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. ​​​