2024.

What are ACER’s key findings?

ACER recommends further improvements in ENTSOG’s guidance documents, including to:

• Revise the Infrastructure Gaps Identification (IGI) methodology by taking into account current uncertainties in hydrogen system development and align the methodology with ENTSO-E’s approach, specifying infrastructure needs in terms of required capacities per border.
• Improve clarity on the use of assumptions throughout different stages of the TYNDP process.
• Use more realistic infrastructure levels in line with expected developments in natural gas and hydrogen infrastructure.
• Enhance stakeholder engagement by collaborating with industry stakeholders to develop joint methodologies for defining relevant assumptions and parameters.
• Define and consult on a methodology to introduce a sensitivity analysis on the costs of hydrogen disruption, which significantly affect the benefits of infrastructure projects.
• Limit the security of supply assessment outlined in Annex D3 of the draft TYNDP to natural gas infrastructures only.

What are the next steps?

In line with the TEN-E Regulation 2022/869, ACER will issue an Opinion on the ENTSOG’s Infrastructure Gaps Identification (IGI) as well as on its draft TYNDP 2024 at a later stage. ACER emphasizes the importance of receiving all relevant materials promptly to ensure they align seamlessly with the 2025 Projects of Common Interest (PCI) selection process.

Access ACER’s feedback.

Today, ACER releases its report on the Swedish gas transmission tariffs, directed at the Swedish Energy Markets Inspectorate (EI), the National Regulatory Authority (NRA), and Swedegas, the Transmission System Operator (TSO) of Sweden.

The report evaluates the compliance of the proposed methodology with the requirements of the Network Code on Harmonised Transmission Tariff Structures (NC TAR).

What are the key findings?

After analysing the proposed methodology, ACER concludes that:

• The methodology used to determine the actual reference prices for the Swedish transmission network (referred to as the “applied methodology”) differs from the one presented in the public consultation.
• The consultation does not include the information requested in Article 26(1) of the NC TAR, as the details provided do not refer to the methodology applied to derive the reference prices.
• The TSO's continual revenue under-recovery questions whether its costs correspond to those of an efficient and structurally comparable network operator.
• There is no information on the applied methodology to conclude whether it complies with the NC TAR (Article 7) and satisfy the conditions for accessing gas transmission networks (Article 13 of Regulation (EC) No 715/2009).

What does ACER recommend?

ACER recommends that the NRA (or the TSO, as decided by the NRA) conduct a consultation on the applied methodology in the Swedish transmission network, following the requirements of the NC TAR.

ACER invites the NRA to repeat the consultation next year, considering that the NC TAR prescribes tariffs to be set at least every five years. This threshold has already passed at the time of this report’s publication.

Access all ACER reports on national tariff consultation documents.

Today, ACER releases its report on the Austrian gas transmission tariffs proposed for 2025 by E-Control, the National Regulatory Authority (NRA) of Austria.

The proposed methodology takes into account the changes in network patterns resulting from the 2022 energy crisis. To address these challenges, E-Control proposes:

• Adopting a capacity weighted distance methodology as the reference price methodology.
• A split of revenue between entries and exits of 27/75.
• Introducing a cap on domestic exit points to mitigate potential tariff increases, alongside offering 50% discounts at storage exit points.

What does ACER recommend?

ACER analysed the information provided by E-Control and assessed the compliance of the proposed methodology against the requirements of the Network Code on Harmonised Transmission Tariff Structures (NC TAR). Based on this analysis, ACER provides the following recommendations to the NRA:

• Evaluate the network topology and use patterns. For instance, the NRA should take into account the distance gas flows need to cover to supply different network points into the methodology.
• Explore the methodologies that best align with the network’s characteristics and usage, including selecting appropriate cost drivers and other instruments such as flow scenarios.
• Compare the results of the Capacity Cost Allocation (CAA) assessment to identify the most suitable methodologies for the Austrian transmission network. The NRA should investigate whether high CAA outcomes indicate potential cross-subsidisation between intra-system and cross-system network usage.

What are the next steps?

E-Control adopted the motivated decision on the reference price methodology on 31 May 2024, after receiving preliminary input from ACER.

Following the publication of this report, E-Control shall consider ACER’s recommendations in its next tariff consultation, scheduled for completion by the end of 2024. 

Access all ACER reports on national tariff consultation documents.

ACER’s 2024 report finds that congestion progressively diminished in 2023 due to adjustments of gas demand, supply, and flow paths to reduce reliance on Russian gas. However, the repercussions of the gas market crisis remain clear, as price convergence between European gas hubs has not yet reached the pre-crisis levels.

What does congestion mean?

Different types of congestion can occur in gas markets:

• Contractual congestion happens when the capacity of the gas transportation system is fully booked but remains partially unused, with actual gas flows below the technical limit of the gas system. This can prevent other users from accessing the gas network, leading to inefficiencies. Bringing unused capacity back to the market eases contractual congestion.
• Physical congestion occurs when gas flows reach the technical limit of the gas system. If structural bottlenecks happen, a careful assessment must be done on the need for further investment in the gas system, not necessarily in transmission assets. This assessment should be done in line with the EU’s energy and climate policies, ensure security of supply, and mitigate the risk of future asset stranding.

Addressing the most acute congestions by optimising the use of transmission capacities remains a short-term action that can help deal with tight market conditions.

What are the key findings?

The report finds that in 2023:

• Congestion diminished but remains present on key west-east routes that allow to reduce the reliance on gas supplies from Russia.
• 35 exit and entry sides at Interconnection Points (IPs) were congested, a decrease from 50 congested IPs in 2022.
• New LNG import capacity boosted supply and helped remove congestion at entry points from Norway and the UK.
• Improved market conditions at the most critical bottlenecks reduced the spreads between hub prices. As a consequence, this lowered the incentive for network users to pay high premiums to acquire capacity to move gas between those hubs.
• Total congestion revenues collected by Transmission System Operators (TSOs) amounted to €140 million, a significant drop from the €3.4 billion generated from capacity auctions in 2022. However, this figure remains high compared to the pre-crisis level of €55 million in 2021.

What does ACER recommend?

• Neighbouring TSOs should closely coordinate to maximise the availability of firm and interruptible capacities.
• Neighbouring National Regulatory Authorities (NRAs) should collaborate to remove any regulatory barriers that hinder the optimal use of the existing network for reconfigured supply routes.
• TSOs shall assess whether new investments are needed to address physical bottlenecks that persist after operational optimisations.
• NRAs need to assess whether investments to eliminate structural bottlenecks align with the EU’s energy and climate policies, and security of supply requirements.

What are the next steps?

ACER reports annually on the status of contractual congestion in the EU gas markets and on how it is managed.

Considering the monitoring results, the NRAs shall decide on the application of congestion management procedures in their own countries.