Sign In

Public Consultation on tariff methodology and indicative 2020-2023 tariffs of Lithuanian TSO – implementation of the Network Code on Harmonised Transmission Tariff Structures for Gas

The National Energy Regulatory Council, as a consolidated institution, following the process when the State Energy Inspectorate under the Ministry of Energy has been reorganised by way of merger and joined to the National Commission for Energy Control and Prices, started its activities from 1st of July 2019 and took over the economic and technical regulation and market supervision and control functions of energy market in the Republic of Lithuania. The consolidation of two institutions was approved by the Parliament of the Republic of Lithuania on 14th of February 2019.

National Control Commission for Prices and Energy (hereinafter – Commission) 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", 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 – Tariff Network Code), i.e. rules on the application of a reference price methodology, publication and consultation requirements.

The Tariff Network Code sets for national regulatory authorities the following requirements:
• to publish the information about the background of the transmission tariffs every year;
• to consult all stakeholders about the reference price methodology at least every five years;
• to consult all stakeholders about the discounts, the multipliers, and the seasonal factors each year.

The structure of this public consultation reflects the structure of the public consultation requirements established in Article 26 and 28 of the Tariff Network Code. The consultation covers only methodological approach for the remainder of current regulatory period, i. e. 2020-2023. Non-price cap regime is applied in Lithuania.

Chosen reference price methodology is Postage stamp, with the following features:
- Costs of  local network (used solely for distribution to Lithuanian consumers using high-pressure pipelines) is separated from costs of transmission (primary) network, and based on costs attributable to local network,  non-transmission part of tariffs for domestic customers groups is formed;
- 90%/10% Capacity–Commodity split applied, based on the proportion of variable expenses within total allowed revenue;
- Costs of transmission network are split into a part of transmission within the EU and transmission services to transport gas to 3rd country;
- 70%/30% Entry-Exit split (input value) is applied for the part of allowed revenue attributable to transmission (primary) network;
- 75% discount is applied at Klaipeda LNG terminal entry point, respectively adjusting the allowed revenue level of domestic exit point (and, thus, rescaling tariffs at domestic exit point);
- One of the inputs into reference price calculation is forecasted capacity: annualized, 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).

The public consultation process started at the 5th of March 2019 and lasted at the 6th of May 2019.

The public consultation document and the attachments in English language are available below:
- Public consultation document;
- Simplified tariff model (Scenario 1);
- Simplified tariff model (Scenario 2);
- The comparison of the indicative reference prices for 2020 based on proposed postage stamp methodology and on capacity weighted distance methodology.

Taking into consideration recent regional developments (creation of adjacent FINESTLAT tariff zone, comprising Finland, Estonia and Latvia) consultation includes two scenarios for tariff for 2020:
- Scenario 1 – Entry-Exit zone – only Lithuania (national scenario);
- Scenario 2 – Entry-Exit zone harmonized with FINESTLAT, i.e. Lithuanian tariffs adjusted aiming to integrate into the regional market (difference from the national scenario – Entry tariffs equalized with those applied in FINESTLAT; setting zero tariffs at Kiemenai IP from both Lithuanian and FINESTALT sides, and, therefore, rescaling tariffs at Domestic exit point).

Received comments from: AB „Klaipėdos nafta", JSC "Conexus Baltic Grid",  JSC "Latvijas Gaze", Finnish, Estonian and Latvian NRAs, UAB „Lietuvos energijos tiekimas", AS AJ Power Gas, UAB „Lietuvos energijos tiekimas".

Consultation responses received and their summary (download here)

Agency Report - Analysis of the Consultation Document on the Gas Transmission Tariff Structure for Lithuania (please find here)

Article 27 of the Tariff Network Code requires the Agency for the Cooperation of Energy Regulators (hereinafter – Agency) to analyze the consultation documents on the reference price methodologies for all entry-exit systems.

The Agency, after having completed the analysis of the Lithuanian consultation document pursuant to Article 27(2) of Tariff Network code, provided the conclusions and recommendations for Commission (more information you could find in provided Agency Report).