Greater gas consumption to reduce tariffs by 8-9%

RAE, the Regulatory Authority for Energy, has arrived at a formula it believes is capable of offering satisfactory returns to DESFA, the natural gas grid operator whose 66 percent is being offered through a renewed tender, while also promising lower tariffs for consumers, according to sources.

RAE, expected to reach a tariff management decision for 2018 around mid-October, intends to divide overperformance revenues if consumption next year is sustained at the higher levels seen this year. Roughly half the excess amount will be used to pay DESFA a recoverable amount worth 320 million euros. The other half will be factored into the overall equation to produce tariff reductions for consumers, expected to drop by around 8 to 9 percent.

An amount generated by DESFA’s overperformance in 2017, estimated to be between 70 and 80 million euros, will go entirely to servicing the operator’s 320 million-euro recoverable amount.

EVIKEN, the Association of Industrial Energy Consumers, yesterday called for tariff reductions as a result of DESFA’s overperformance.

Also, a public consultation procedure for amendments to the current tariff regulations, expected to commence today, features two fundamental revisions.

The first of these revisions, concerning a collection plan for DESFA’s recoverable amount of 320 million euros, to be collected by DESFA over an 18-year period, proposes a division of the total into equal lots rather than a greater amount during the first ten years, as has previously been considered, to make the operator a more attractive prospect for investors. It remains to be seen whether the latest proposal will be endorsed by RAE.

The public consultation procedure’s second major revision proposal concerns the adoption of a mechanism that would trigger tariff level revisions one year down the road should annual returns overperform or underperform by over 25 percent.