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At the end of August 2020, the Regulator adopted several important amendments to the regulations in the energy sector. The gas market participants received decreased tolerance margin for imbalance. At the same time, the Distribution System Operators of the electricity market received the new RAB regulation.
Settlement of daily balancing on the gas market
On 26 August 2020, the National Energy and Utilities Regulatory Commission of Ukraine (the “NEURC”) adopted a Resolution № 1611 to amend the Gas Transmission System Code (the “GTS Code”) of Ukraine and the Gas Distribution Systems Code of Ukraine.
Daily balancing of gas supply/withdrawal volumes was introduced on the natural gas market from 1 March 2019.
In order to develop a short-term wholesale gas market and reduce the costs of the Operator of the Gas Transmission System (the “GTS Operator”) for balancing actions.
The volume of gas price adjustment for calculating the imbalance payment was reduced
The GTS Code stipulates that payment for the daily imbalance is calculated based on the gas price which is defined as:
- the marginal price of natural gas sale, if the volume of the daily imbalance of the customer of natural gas transportation services (the “Customer”) in a gas day is positive (e.g. when Customer’s gas supplies during a gas day exceed its withdrawals)
- the marginal price of natural gas purchase, if the volume of the daily imbalance of the Customer in a gas day is negative (e. when Customer’s gas withdrawals during a gas day exceed its supplies)
The GTS Code defines the procedure for calculating the marginal selling price and the marginal purchase price of natural gas for each gas day. To determine the marginal selling price, the estimated gas price is reduced by the amount of the adjustment, and to determine the marginal purchase price, this price is increased by the amount of the adjustment.
Before the amendments, the size of the adjustment value was 10 per cent.
The amendments provide for a differentiated approach to the amount of the adjustment value depending on the amount of imbalance.
The following adjustment amounts are applied:
- 10 per cent in case of imbalances
- from 3 per cent to 5 per cent (inclusive)
- from 7.5 per cent to 15 per cent (inclusive) for operators of the gas distribution system
- 20 per cent in case of imbalances
- more than 5 per cent
- by more than 15 per cent for gas distribution system operators.
The amount of permissible deviation of the daily imbalance volume (tolerance margin) is reduced
In accordance with the provisions of the GTS Code, the payment for the daily imbalance for the Customer is calculated without taking into account the amount of the adjustment, if the amount of the daily imbalance does not exceed the tolerance margin.
The provisions of the GTS Code established the size of the tolerance margin at the level of 10 per cent.
The amendments provide the following decrease of the tolerance margin:
- from 10 per cent to 3 per cent for customers
- from 15 per cent to 7.5 per cent for operators of gas distribution systems.
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