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Published: 9/16/2019. Updated: 9/16/2019

Gas regulatory issues discussed among Baltic and Finnish regulators

On 13 September, a regional meeting of the heads of the national regulatory authorities of Baltic states and Finland took place in Vilnius with the aim to discuss the progress and future steps in terms of gas market merger process in the Baltic-Finnish region.

The discussions focused on the preconditions for Lithuania to join the common Baltic states and Finnish gas market zone Finestlat. Various terms and scenarios were presented for the short term solution, i. e. from 2021, and for the long term solution starting from 2022.  In particular, it was agreed among the representatives of the national regulatory authorities of Baltic states and Finland to make a common statement addressed to transmission system operators and relevant Ministries of four countries inviting them to find workable solutions for the inter-TSO compensation (ITC) mechanism that could be applicable from 2021. As for the long term solution starting from 2022, there was a common understanding that the ITC mechanism for the long term solution has to be based on the costs and benefits analysis performed by third party, e. g. European Network of Transmission System Operators for Gas (ENTSO-G), allowing fair allocation of costs and benefits from market merger, and that the regional discussions could be followed by third party as European Commission and European Union Agency for the Cooperation of Energy Regulators (ACER) in order to ensure the compliance with EU regulatory framework. The representatives of national regulatory authorities of Baltic states and Finland commonly agreed that gas market merger would ensure more efficient and less distorted gas flows in the region and availability of the cheapest available gas in any part of it, as a result of a removal of cross border tariffs, as well would contribute to greater liquidity and improved security of supply.

Apart from the updates on the regulatory rules applicable in the region, the discussions also touched upon the infrastructure projects and the need to ensure the level playing field in terms of framework of rules and conditions for the activities in construction and development of energy infrastructure ensuring that the compliance to this framework in one country is mutually recognized in other country of the region. Those measures would aim to facilitate the competition in this sector and lower costs of works. It was agreed to present this issue to the relevant Ministries.

The discussions and updates on the regional developments in gas and electricity markets will proceed in the traditional Baltic gas and electricity market forum events that will be taking place in Vilnius in November.