Ukraine: Energy regulator introduces entry-exit tariff system for domestic gas transportation
CMS Cameron McKenna,
Kyiv, Ukraine, Wed, April 5, 2017
On 28 March 2017 the National Commission for State Regulation of the Energy Sector and Municipal Utilities (the “Regulator”) adopted a resolution on the introduction of entry-exit tariffs for gas transmission within the territory of Ukraine (i.e. domestic gas transportation). The final text has not been published yet, however, according to the most recent version of the draft resolution, the new tariffs and changes come into force on 1 April 2017 (but not earlier than one day after official publication of the resolution).
This “entry-exit” model complies with provisions of the 3rd Energy Package (Directive 2009/73/EC concerning common rules for the internal natural gas market) and is expected to ensure non-discriminatory network access for all customers. The resolution itself is a revolutionary step for the Ukrainian government as it completely changes the procedure for the calculation of tariffs.
This model implies that for each gas distribution area one virtual entry point (comprising all of the physical entry points within such area) and one virtual exit point (which includes all of the physical exit points) are established. Tariffs (one for entry point and one for exit point) are set by the Regulator in line with the applicable methodology. Tariffs for entry points shall be established for the gas transportation system (GTS) as a whole, while the exit tariffs shall be applied by the Transmission System Operator (TSO, Public JSC “Ukrtransgaz”) separately for each gas distribution area.
The draft establishes the following rates for the gas transportation tariff (calculated on the basis of the capacity booked by the customer in line with the Gas Transportation Agreement and provisions of the Gas Transportation System Code):
In addition, the draft also provides for the following novelties and changes:
- Tariffs for gas distribution shall be calculated on the basis of the so-called “connected capacity” and must be paid by the relevant consumer connected to GDS. Tariff rates and the structure of the relevant tariff shall be established separately for each distribution system operator (DSO). Different rates for households and for commercial consumers shall be applicable, in particular:
- Gas distribution tariff rates for households vary from kopecks 1.108 [approx. EUR cent 0.037] to 7.782 [approx. EUR cent 0.26] calculated for 1 cubic meter per hour (without VAT); and
- Gas distribution tariff rates for commercial consumers vary from kopecks 1.273 [approx. EUR cent 0.043] to 163.884 [approx. EUR cent 5.54] calculated for 1 cubic meter per hour (without VAT).
- The entry/exit tariffs for cross-border transportation services (published on the official website of TSO) remain unchanged; however the draft expressly provides that they must be applied per day (for example – USD 12.47 per 1000 cm of natural gas per day for the entry point Beregdarots).
Vitaliy Radchenko, Partner, Vitaliy.Radchenko@cms-cmck.com