Regulations concerning the business segment

Regulation transition period 2018-2019

Criteria for adjusting the tariffs for the natural gas transport service for the transition period in the years 2018 and 2019

By means of Resolution 653/2017/R/gas, published on 2 October 2017, the Authority approved tariffs for the LNG regasification service for 2018-2019. The resolution confirms the main criteria of the previous regulation, with several amendments:

• The asset β parameter was confirmed for the 2018-2019 Transition Period. The value of the WACC equal to 6.6% in pre-tax real terms was therefore confirmed for 2018 and was recalculated for 2019 through the updating of the basic parameters.
• The investments made in the year t-1 were included in the invested capital recognised for the purpose of calculating the tariffs for the year t, replacing the 1% increase in the WACC covering the regulatory time lag. The 1% increase in the WACC covering the regulatory time lag was applied to investments made in the period 1 January 2014 - 31 December 2016.
• The input-based incentive scheme (2% for 16 years for the upgrading of regasification capacity) was applied to new development investments that come into service by 31 December 2017;
• An input-based incentive scheme (1.5% for 12 years) was applied to investments for constructing new regasification capacities that became operational in the years 2018 and 2019;
• The operating costs recognised in the fourth regulatory period were updated according to inflation, and a productivity recovery factor (X-factor).
• The current provisions relating to the revenue coverage factor were confirmed.

Updating of the remuneration rate of the capital invested for regulatory purposes (WACC) for 2019

Through resolution 639/2018/R/gas, published on 6 December 2018, the Authority carried out an interim update of the basic WACC parameters, shared by all regulated infrastructure services of the electricity sectors, for the three-year period 2019-2021, and for regulated infrastructure services of the gas sector, for 2019, setting this value at 6.8% for regasification activities (6.6% for the years 2016-2018).

For infrastructure services other than those of gas distribution and metering, the Authority set a D/E gearing level of 1, while the calculation of the Beta parameter was carried out during the tariff regulation of the individual businesses starting from 2020. The WACC for 2020 was calculated following the setting of the Beta parameter for the 5th regulatory period.

For more information on the parameter values used by the Authority for calculating the value for 2019, please refer to the section “Regulation of activity sector - Natural gas transportation” of this Report.

Tariff regulations for 2019

Through resolution 695/2018/R/gas “Approval of the tariffs for the LNG regasification service for 2019 and amendments and supplements to the RTRG” published on 20 December 2018, the Authority approved the revenues recognised for the regasification service for 2019 based on the proposal submitted by LNG Italia. The tariffs were set on the basis of reference revenue of €26.7 million. The revenue coverage factor has been set at 64% of the reference revenue. The RAB for LNG regasification activities was €108.7 million.

At the same time, the Authority published the definitive 2018 revenues based on the final 2017 balance sheet data, which stood at €26.7 million.

Regulation for the fifth regulatory period 2020-2023

Criteria for adjusting the tariffs for the liquefied natural gas regasification service for the fifth regulatory period (2020-2023)

Through resolution 474/2019/R/gas, published on 21 November 2019, the Authority defined the criteria for calculating the revenues recognised and the tariffs for the regasification service for the fifth regulatory period (1 January 2020-31 December 2023).

The duration of the regulatory period was confirmed as 4 years. The valuation of the net capital invested (RAB) is based on the revalued historical cost method.

The net invested capital remuneration rate Beta parameter (WACC) remains fixed at 0.524, with the WACC remaining unchanged at 6.8% before tax for the years 2020-2021, in line with the TIWACC framework.

Works in progress (LIC) remain excluded from the calculation of the RAB, at the same time as the recognition of financing expenses (IPCO). The operating costs recognised are calculated based on the recurring effective costs for the last available year (2018), plus the greater efficiencies achieved in the current period (50% profit sharing), with the size of the efficiency factor (X factor) designed to restore the greater efficiencies achieved in the fourth period to consumers in the fifth regulatory period. The revenue guarantee mechanism is confirmed as 64% of revenues recognised for a duration of 20 years starting from the first year in which the business offers the regasification service or, if prior to that, from the first year of ownership of the guarantee factor pursuant to resolution ARG/gas 92/08.

In order to incentivise the range of flexible services offered, there are plans that a share of 40% of revenues from the offering of these services can be retained by the regasification business to cover the revenues not subject to the revenue guarantee factor, up to the recognised revenues.

Recognition of variable electricity costs will be introduced (dependent on the unloading of ships and regasification of LNG) through a fee applied to users. Costs relating to electricity for the basic operation of the terminal continue to be recognised in the reference revenues.

There are plans to recognise the costs relating to the Emission Trading System (ETS), ratifying the neutrality principle of the business in relation to the price risk and incentivising virtuous behaviour aimed at reducing CO_² emissions.

2020 revenue approval

With resolution 43/2020 / R / gas “Approval of the tariffs for the LNG regasification service for 2020 and amendments and additions to the RTRG”, published on 19 February 2020, the Authority approved the revenues recognized for the service of regasification for 2020 on the basis of the proposal presented by LNG Italia. The tariffs were determined on the basis of reference revenues of € 25.1 million and on energy costs of approximately € 3.1 million. The revenue coverage factor is 64% of the reference revenue. The RAB for the LNG regasification activity is € 121.8 million.

At the same time, the Authority published the definitive 2019 revenues with a total amount of 26.8 million euros, based on the final 2018 balance sheet data.