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Main factors of the pricing framework

The transportation, storage and distribution of natural gas and regasification of LNG are regulated by the Electricity and Gas Authority, in operation since 1997 and responsible for the regulation of the national electricity and natural gas markets. Among its functions are the calculation and updating of the tariffs, and the provision of rules for access to infrastructure and for the delivery of the relative services.

The tariff systems for the four business segments are based on shared principles and provide, in particular, that the revenues used to formulate tariffs are determined in such a way as to ensure that operators’ costs are covered and that return on invested capital is fair. There are three categories of recognised cost:

  • the cost of net invested capital for regulatory purposes (regulatory asset base, RAB) through application of a rate of return for the same;
  • amortisation and depreciation, covering capital expenditure;
  • operating costs.

For development investments aimed at upgrading infrastructure, the increase in rate of return varies according to the investment type.

The following are the primary tariff components for each of the regulated activities carried out by Snam, based on the regulatory framework in force as at 31 December 2012.

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TRANSPORTATION

REGASIFICATION

STORAGE

DISTRIBUTION

(a)

With Resolution 237/2012/R/gas, the Electricity and Gas Authority extended the criteria for determining regasification tariffs for the transition period 1 October 2012 - 31 December 2013.

(b)

With Resolution 436/2012/R/gas, the Electricity and Gas Authority extended the criteria for determining distribution tariffs for the transition period 1 January 2013 - 31 December 2013.

End of regulatory period
  • 31 December 2013
  • 30 September 2012

Transitional period:
1 October 2012 -
31 December 2013 (a)
  • 31 December 2014
  • 31 December 2012

Transitional period:
1 January 2013 -
31 December 2013 (b)

Calculation of net invested capital recognised for regulatory purposes (RAB)
  • Revalued historical cost
  • Revalued historical cost
  • Revalued historical cost
  • Deduction of restoration costs
  • Revalued historical cost
  • Parametric method for centralised assets

Return on net invested capital recognised for regulatory purposes (pre-tax WACC)
  • 6.4% (transportation)
  • 6.9% (metering)
  • 7.6%

Transitional period:

  • 8.2%
  • 6.7%
  • 7.6% (distribution)
  • 8% (metering)

Transitional period:

  • 7.7% (distribution)
  • 8% (metering)

Incentives on new investments
  • 1% over 5 years
    (on safety investments)
  • 2% over 7/10 years
    (on investments to develop capacity)
  • 3% over 10/15 years
    (on investments to develop entry capacity)
  • 2% over 8 years
    (on expansions of existing terminals by less than 30%)
  • 3% over 16 years
    (on expansions of existing terminals by more than 30%)
  • 4% over 8 years
    (on expansion of existing capacity)
  • 4% over 16 years
    (on the development of new storage fields)
  • 2% over 8 years
    (on replacement of pipelines or cast iron and renovations of odorisation systems)

Efficiency factor (X FACTOR)
  • 2.1% on operating costs
  • 0.5% on operating costs
  • 0.6% on operating costs
  • 3.2% on distribution operating cots
  • 3.6% on metering operating cots

Gas demand
  • 15% of revenues exposed to change in demand
  • 10% of revenues exposed to change in demand
  • No exposure to change in demand
  • No exposure to change in demand
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