During 2018, a lot of efforts were put for the development of the tariff model and ITC mechanism for the common Baltic-Finnish market, resulting in stepwise integration approach agreed by RGMCG.
Following the stepwise integration approach on November 14, 2018 NRAs of Finland, Estonia and Latvia (FinEstLat) signed the Memorandum of understanding to facilitate cooperation and coordination between the NRAs in order to create in good time the FinEstLat market which provides for the possibility for other NRAs to join. NRAs of Finland, Estonia and Latvia based on the findings of the Consultancy company Baringa Partners LLP study agreed that FinEstLat single natural gas transmission entry-exit system (FinEstLat system) shall have the following features:
Based on the selected tariff model, the FinEstLat NRAs have amended the methodologies for calculating the transmission tariffs and approved the transmission tariffs, which will be applied as of January 1, 2020, taking all the actions specified in NC TAR. ACER published its analyses of the consultation documents of the Estonian, Latvian and Lithuanian reference price methodologies.
In turn, FinEstLat TSOs on October 8, 2018, signed the Memorandum of understanding, stipulating the goals, values and TSO-related principles for harmonisation of capacity management, establishment of single balancing zone, regional gas market model, and principles of the ITC mechanism. Memorandum also provides the option for other TSOs sharing its goals and values to freely join it. Signing of memorandum was followed on November 5, 2018 by submission of joint application on coordinated opinion on gas transmission system entry-tariff and ITC mechanism among Finnish, Latvian and Estonian TSOs. Supporting opinion of NRAs was the key for the development of the Agreement on the Implementation of Inter-transmission System Operator Compensation Mechanism (ITC Agreement), signed by the TSOs of Estonia, Finland and Latvia on February 14, 2019.
Considering the different level of natural gas market maturity in the countries of FinEstLat system and following the stepwise integration approach, for the transition period, two balancing areas are set up in the FinEstLat system – the common Estonian-Latvian balancing zone and the Finnish balancing zone.
For the implementation of the common balancing zone, TSOs of Estonia and Latvia jointly prepared and relevant NRAs approved the Common regulations for the use of natural gas transmission system and Common regulations for the natural gas balancing of transmission system, which entered into force on November 1, 2019 with the full application as of January 1, 2020.
For the communication with market participants, TSOs of Estonia and Latvia jointly develop the Common IT platform, ensuring WEB-interface and AS4 communication for the information exchange with market participants. TSOs also introduced the concept of Connecting TSO with the aim to minimise the administrative burden for market participants, requiring signing of just one set of agreements with the TSO of free choice in order to get access to all transmission infrastructure of the common balancing zone.
FinEstLat system becomes operational January 1, 2020.
In 2020, RGMCG will continue the work on four-country market model.