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SPRK establishes significantly lower natural gas cross-border transmission tariffs

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUOn Tuesday, 30 May, the council of Public Utilities Commission approved Conexus Baltic Grid natural gas transmission services tariff project, as confirmed by the commission.

The new tariffs will come into force 1 July. During the assessment, changes were added to contribute to more active cross-border use of the natural gas transmission system and creation of a unified gas market in the Baltics, experts say.

This is the first tariff that was approved using a new approach, setting the tariff for the transmission system’s entry-exit points, which is expected to improve development of regional trade.

New tariffs will ensure increased use of Incukalns gas storage facility, because tariffs for cross-border flow have been reduced. This serves to increase the interest of foreign investors. Approved tariffs also provide for a 50% discount for entry and exit point to Incukalns.

SPRK emphasizes that a reduction has been accomplished on multiple cost positions. This includes reduced the tariff’s included remuneration for transmission operator council members, consultation services, transports and administrative costs. Compared with the previous tariff project, the end decision has increased the predicted gas amount to be transported for Latvia’s needs. Predicted volumes have a growth-inhibiting effect on system service tariffs.

Also compared with the previous tariff project, the fee for transmission tariffs on entry and exit points along Latvia’s border has been reduced significantly (by 3.7 times). This reduces the barrier for cross-border gas trade.

«Last year’s capital return rate left a positive impact on transmission service tariffs. This allowed for a reduction of capital costs. The capital return rate approved in 2008 was 8%. The current rate is 4.68%. Keeping capital return rate at 8% would make general service costs approximately EUR 6 million higher (19%) when compared with costs included in current tariff,» representatives of SPRK comment.

In spite of overall costs having declined since 2008, the volume of gas transported through the transmission system has reduced 46%. As a result, the cost of using transmission system per unit increases. Considering the proportion of service costs in users’ payments for gas, the effect of approved tariffs on end payments will be around 2% to 4%, experts say.

During the tariff project’s evaluation, SPRK asked for additional information and clarifications from the company. Because of that, the initial tariff project was corrected on many positions.

SPRK’s approved natural gas transmission system’s tariffs will apply to natural gas traders to pay for the use of the transmission system.

Ref: 224.109.109.6092


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