gas network usage fees

Free gas-network connections ended in most parts of Greece

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The termination of free-of-charge connections to the country’s gas grid as of January 1 is expected to prompt a slowdown of new residential connections in most parts of the country.

Under the new system, consumers will be required to either fully or partially cover connection-fee costs, depending on their respective area’s natural gas penetration levels.

Previously, RAAEY, the Regulatory Authority for Waste, Energy and Water, offered consumers a universal 100 percent discount on connection fees, which fueled strong growth in new gas-network connections and also subdued network usage tariffs as a result of greater consumption levels and their economies of scale.

According to the new system, consumers in municipalities with low-level natural gas penetration levels are expected to still be offered connection-fee discounts of up to 100 percent.

Consumers based in municipalities where natural gas penetration is between 25 and 75 percent will be granted a connection-fee discount of up to 70 percent in 2024 and 60 percent in 2025.

Connection-fee discounts are expected to be scrapped for consumers based in municipalities with natural gas penetration rates of more than 75 percent, according to the RAAEY decision.

DEDA, RAAEY, entering WACC, tariff talks, with gap to cover

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Gas distributor DEDA and RAAEY, the Regulatory Authority for Waste, Energy and Water, are entering negotiations to determine gas distribution network weighted average cost of capital (WACC) and tariff levels for the regulatory period covering 2023 to 2026 with some distance between them to cover, energypress sources have informed.

A ratified legislative revision that had been forwarded by the energy ministry on the WACC level of the then-DEPA Infrastructure company, now reorganized, had set a WACC level of 8.57 percent for the current year, leaving the rest of the four-year regulatory period pending until the corporate reorganization of the gas company was completed.

The process has now been completed, as officially announced by Italian buyer Italgas, through a merger of gas distributors EDA THESS and EDA Attiki, both subsidiaries of the former DEPA Infrastructure Group, and absorption by DEDA.

The Italian group recently acquired DEPA Infrastructure and its three gas distribution subsidiaries, EDA Attiki, EDA Thess and DEDA.

According to energypress sources, DEDA will soon forward to RAAEY its proposal for WACC and tariff levels concerning 2024 to 2026, thereby setting in motion negotiations between the two sides. Finalized decisions are expected by the end of the year.

Italgas will propose a WACC level of more than 9 percent, expected to prompt a reaction from RAAEY, which is determined to subdue WACC and tariff levels to limit, as much as possible, the burden on consumers, sources said.

 

DESFA, RAAEY apart on tariff agreement as deadline nears

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Gas grid operator DESFA and RAAEY, the Regulatory Authority for Waste, Energy and Water, still far apart on the operator’s WACC figure for the next regulatory period covering 2024 to 2027, are engaged in tough negotiations as a June 5 deadline for new tariffs approaches.

DESFA set a WACC figure of 9.14 percent in a proposal put through consultation in mid-March. It has been firmly opposed by RAEEY, believing this figure is unjustifiably high.

DESFA ended 2022 with a WACC figure of 7.44 percent, a starting point for RAEEY in its negotiations. The authority, viewing DESFA’s new WACC figure as pivotal as it will serve as a guide in the levels to be set for other operators, believes the operator’s new level should be a little over last year’s 7.44 percent level, and certainly under 8 percent.

The WACC level to be applied by DESFA over the next regulatory period from 2024 to 2027 is one of four aspects that need to be resolved before gas transmission network usage tariffs are set.

DESFA also needs to finalize its operational expenditure figure for the next regulatory period so that an allowed revenue for the operator may be set. The operator has yet to send this data to RAAEY and, consequently, appears likely to miss the June 5 deadline on this matter.

DESFA’s socialization percentage concerning the operating cost of its Revythoussa LNG terminal just off Athens is another unresolved matter. DESFA has proposed that it be maintained at the current level of 50 percent for the next regulatory period.

However, Gastrade and Motor Oil, both developing new floating LNG terminals in other parts of Greece, have protested, contending this figure is excessive and would offer DESFA’s Revythoussa facility an unfair advantage and undermine the financial viability of their investments. ACER, Europe’s Agency for the Cooperation of Energy Regulators, has backed the two companies on this issue.

DESFA’s ten-year development plan covering 2023 to 2032, a fourth prerequisite needed before its new gas transmission network usage tariffs are set, has already received RAAEY’s approval.

 

RAE reserved about Italgas’ network expansion plan

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RAE, the Regulatory Authority for Energy, is deeply concerned about the prospect of gas distribution network expansions into new geographical territories as, at present, amid the energy crisis, it remains unclear whether an expanded network would result in a greater number of overall gas users in Greece or, on the contrary, excessively increase the cost of this fuel for existing gas users through higher charges on regulated tariffs.

Italgas, following up on its recent 733 million-euro acquisition of DEPA Infrastructure, one of Greece’s biggest energy-sector privatizations, is keen to expand the country’s gas network through three DEPA Infrastructure subsidiaries, EDA Attiki, EDA THESS and DEDA. The expansion project is included in their investment plans for 2022 to 2026.

RAE will soon need to decide on whether to approve these gas network expansion plans.

Italgas has made clear it views geographical expansion of the country’s gas network as am approach that will increase gas usage in the Greek energy market.

Italgas aims to increase the number of gas users in Greece from approximately 600,000 at present to one million by 2028.

 

Producers expecting €8.83m surcharge return from gas distributors

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RAE, the Regulatory Authority for Energy, has determined the size of network usage surcharges all large-scale consumers stand to be handed back by natural gas distributors to offset across-the-board surcharges imposed on industrial enterprises between August 14, 2015 to December 1, 2016. The amount to be returned by the gas distributors totals 8.83 million euros.

Gas distributor EDA Attiki, covering the wider Athens area, will need to return to large-scale consumers a total of 1.44 million euros, EDA Thess, covering the Thessaloniki and Thessaly areas, must return 3.26 million euros, and DEDA, covering the rest of Greece, needs to return 4.13 million euros.

The 8.83 million-euro amount that will need to be returned by the three gas distribution companies is expected to be offered in 36 monthly installments from November, 2021 to October, 2024.

Large-scale consumers were universally charged a network usage surcharge of 4 cents per MWh over a 16-month period, based on a bailout term from 2015, which prompted EVIKEN, the Association of Industrial Energy Consumers, to forward an official complaint to the European Commission.

Industrial consumers rebated for gas network usage surcharge

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RAE, the Regulatory Authority for Energy, has delivered an official decision vindicating the industrial sector, after a four year wait, in a dispute concerning temporary natural gas distribution surcharges imposed on consumers by ordering offsetting measures leading to rebates for the period in question, between August 14, 2015 to December 1, 2016.

EVIKEN, the Association of Industrial Energy Consumers, challenged the introduction of this temporary gas distribution surcharge for industrial gas consumers, deemed as a breach of EU rules. It burdened industrial gas consumers at a rate of 4 euros per MWh.

Industrial consumers will receive rebates, based on a specific formula, covering the aforementioned period, according to the RAE decision, published in the government gazette yesterday.

According to industrial sector estimates, the surcharge sum to be returned to industrial consumers is estimated between 2.5 million and thee million euros. The rebate may be distributed in installments over a period of up to five years.

This surcharge did not reflect the costs of operators, arrived as a disproportionate cost for certain consumer categories using the network, and should have been determined and introduced by RAE, not through a legislative procedure, EVIKEN argued in its case before being vindicated by RAE as well as the European Commission’s Directorate-General for Energy.

Discrepancies observed exceeded 100 percent for most energy-intensive industrial enterprises.

The industrial sector will not tolerate any breach of EU rules concerning the new market’s framework, Antonis Kontoleon, the head official at EVIKEN, stressed.

Brussels’ Directorate-General for Energy had supported EVIKEN on all aspects of the dispute through a surveillance report delivered in November, essentially preannouncing the RAE decision.

 

 

 

EVIKEN requests RAE hearing for gas network distribution fees

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EVIKEN, the Association of Industrial Energy Consumers, has asked RAE, the Regulatory Authority for Energy, for copies of European Commission documents delivered to the authority as responses on temporary natural gas network distribution fees.

EVIKEN lodged an official complaint to the European Commission in June, 2016 over temporary network distribution fees of 4 euros per MWh that were imposed for a 16-month period on all industrial consumers in Greece, regardless of respective profiles.

In November of that year, RAE determined the levels of permanent network distribution fees, which showed a major discrepancy compared to the temporary network distribution fee levels.

EVIKEN has since asked RAE to exercise its authority and offset the difference.

The industrial energy consumers association noted that the European Commission is awaiting a response from RAE on whether and how it will offset this gap.

EVIKEN has asked for a RAE hearing  to present its views on the matter at the authority’s board.

 

RAE approves DESFA’s new gas network usage pricing plan

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RAE, the Regulatory Authority for Energy, has approved a new gas network usage pricing system, paving the way for gas grid operator DESFA to introduce its new pricing package for the remainder of 2019 as well as 2020 over the next few days.

The operator’s new pricing system will come into effect the month following its official announcement.

Gas grid transmission charges are expected to drop by levels of as much as 14 to 15 percent for the remainder of 2019 and 2020 compared to 2018, sources informed.

Consumers, both large-scale and household, as well as electricity producers can expect to benefit from the network usage pricing revision.

RAE took into account DEFSA’s WACC, revenue and expense figures in its calculations.

ACER questions DESFA proposal for network charges

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ACER, Europe’s Agency for the Cooperation of Energy Regulators, has questioned, if not rejected, Greek gas grid operator DESFA’s proposed formula for calculating gas network charges, needed as an adjustment to the European Commission’s new TAR, or regulation establishing a network code on harmonized transmission tariff structures for gas.

ACER recently offered its view on the DESFA proposal through a consultation procedure staged by RAE, Greece’s Regulatory Authority for Energy.

The DESFA proposal includes a basic charge as an addition to revenues recovered from main transmission system charges as well as a Revythoussa LNG terminal entry-point discount for fairer market conditions.

RAE needs to reach a decision by May 31 on new network usage tariffs to apply as of January 1, 2020.

 

Industrialists, PPC question cost impact of gas network expansion

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EVIKEN, the Association of Industrial Energy Consumers, and the main power utility PPC have both raised sustainability-related objections to a gas network expansion plan covering 18 municipalities in northern and central Greece, included by gas distributor DEDA in its five-year development plan.

Participating in public consultation staged by DEDA, EVIKEN pointed out that the gas distributor’s five-year plan makes no mention of the impact on distribution network surcharges.

RAE, the Regulatory Authority for Energy, has already endorsed distribution network surcharges for central Greece, a region of heightened industrial activity. The area’s gas network is already developed but will be expanded. RAE will need to ensure that existing network charges are not increased to cover the cost of the network’s expansion, the industrial consumers association stressed in its intervention.

PPC also raised sustainability concerns regarding the gas network’s expansion to previously non-serviced areas.

RAE is expected to approve DEDA’s five-year development plan by October 10, when the gas distributor, a wholly-owned subsidiary of DEPA, the public gas corporation, plans to proceed with tenders for the development of the natural gas networks.

The DEDA tenders are planned to cover all development aspects of the projects, including procurement, project management and construction. A total of 11 or 12 tenders are being planned.

 

Gas distribution fees set, competition to intensify

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Greece’s new natural gas distribution fee system, still officially unannounced,  has been finalized by RAE, the Regulatory Authority for Energy, setting the scene for full division of distribution and supply activities in the sector as of January 1, intended to help liberalize the market.

RAE set new distribution tariffs for four Greek natural gas market regions carved out – wider Athens, Thessalia, Thessaloniki, rest of Greece – after requesting additional data from DEPA, the Public Gas Corporation, and three EPA supply companies, still regional monopolies controlled by DEPA with respective 51 percent stakes. The tariffs, determined by one formula for all, differ for all four regions.

According to sources, energy and capacity fees are charged separately, while four consumer categories have been established – household, commercial, major-scale non-commercial consumers, and industrial.

The new distribution tariffs will come into effect as soon as they are endorsed. Consumers, especially industrial customers, are eagerly awaiting the new distribution fee levels. Local authorities recently introduced a hefty transitional price hike from 0.8 euros per Mwh to 4 euros per Mwh for all consumer categories without applying any specific formula to calculate the price level.

The transitional natural gas distribution fee of 4 euros per Mwh, implemented despite opposition from RAE, was originally planned to remain valid until last June but has been stretched out.

The country’s natural gas market is expected to be further liberalized at the beginning of next year as, besides industrial consumers, enterprises with major gas consumption levels are expected to gradually enter free markets, which is expected to generate competition in the current regional monopolies.

Competition in the natural gas market is expected to peak at the beginning of 2018 when supply for households is fully liberalized. As a result, the EPA supply companies currently maintaining regional monopolies will enter each other’s markets.

 

 

New pricing regulations endorsed, levels awaited

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The country’s new natural gas network usage fee pricing regulations have been endorsed and just published in the government gazette but actual prices have yet to be determined.

An early draft prepared for the matter’s public consultation procedure, which envisaged extending the time period of a transitional increase of 4 euros per Mwh until the end of the year, prompted a consumer reaction.

Based on the new regulations, the new distribution fees will apply as soon as they are endorsed.

Local authorities recently enforced a hefty transitional price hike from 0.8 euros per Mwh to 4 euros per Mwh for all consumer categories without applying any specific formula to calculate the price level.

Four consumer categories have been established through the new regulations – household, commercial, major-scale non-commercial consumers, and industrial.

The transitional natural gas distribution fee of 4 euros per Mwh was originally planned to remain valid until last June but has been stretched out.

 

Network expansion incentives included in new gas regulations

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Incentives for expansion of the country’s natural gas network into new regions at a limited cost, even zero cost, have been included in new and revised sector regulations endorsed by RAE, the Regulatory Authority for Energy. The revisions are set to be published in the government gazette.

The move represents an important step in the effort to liberalize the natural gas market, further aided by the division of distribution and trading activities performed by supply companies.

The sector’s new regulations include a formula determining the calculation of fees for use of the country’s three exisiting natural gas distribution networks in the wider Athens area, Thessaloniki and Thessalia as well as other areas where networks are gradually being developed.

Network usage fee price levels will be endorsed annually by RAE so as to ensure that operational and depreciation costs are covered while also offering satisfactory returns for invested capital.

The network usage fees are designed to enable the natural gas grid operator to recover part or all of the construction costs entailed in developing new supply points.

Connection fee discounts will also be offered to encourage further market penetration of natural gas.

The revised regulations are expected to facilitate development of gas networks in new areas as, besides project costs, the network usage fees will factor in market demand forecasts in regions where new networks are being developed.

Four consumer categories have been established as part of the revised regulations – household, commercial, major-scale non-commercial, and industrial.