IN ITALY
The Electricity and Gas Authority has regulated the gas transportation, storage, regasification and distribution sectors in Italy since 1997. In the context of market liberalisation, regulation has over time become a tool enabling the economically sustainable development of infrastructure and the non-discriminatory access to services by all operators in the free market.
The quality and regularity of relations between Snam and the Electricity and Gas Authority play a key part in this process. Over the years, Snam has established constructive dialogue and proactive cooperation with the Authority by continually maintaining an advisory role and providing the necessary support to changes in the regulatory framework of the natural gas sector.
Specifically, the group’s companies individually:
- respond, either directly or through trade associations, to the public consultations that the Electricity and Gas Authority holds on different activities in the sector prior to defining new regulations or revising current ones;
- take part in technical working groups established by the Electricity and Gas Authority on changes to the regulatory framework;
- draft changes to the transportation, distribution, storage and regasification network codes, which are then submitted to the Authority for approval;
- participate in gathering data and in surveys conducted during the year for purposes of evaluating the status of the sector or of the individual services, and periodically send the data requested in compliance with reporting obligations.
The table below summarises relations with the Electricity and Gas Authority for each regulated sector:
RELATIONS WITH THE AUTHORITY
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Transportation |
Storage |
Distribution |
Regasification | ||||||
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|
Responses to consultation documents (no) |
6 |
2 |
5 |
2 | ||||||
|
Responses to consultations/ |
7 |
3 |
15 |
3 | ||||||
|
Tariff proposals (no) |
3 |
3 |
2 |
2 | ||||||
|
Data gathering (no) |
75 |
50 |
95 |
27 | ||||||
|
Investigations (no) ** |
2 |
0 |
1 |
0 | ||||||
|
Proposed amendments/ |
8 |
5 |
3 |
3 | ||||||
|
Approved amendments/updates to codes and contractual documents (no) |
3 |
3 |
0 |
0 | ||||||
Compliance with anti-trust law
In 2012 Snam adopted the “Anti-trust Code of Conduct” Management System Guidelines, which every employee should be aware of and apply. In this regard the Company has developed a full programme to prevent the risk of anti-trust law violations which could result in monetary fines, third party liability, reputational damage and a negative impact on share price. This programme includes the following initiatives:
• the adoption of the Anti-trust Code, which provides guidelines for compliance with anti-trust law in each business segment;
• training and communication initiatives for all employees in order to ensure knowledge and application of the Code;
• the constitution of a dedicated anti-trust organisation within the Legal and Corporate Affairs and Compliance Department of Snam to provide assistance in the implementation of the Code;
• a specific programme to monitor the effectiveness of the Code and the rules to update it according to changes in anti-trust law and business structure.
Determining revenue and tariffs
The clarity, stability and transparency of the regulatory framework for determining revenue and tariffs are key factors for the economic sustainability of Snam, and are also relevant to network users, who are affected by costs associated with infrastructure use, and to financial investors, in terms of predicting returns on their investments.
In general, tariff criteria are defined every four years. The revenue from all activities is determined so as to ensure coverage of operating costs, amortisation and depreciation, and a fair return on net invested capital, which ranges in general from 6 to 8 per cent. Incentives are also provided, differentiated according to the type of investments made during the course of each regulatory period. Every year, based on its own recorded revenue, each Snam company formulates a tariff proposal which is submitted to the Electricity and Gas Authority for approval.
Updating the network codes
The network codes (for transportation, distribution, storage and regasification) are proper contractual documents that define service provision and access conditions. They are updated periodically by group companies according to changes in the regulatory framework and in operating conditions. In order to uphold the principles of transparency, accuracy and fairness, all amendment proposals (except concerning the distribution code) are subject to public consultation before being submitted to the Electricity and Gas Authority for approval.
PR9
All codes have a section containing indicators for monitoring the quality of service provided by the companies. Users are automatically compensated in the event of non-compliance with service quality standards in relation to some of these indicators, listed in the table as those referring to specific quality levels.
IN EUROPE
On a European level, the Electricity and Gas Authority is part of the Agency for the Cooperation of Energy Regulators (ACER) and Snam Rete Gas is part of the European Network of Transmission System Operators for Gas (ENTSOG). These two bodies develop European codes and guidelines to regulate the access and use of cross-border infrastructure and to help towards creating a single gas market.
The “regional initiatives” are responsible for assessing potential cross-border market integration and subsequently working to harmonise the interconnected national systems. Italy is part of the South South-East regional initiative, which is coordinated by the Italian and Austrian regulators. Integration in the region remains difficult for significant reasons such as the vast geographical area and the extremely diverse market conditions and levels of interconnectivity. The South South-East region focuses on security of supply and capacity allocation.
Snam Rete Gas worked with the Electricity and Gas Authority and with interconnected operators during 2012 to establish guidelines on the daily sale of capacity between the Austrian exchange point at Baumgarten and the Italian system entry point at Tarvisio, in coordination with the Austrian regulator. In addition, a new interconnection agreement was signed with Slovene company Plinovodi in relation to the Gorizia entry point, and the existing agreement with Switzerland, with transportation companies Swissgas and Fluxswiss and technical operator Transitgas in relation to Gries Pass, was revised. The interconnection agreement with Austria’s TAG is also in the final stages of revision.
Lastly, the Electricity and Gas Authority has asked Snam Rete Gas to draw up a draft schedule, subject to subsequent consultation, for adopting the European balancing code.
European Gas Target Model endorsed
The energy regulators of the 27 EU Member States endorsed the Council of European Energy Regulators’ (CEER) new Gas Target Model at the Madrid Forum on 26 March 2012.
The model, which is the result of involving more than 700 stakeholders in five workshops held over the previous year, recommends hub-to-hub trading between five or six main exchange centres as the best way to achieve a single European gas market.
Upon completion of its works, the CEER stated: “Well-functioning and connected wholesale markets are key. CEER’s vision of a sustainable internal gas market is based on a core objective of enabling functioning wholesale markets where they do not exist yet. Furthermore, markets need to be connected closely to move forward to an integrated market”.
