ACER calls for improvements to the proposed French gas transmission tariffs
What is it about?
Today, ACER publishes its report on the French national regulatory authority’s (CRE’s) proposed gas transmission tariffs. In its report, ACER assesses the methodology proposed for calculating the tariffs applicable to the transmission networks and provides several recommendations to further justify the methodology.
What are ACER’s recommendations?
- Improve the justification provided for the proposed flow scenarios, in particular:
- Support the proposed distance cost driver calculation with evidence. In the proposed methodology, this is based on the ‘shortest distance between entry and exit points’, instead of using the average distance between network points, which is the standard approach in the capacity weighted distance methodology.
- Demonstrate that the application of non-economic combination of points is consistent with the possibility of sourcing gas to neighbouring markets from the French hub. The methodology proposes that certain combinations of network points cannot be considered in the calculation of the distance cost driver, as they are not competitive with alternative EU routes.
- Provide a clearer explanation on the calculation steps and the outcome of the optimisation algorithm.
This recommendation aims at ensuring that CRE provides an appropriate justification for the assumptions and calculations proposed in the methodology.
- Increase transparency: ACER recommends that CRE assesses the impact of the proposed flow scenarios and unit cost equalisation on the distance cost driver and on tariffs respectively. CRE proposes that tariffs for the intra-system and cross-system use of the network have the same unit costs, but does not explain the degree to which tariffs are modified to achieve this objective.
- Yearly assessment on contracted capacity: ACER proposes a yearly assessment of the difference between the forecasted contracted capacity and the actual contracted capacity at the beginning of each tariff period. This is particularly relevant as the forecast is completed for a four-year period, instead of the more standard yearly period. The publication should inform stakeholders about the accuracy of the contracted capacity forecast.