Creditworthiness for licence application

What are the creditworthiness requirements when applying for a licence?

Your credit rating is adequate for your intended obligations. This means that you meet the financial security requirements appropriate for your exposure. The rules are set out in Appendix 1 of the Transmission Code Gas-TSO.

Your exposure consists of:

  • Reserve for TTF, OV-exit or future transmission bookings;
  • Exposure through entering into contracts for services;
  • Initial Imbalance exposure: depends on the maximum volume of gas to be transported at the start of your licence. Your actual imbalance exposure is checked daily, the initial imbalance exposure will be replaced by the actual exposure is higher.

Initial imbalance exposure

The year average neutral gas price of the previous calendar year is used to determine the initial imbalance exposure when requesting a licence. The year average neutral gas price for 2016 was 0,0140081713 €/kWh.

Credit limit

Your credit limit is determined on the basis of your financial data or on the basis of (additional) securities. We set an initial credit limit for each shipper, after performing a financial analysis of your company. The credit limit must always cover your exposure or expected exposure. It is your responsibility to have and maintain a credit limit appropriate to your intended obligations and your exposure. Your credit limit must at least cover your exposure at all times. We recommend you to maintain an unused credit surplus of at least 15% of your credit limit. You can increase your credit limit by providing additional financial securities.

We accept the following additional financial securities: parent company guarantee, security deposit and bank guarantee. The financial securities must be valid for at least 2 months after the end date of the longest transport contract.

What are the steps in the process for demonstrating creditworthiness when applying for a licence?

  1. Our credit limit analysis
    You provide the 3 most recent, audited annual reports. We perform the credit analysis in accordance with the rules in the Transmission Code Gas-TSO and will notify you of the outcome.
  2. Determining your exposure
    Your exposure is determined by taking the sum of the following elements:
  • TTF reserves: €50,000 if you want to trade on the TTF.
  • LDC exit reserves: €50,000 reserve if you want to be active on an LDC exit point.
  • Exposure resulting from your transport bookings: To calculate this exposure, take the highest monthly (intended) transport booking invoice and multiply it by 3. For a transport booking for one or two months, you can respectively multiply by 1 and 2.
  • Initial Imbalance exposure: Estimate the maximum volume of gas that you can in a three-day period. This is the gas that could flow through exit points and/or the TTF.  Multiply this volume with the year average neutral gas price of the previous calendar year. The year average neutral gas price for 2016 was 0,0140081713 €/kWh.
  • Reserves for future transport bookings (e.g. for Open Seasons).
  1. Determining what credit limit and unused credit you need
    Your credit limit must at least cover your exposure, but we recommend you to maintain an unused credit surplus of at least 15% of your credit limit. Make sure you arrange additional unused credit when you want to carry our transport bookings in the future. You can increase your credit limit by providing additional securities.
  2. Providing additional financial securities
    lf your credit limit is not high enough, you will have to provide additional financial securities. You can use a parent company guarantee, a security deposit and/or a bank guarantee. Click here for the standard agreements. The financial security must be valid for at least 2 months after the end date of the longest transport booking.

Example
Below is an sample calculation of the necessary credit limit:

A party wants to do business on the TTF and transport gas from the TTF to a market adjacent to our grid. The party requires an A licence. The desired exit capacity at the border point with the other market area is 200,000 kWh per hour per year and the exit tariff is €2.50. The necessary credit is calculated as follows:

  • The fixed reserve for parties wanting to do business on the TTF is €50,000.
  • The reserve required because of the booked transport contracts: 200,000 kWh * 3/12 * €2.50 = €125,000.
  • Initial imbalance risk: Estimate of the maximum volume to be transported by this party is 200,000 kWh * 24 * 3 days *neutral gas price €0,0140081713 (2016 tariff) = €201.717,67.

In this specific case, at least €376.717,76 credit will be required.

After you have obtained your licence, your credit limit must remain adequate for your intended obligations and exposure. You can read more on that under Creditworthiness for active parties.

Overview of Shipper's creditworthiness and exposure

Credit limit - Exposure = Unused credit
Sum of:
  • GTS analysis of shipper's annual accounts
  • Additional financial securities
  Sum of:
  • TTF reserves
  • LDC-exit reserves (LB licence)
  • Exposure from transmission bookings
  • Outstanding transmission booking invoices (> 60 days)
  • (Initial) Imbalance exposure
  • Other reserves: (Open Season etc.)
  Amount to spend:
  • In euro
  • Percentage already spent

 

View all frequently asked questions

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  • Yes, the amount of credit you need varies. Your credit has to cover your exposure. If your exposure changes, this affects the amount of credit you need. Click here for a detailed explanation of how exposure is built up.

     - Increase
    You can increase your credit limit by providing additional financial securities at the right time. GTS accepts the following additional financial securities: parent company guarantee, security deposit and bank guarantee. You can find the standards here.

    - Decrease
    You can ask us to return all or part of your additional securities if you expect that you will no longer need the additional credit. If, for example, a transmission contract has expired, surplus unused credit becomes available.

    The financial securities must be valid for at least 2 months after the end date of the longest transmission booking contract.

  • Yes, you can ask us to return all or part of your additional securities if you expect that you will no longer need the additional credit. The financial securities must be valid for at least 2 months after the end date of the longest transmission booking contract. If, for example, a transmission contract has expired, surplus unused credit becomes available. Your credit limit must at least cover your exposure but we advise you to keep a minimum of 15% of your credit limit as surplus unused credit. Remember to allow for extra unused credit you will need if you want to book transmission in the future.

  • Yes, the amount of financial security that you provide can be changed. Your credit limit must at least cover your exposure but we advise you to keep a minimum of 15% of your credit limit as surplus unused credit. Remember to allow for extra unused credit you will need if you want to book transmission in the future.

  • We will perform periodic credit analyses on your company. We will then set a new credit limit for you and inform you of this.

  • The financial securities must be valid for at least 2 months after the end date of the longest transmission booking contract.