Regulation and other provisions

Ministerial Decree of 15 February 2013 – Determination of modulation storage capacity and of the methods for distributing and allocating storage capacity (Official Gazette No. 55 of 6 March 2013).

With this decree, the Ministry of Economic Development determined the modulation storage capacity for the thermal year 2013-2014 to be around 6.7 billion cubic metres, to be allocated to civilian customers, prioritised according to supply requirements. The Ministerial Decree also defined the criteria for allocating storage capacity, stipulating that a share of the modulation service capacity (2.5 billion cubic metres) and additional capacity of 1.7 billion cubic metres should be allocated via auction. Lastly, it established the procedures for withdrawing natural gas from the storage system in order to ensure the secure functioning of the natural gas system.

Ministerial Decree of 15 February 2013 – Storage associated with the regasification service and the supply of liquefied natural gas for businesses (Official Gazette No. 59 of 11 March 2013).

With this decree, the Ministry of Economic Development stipulated that a storage capacity of 450 million cubic metres of natural gas would be allocated to industrial business and related consortia to provide them with a direct supply of LNG from abroad, and that a storage capacity of 50 million cubic metres of natural gas would be allocated to regasification users to guarantee the regasification programme should an unforeseeable event occur.

The Ministerial Decree also defined procedures for the allocation and withdrawal of natural gas in relation to the storage capacity allocated to regasification users or to industrial businesses and related consortia that intend to obtain LNG supplies directly from abroad.

Resolution ARG/gas 119/10 – Consolidated act on the regulation of the quality and the tariffs for natural gas storage services for the 2011-2014 period (TUSG): approval of part II “Regulation of natural gas storage service tariffs for the regulatory period 2011-2014 (RTSG)”, measures on the transitory fee for the gas transportation metering service for 2011.

With this resolution, published on 5 August 2010, the Electricity and Gas Authority established the calculation criteria for the storage tariffs for the third regulatory period (1 January 2011 - 31 December 2014).

The valuation of the net capital invested (RAB) is based on the revalued historical cost method. The return rate of net capital invested (WACC) is set at 6.7%, in real terms, before taxes.

The greater returns for new investments were confirmed and provide for a higher return compared to the base rate (WACC), amounting to 4% for a period of eight years for extending existing capacities and for a period of 16 years for developing new fields. The revenue associated with new investments is recognised from the second year following the one in which the costs were incurred (“spending”) and are guaranteed regardless of the volumes of gas transported.

The method for updating the price cap tariffs is applied only to revenue relating to operating costs and is equal to approximately 18% of the revenue in question, which is updated for inflation and reduced by an annual recovery coefficient set at 0.6%. 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). Specifically, in the third regulatory period, the amortisation and depreciation is subtracted from the price-cap mechanism.

With this resolution, for the purposes of applying the tariffs, the calendar year is taken as a reference rather than the thermal year and the single tariff is confirmed nationally along with the revenue equalisation mechanism.

Resolution 313/2012/R/gas – “Approval of company payments and calculation of single payments for storage services and the transitory fee for metering activities for 2013”.

With this resolution, published on 27 July 2012, the Authority approved the storage tariffs for 2013. The RAB as at 31 December 2011 for natural gas storage activities was around €3.5 billion. The storage tariffs for 2013 were determined based on recognised reference revenue of €437 million.

Resolution 92/2013/R/gas – “Provisions for the allocation of storage capacity for the 2013-2014 thermal year for storage”.

With this resolution, published on 5 March 2013, the Electricity and Gas Authority defined how the auction procedure would be organised and how storage capacity would be allocated for the 2013-2014 thermal year, pursuant to the Decree of the Minister of Economic Development of 15 February 2013 (“Determination of modulation storage capacity and of the methods for distributing and allocating storage capacity”).

The Authority postponed, to be dealt with under subsequent measures, provisions for amending the time frames for settlement in order to ensure that storage companies have a revenue flow equivalent to that received under the settlement criteria applicable prior to the provisions introduced by the resolution in question, including in the event that the capacity allocation price is lower than the fees approved by the Authority.

Resolution 121/2013/R/gas – “Urgent provisions on settlement relating to storage services for the 2013-2014 thermal year”.

With this resolution, published on 29 March 2013, the Electricity and Gas Authority set out the provisions on settlement relating to storage services for the 2013-2014 thermal year in order to mitigate the possible financial impact for storage companies in the event that, due to the provisions of Resolution 92/2013/R/gas, the storage capacity allocation price is different from the fees approved by the Authority.

Resolution 310/2013/R/gas – “Provisions for the allocation of storage capacity for the 2013-2014 thermal year for storage”.

With this resolution, published on 15 July 2013, in order to incentivise the replenishment of storage capacity before the end of the injection phase of the 2013-2014 thermal year, the Electricity and Gas Authority set out the procedures for allocating any remaining storage capacity in accordance with the criteria established by Resolution 92/2013/R/gas for the uniform storage service, setting a reserve price of zero.

The resolution also provided for Stogit to offer said capacity for interim storage services, providing for the injection capacity to be available until the end of the injection phase, the withdrawal capacity to be limited to the central period of the withdrawal phase, and the application of fees to cover transportation costs to be applied only to the period of availability of the services provided.

Resolution 350/2013/R/gas – Approval of business fees and determination of unit fees for the storage service for 2014.

With this resolution, published on 2 August 2013, the Electricity and Gas Authority approved the storage tariffs for 2014. The RAB as at 31 December 2012 for natural gas storage activities was about €3.7 billion. The storage tariffs for 2014 were determined based on recognised reference revenue of around €453 million.