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Published: 9/11/2017. Updated:

Energy Regulators of the Baltic States and Finland Agree on the Pricing of Services of Natural Gas Transmission in the Regional Market


foto_2017_09_08.jpgOn 7th of September, a regional meeting of the representatives of national regulatory authorities for energy (NRAs) and the natural gas transmission system operators (TSOs) of the Baltic States and Finland took place in Klaipėda, where pricing guidelines for the service of transmission of natural gas were discussed.

In the short-term period of 2018–2020, the pricing model for entry and exit points would be applied to the gas market of the Baltic States that includes Estonia, Latvia, and Lithuania. In an effort to create equal competitive conditions to all the suppliers in the region, the same entry tariffs would be applied to every entry point in the region. In addition to that, the TSOs are obligated to agree on the mechanism for Inter TSOs Compensation within the region.

In the long-term period, i.e. from 2020 and beyond, the same entry tariffs for transmission of natural gas would be applied to entry points in the entire Baltic-Finnish region: they would be calculated by applying the most optimal methodology, chosen from three alternatives (postage stamp; capacity weighted distance; and matrix).

The representatives of the NRAs’ of the Baltic States and Finland intend to sign the document that would elaborate on said pricing guidelines for the service of transmission of natural gas in the near future, after an additional consultation with the TSOs’.

It is also planned to conduct a comparison of the results of different pricing calculation models for entry and exit points, which would serve as the basis for a decision on an optimal solution for the regional Baltic-Finnish natural gas market, starting from 2020. An international procurement will be executed for said modelling – a joint agreement on the procedures of the execution of said procurement was signed by the representatives of the Baltic and Finnish NRAs’.

The agreement between the Baltic and Finnish NRAs’ on the regional pricing guidelines for the transmission of natural gas will allow to increase the liquidity of natural gas trade in the region and create equal competitive conditions for suppliers importing natural gas from different import sources, which should lead to competitive pricing of natural gas for all the users in the region and would allow a more effective utilisation of the natural gas infrastructure in the region. In order to implement the said pricing guidelines, relevant laws and other legislation will have to be changed, thus, participation from all the interested parties will be necessary.

The pricing guidelines for the service of transmission of natural gas, are prepared in implementing the action plan for the formation of the common regional natural gas market which was approved by the Regional Gas Market Coordination Group, established by the Baltic Energy Market Interconnection Plan (BEMIP).