ACER welcomes simplified Lithuanian gas transmission tariff proposal

Today, ACER releases its report on the Lithuanian gas transmission tariffs directed at the Valstybinė Energetikos Reguliavimo Taryba (VERT), the national regulatory authority (NRA) of Lithuania.

The report assesses the compliance of the proposed reference price methodology (RPM) with the requirements of the Network Code on Harmonised Transmission Tariff structures. 

What is the proposed methodology about?

The Lithuanian regulator proposes to:

• Apply a postage stamp reference price methodology with flexible entry-exit splits, complemented by a 100% discount at entry points for domestic biomethane producers.
• Align entry tariffs with those of the neighbouring FinEstLat (Finland, Estonia and Latvia) zone.
• Simplify the existing tariff structure by abandoning the previously applied system based on multiple asset cost splits and differentiated tariffs.
• Use a flow-based charge (commodity-based tariff) with a fixed tariff level for the entire regulatory period.
• Offer a conditional product with limited allocability (i.e. the product can only be used to ship gas to pre-defined system points) at entry and exit points with non-EU countries.

What are the key findings? 

After analysing the consultation document, ACER concludes that:

• The proposed methodology meets the requirements on transparency, non-discrimination, and volume risk.
• Compliance with the requirements on cost-reflectivity, avoidance of cross-subsidisation, and prevention of cross-border trade distortions cannot be fully assessed, due to several design elements of the methodology.
• While the criteria for setting the flow-based charge are met, further clarification is needed on how the charge will be adjusted and reconciled. 
• Simplifying the tariff structure has made the methodology more understandable for system users.

What does ACER recommend? 

ACER recommends that the national regulator, when adopting its final decision:

• Provides a clear framework for the flow-based charge, preferably by recalculating its level annually.
• Ensures full compliance of non-EU entry and exit points with the network code. 
• Assesses regional networks and allocates their costs in a compliant way, in line with EU rules and ACER’s guidance.

See all ACER reports on national tariff consultation documents.