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Public Consultation on tariff methodology and indicative 2022-2023 tariffs of Lithuanian TSO – implementation of the Network Code on Harmonised Transmission Tariff Structures for Gas


National Energy Regulatory Council (hereinafter – Council) published a document for the public consultation on the methodology for determining the tariffs of services provided by the Lithuanian natural gas transmission system operator AB „Amber Grid" (hereinafter – RPM), fulfilling the requirements of the Regulation (EU) 2017/460, of 16 March 2017, establishing a network code on harmonized transmission tariff structures for gas (hereinafter – TAR NC), i.e. rules on the application of a reference price methodology, publication and consultation requirements.

The structure of this public consultation reflects the structure of the public consultation requirements established in Article 26 and 28 of the TAR NC. The consultation covers only methodological approach for the remainder of current regulatory period, i. e. 2022–2023.

As in 2022 the Lithuania-Poland gas interconnection (GIPL) point (Santaka IP – named after the location of the new GMS) will be commissioned, this additional consultation is published for the remainder of the regulatory period (2022-2023), including setting reference prices at the new GIPL / Santaka interconnection point.

Also, the newly proposed RPM contains some changes considering the opinion of Agency for the Cooperation of Energy Regulators, expressed in the document „Agency Report - Analysis of the Consultation Document on the Gas Transmission Tariff Structure for Lithuania"[1]  published on 04 July 2019:

Main aspects of ACER opinion on LT tariff structure:Changes in 2022 to align with ACER's opinion and NC TAR:
On "Non-transmission" / Local network: "The use of the local transmission network should be either considered as a transmission service or reclassified as a distribution service", based on Article 2(5) of Directive 2009/73/EC.

All allowed revenue (AR) is considered for transmission service.

The costs of gas network units/branches by which the gas is transmitted exclusively to cover Lithuanian gas demand (so called "Local network") are identified and in RPM directly allocated to Domestic exit points to ensure cost-reflectivity, and minimize cross-subsidization between domestic and cross-border network users.

On Commodity tariff level: „If Council chooses to reclassify the use of the local network as a transmission service, the same RPM should apply to all part of the transmission network, in particular with only one capacity-commodity split. "Capacity - Commodity split is lowered from ca. 23 % to 10 % of total AR and unified for all exit points (10 % representing the costs mainly driven by the quantity of the gas flow), thus ensuring compliance with Art. 4 (3) of TAR NC.
On differentiation of tariffs by the network users' size or consumption: „In both cases, these services should be priced in a non-discriminatory manner, regardless of the network users' size or consumption."Two Domestic exit points are established instead of one (based on significance criteria), this ensures non- discrimination of users based on their consumption in a single exit point.  The establishment of two points ensures cost reflectivity and minimizes cross-subsidization between domestic network users. Further information regarding Domestic exit points is provided in chapter 5.4.

 

Chosen reference price methodology is Postage stamp, with the following features:

Methodological features of Lithuanian RPM in 2022-2023New / No change

RPMPostage stamp with direct allocation of costs, of the part of TSO's network which is exclusively used only by the specific network users, i.e., allocation of costs of:

  • Primary network (commonly used for cross-border and domestic flows) – via PS methodology
  • Asset-cost split for transmission services to 3rd country within the Primary network
  • Local network – by allocation of costs just to Domestic exit points
No change
Costs of Primary (Main) network are split into a part of transmission within the EU and transmission services to transport gas to 3rd country (hereinafter – transmission to Kaliningrad Region); the split makes appr. 65% - transmission within the EU and appr. 35 % - transmission to 3rd country (the split is applied and tariffs for the service to transport gas to 3rd country are derived based on set of cost-drivers maintaining high level of cost-reflectivity for this service and in accordance with the provisions of Art. 7(d) and Art. 4.2 of TAR NC); as capacity cost allocation comparison index exceeds 10 %, the justification for it (as required per Article 5.6 of TAR NC) is provided; commodity cost allocation comparison index is within 10 % range, therefore additional justification is not providedNo change
Costs of Local (Secondary) network (used solely for gas transmission to Lithuanian Domestic Exit Points using high-pressure pipelines, as per Art. 3 of TAR NC, Art. 2(1), (3) of Directive 2009/73/EC) is separated from costs of Primary (Main) network, and based on costs attributable to Local network, Domestic Exit Point's tariffs for different exit points in Lithuania are formed based on actually used infrastructure at each of the two Domestic points; Local (Secondary) network cost constitute ca. 34% of allowed revenue and are attributed as mentioned only to Lithuanian Domestic exit points.No change (except splitting of Domestic exit into 2 Domestic Exit points – see the next bullet point)

Domestic Exit split into 2 Exit points, based on their significance:

  • Domestic Exit Point - Achema (Achema)
    • Domestic Exit Point

       

New:

- Prevention of undue cross-subsidisation;

- Ensuring cost reflectivity, using specific cost drivers: based on costs of actually used infrastructure at each of the two Domestic Exit points

90%-10% Capacity–Commodity split (as per Art. 4.3 (a) of TAR NC) applied, based on the proportion of variable expenses within total Allowed Revenue, single commodity tariff is applied at all exit points

New:

-  Proportion lowered from ca. 23 % to 10 % of total AR, i. e. reflecting costs mainly driven by the quantity of the gas flow,

- Commodity tariff unified (earlier was differentiated at Domestic Exit)

Entry-Exit split applied to Primary (Main) network adjusted so that Entry tariffs in Lithuanian transmission system were in line with the unified FINESTLAT Entry tariff (Entry- Exit split in this consultation document derives at appr. 70%-30% of Primary (Main) network costs). Taking into account whole AR for transmission service (including Local network for Domestic Exit points and transmission to 3rd country (non-EU)) the split share of revenue for Entry-Exit is appr. 24 %-76 %.No change
75% discount is applied at Klaipeda LNGT Entry point (as per Art. 9.2 of TAR NC), respectively adjusting the allowed revenue level of Exit points (and, thus, rescaling tariffs at exit points for Domestic and transmission within EU countries' Exit points (including new GIPL (Santaka) Exit point from 2022)); therefore the resulting in final Entry-Exit split shift, putting more weight on exit sideNo change
0% discount is applied at GIPL (Santaka) Entry / Exit pointNew
74,8 % discount to the reference price at Kotlovka entry point is applied in 2022 for restricted capacity product as per provision of ART. 4.2 of TAR NC for transmission service to Russia, Kalinigrad region, when the corresponding capacity in Kotlovka Entry point capacity can be used only upon of nominating quantities at Šakiai Exit point. From a market value perspective, the product with a point-to-point constraint, which does not allow to deliver to other exit points or to trade gas in Lithuania, justifies a discount in comparison with the tariff of the regular firm entry capacity that can be dispatched unrestricted in the Lithuanian market zone.No change
One of the inputs into reference price calculation is forecasted capacity: annualised, taking also into account the forecast of short-term capacity bookings (i.e. converting of estimation of capacity booking of products of all maturities into annual product equivalent)No change
All network of LT TSO is considered as transmission network

New

Earlier Local network was classified as non-transmission, and its costs were attributed to non-transmission service; now all network is classified as transmission.

Under new methodology, Local network is identified and its costs attributed to domestic users only following cost-reflectivity and non cross-subsidization principle – this remains unchanged.

Single seasonality pattern calculated out of mid-term historical data is applied for all Exit points where short-term tariffs include seasonal factors - i. e. Lithuanian Exit points and Šakiai Exit point

New:

Until 2021 seasonality patterns are separate for Lithuanian Exit and Šakiai Exit points, and projected seasonality patterns of the respective (forthcoming) tariff period are used

In accordance with the time limits laid down in the TAR NC, the draft documents shall be subject to public consultation by all interested parties for a period of two months.

The public consultation process starts at the 16th of December 2020 and lasts until 17th of February 2021 (updated  16th December, 2020)

The public consultation document and the attachments in English language are available below:
- Public consultation document;
- Simplified tariff model;
- The comparison of the indicative reference prices for 2022 based on proposed postage stamp methodology and on capacity weighted distance methodology.

Received comments from:
- AB „Klaipėdos nafta"
- Baltic Energy Partners OU
Energetikos ministerija


[1] Agency Report - Analysis of the Consultation Document on the Gas Transmission Tariff Structure for Lithuania, http://www.acer.europa.eu/Official_documents/Acts_of_the_Agency/Publication/Agency%20report%20-%20analysis%20of%20the%20consultation%20document%20for%20Lithuania.pdf