Resolution ARG/gas 184/09 – “Approval of part II - Regulation of tariffs for the natural gas transportation and dispatching service for regulatory period 2010-2013 (RTTG), approval of part III - Regulation of tariffs for the natural gas transportation metering service for regulatory period 2010-2013 (RMTG), provisions on the transitory fee for the gas transportation metering service for 2010 and amendments to Attachment A of Resolution 11/07”.
With Resolution ARG/gas 184/09, published on 2 December 2009, the Electricity and Gas Authority issued the criteria for defining natural gas transportation and metering tariffs on the national and regional transportation networks for the third regulatory period (1 January 2010 - 31 December 2013).
The valuation of the net capital invested (RAB) is based on the revalued historical cost method. The return rate (WACC) of net capital invested is set at a real rate of 6.4% before taxes.
The incentives for new investments were confirmed and provide for a higher return compared to the variable base rate (WACC), in relation to the type of investment, from 1% to 3% and for a period from 5 to 15 years. The revenues associated with new investments are paid starting from the second year following that in which the costs were incurred (“spending”) and are guaranteed regardless of the volumes transported.
The method for updating the price cap tariffs is applied to revenue relating to operating costs and is equal to approximately 15% of the revenues in question, which are updated with inflation and decreased by an annual recovery coefficient set at 2.1% (3.5% in the previous regulatory period). The revenue components which are related to returns and amortisation and depreciation are determined on the basis of the annual update of net capital invested (RAB). In particular, in the third regulatory period, the amortisation and depreciation is deducted from the price-cap mechanism and calculated on the basis of the useful economic and technical life of the transportation infrastructure, which is 50 years.
The tariff structure is based on an entry/exit model and was confirmed for the third regulatory period as well, together with the capacity fee for the metering service.
Finally, fuel gas is treated as a pass-through cost which is payable in kind by the users and is excluded from the price-cap mechanism.
Resolution ARG/gas 178/11 – “Approval of the tariff proposals for natural gas transportation and dispatching, and the transitory fee for the gas transportation metering service for 2012 in implementation of the provisions set forth in Resolution ARG/gas 184/09 issued by the Electricity and Gas Authority on 1 December 2009”.
The Authority approved the transportation, dispatching and metering tariffs for 2012 by Resolution ARG/gas 178/11.
The tariffs were determined on the basis of the base revenues which amounted to €1,862 million, net of the third-party portion (of which approximately €113 million relates to development investment incentives and approximately €41 million to revenue associated with system balancing costs).
The actual revenues for 2012 will have to take account of the increase in volumes transported compared to the base amount of 75.7 billion cubic metres.
The RAB as at 31 December 2010 for transportation, dispatching and metering amounts to around €13.7 billion.
Resolution 403/2012/R/gas – “Certification of Snam Rete Gas S.p.A. as an Independent Transmission Operator for natural gas following an opinion issued by the European Commission on 1 August 2012, C (2012) 5333”.
The Electricity and Gas Authority has completed the process of certifying Snam Rete Gas as an Independent Transmission Operator for natural gas, confirming the functional unbundling of the vertically integrated undertaking, as provided for by the EU Third Energy Package (Directive 2009/73/EC) and Decree 93 of 1 June 2011 transposing it into law.
The certification (Resolution 403/2012/R/gas) was adopted after the European Commission issued a favourable opinion on the preliminary certification adopted by the Authority (Resolution 191/2012/E/gas).
In its final decision, the Authority confirmed all the prescriptions and recommendations handed down to Snam Rete Gas by the preliminary certification decision in order to ensure the Company’s management of transportation infrastructure is neutral in relation to its interests in production and supply activities. As a result of the certification, Snam Rete Gas S.p.A. is authorised to operate in the natural gas transportation sector, in Italy and in the rest of Europe. Following the ownership unbundling of Snam Rete Gas from eni, as defined by the Prime Ministerial Decree, the Authority shall begin a new certification process.
Resolution 515/2012/R/gas – “Approval of the proposals for the natural gas transportation and dispatching service tariffs and the transitory fee for the gas transportation metering service for 2013.”
With this Resolution, published on 6 December 2012, the Authority approved the transportation, dispatching and metering tariffs for 2013.
The tariffs were determined on the basis of recognised core revenue, equal to €1,952 million (of which around €129 million related to incentives for investment). The actual revenues in 2013 will have to take account of the increase in volumes transported compared to the base amount of 75.7 billion cubic metres.
The RAB as at 31 December 2011 for transportation, dispatching and metering amounts to around €14.3 billion.
With this Resolution, the Authority initiated a process, which should be completed by 30 October 2013, aimed at the possible recognition of charges incurred by transportation companies for implementing measures introduced by Legislative Decree 93 of 1 June 2011 concerning the certification of transmission system operators and costs arising from the implementation of Resolution ARG/gas 45/11.
Balancing service – Electricity and Gas Authority Resolutions: ARG/gas 45/11; ARG/gas 155/11; 351/2012/R/gas
With effect from 1 December 2011, natural gas balancing activities became operational pursuant to Resolution ARG/gas 45/11 of the Electricity and Gas Authority, which made Snam Rete Gas, as the major transmission system operator (TSO), the Balancing Supervisor. This role requires Snam Rete Gas to procure the quantities of gas required to balance the system and offered on the market by users through a dedicated platform of the Energy Market Operator, and to financially settle the imbalances of individual users by buying and selling gas on the basis of a benchmark unit price (the ‘principle of economic merit’).
Snam Rete Gas, in its capacity as Balancing Supervisor, issued invoices for more than €2 billion in 2012 and received invoices for the same amount from users of the balancing service.
The regulations contain specific clauses guaranteeing the neutrality of the Balancing Supervisor, and they identify the Cassa Conguaglio Settore Elettrico (Electricity Equalisation Fund) as the entity ultimately responsible for paying to the Balancing Supervisor (i.e. Snam Rete Gas) any sums not collected from users. Specifically, the initial regulation laid down by the Electricity and Gas Authority with Resolution ARG/gas 155/11 stated that users had to provide specific guarantees to cover their exposure and, where Snam Rete Gas had performed its duties diligently and had not been able to recover the costs related to provision of the service, these costs would have been recovered through a special fee determined by the Electricity and Gas Authority. This Resolution, with reference to the income statement items pertaining to the balancing system, stipulated that the Balancing Supervisor would receive from the Electricity Equalisation Fund the value of receivables unpaid by the end of the month following the month in which notification was given9.
In light of the fact that the regional administrative court of Lombardy provisionally voided this system of guarantees for the period between 1 December 2011 and 31 May 201210, some users sold huge quantities of gas and obtained their supplies from the balancing market, failing to pay due amounts and therefore building up a significant debt to Snam Rete Gas which reached around €400 million during the year.
With Resolution 282/2012/R/gas, published on 6 July 2012, the Authority began an explorative investigation into the methods of provision of the balancing service between 1 December 2011 and 31 May 2012, due for completion within 120 days of the start of the investigation. With Resolution 444/2012/R/gas, the Authority extended this period to 23 October 2012 and extended the investigation by 60 days.
With Resolution 351/2012/R/gas of 3 August 2012, the Electricity and Gas Authority changed the rules on the repayment terms established in Resolution 155/11. Specifically, Resolution 351/2012/R/gas defined the methods for recovering receivables pertaining to the balancing system in the period 1 December 2011 - 31 May 2012, ordering payment in instalments over a minimum of 36 months and with a maximum monthly payment of €6 million, providing also for recognition of the interest accrued in favour of Snam Rete Gas, for which settlement will occur after the nominal amount of the receivables has been paid. In 2012, the Electricity Equalisation Fund paid Snam Rete Gas a total of €13 million.
In December 2012, Snam Rete Gas sold on a non-recourse notification basis its receivable from the Electricity Equalisation Fund arising from coverage of user balancing service costs, pursuant to Resolution 351/2012/R/gas of 3 August 2012, for a nominal amount of €300 million, which refers only to the principal.
Snam Rete Gas has initiated all actions necessary for the recovery of receivables relating to income statement items pertaining to the balancing system.
Snam Rete Gas has also initiated legal proceedings to recover receivables from users in arrears after having terminated the relevant transportation contracts due to non-payment.
PRISMA - European Capacity Platform – integrating Italy with the major European markets
On 4 December 2012 in Leipzig, Snam Rete Gas and leading European sector operators agreed to enter the share capital of PRISMA - European Capacity Platform GmbH11, an international project that will enable 19 European gas transportation operators in seven countries (Italy, Austria, Belgium, Denmark, France, Germany and the Netherlands) to offer transportation capacity through a single shared electronic platform from April 2013.
The project deliberately comes in before the European Network Code is implemented in 2014 in order to encourage the harmonisation of service provision and access rules and to facilitate the creation of the internal natural gas market.
The European Network Code, drafted by ENTSOG (European Network of Transmission System Operators for Gas), establishes the methods for allocating transportation capacity at interconnection points between the systems of EU Member States (Network Code on Capacity Allocation Mechanisms - CAM NC), providing for auction mechanisms. By signing up to the project, Snam Rete Gas is pursuing its goal of encouraging Italy’s integration with the major European markets in line with the principles of the EU’s Third Energy Package.
9 Given to the Electricity Equalisation Fund by the Balancing Supervisor once invoices become four months overdue.
10 The guarantees were reintroduced by Electricity and Gas Authority Resolution 181/2012/R/gas, with effect from 1 June 2012.
11 This name, effective from 1 January 2013, replaces Trac-X Transport Capacity Exchange GmbH.