Overperforming DESFA’s tariffs to be cut by 6.5%-10%

Tariff levels at DESFA, the natural gas grid operator, will be reduced by between 6 percent and 10 percent for long-term and short-term contracts, respectively, as a result of the operator’s overperformance and an anticipated overperformance in 2018, RAE, the Regulatory Authority for Energy, has decided, according to energypress sources. Finalized decisions are expected today or tomorrrow, these sources informed.

These tariff reductions are expected to take effect around May next year, as, according to law, at least 7 months must elapse before any pricing policy changes may be implemented.

Higher gas demand in 2017 has generated an overperformance at DESFA that is expected to reach 70 million euros for the year, while next year’s anticipated overperformance is estimated to reach roughly 30 million euros.

This 100 million-euro total of extra revenues in 2017 and 2018 will be used to cover part of a 320 million-euro amount DESFA stands to recover over the next 18 years, it has been decided. As a result, DESFA’s outstanding recoverable amount will drop by 31 percent, to approximately 220 million euros, over the next two years.

Sector regulations require tariff reductions whenever gas demand registers an increase.

All interested parties should be satisfied by these decisions. The industrial sector, in a preceding letter, requested a reduction of DESFA tariffs. Also, prospective bidders preparing to make binding offers in a renewed DESFA tender offering 66 percent of the operator, want the operator’s recoverable amount to be reduced as much as possible during the first decade of the overall 18-year payback period.

Beyond 2018, RAE still needs to set new tariff levels for the four-year period covering 2019 to 2022. Decisions for this period can be anticipated at some point within 2018.