Newsletter GTS July 2019

Dear customer,

With the summer holidays ahead, we would like to inform you via this newsletter about the latest developments regarding the implementation of NC TAR and VIPs. In addition, we would like to inform you about the incorporation of the Surrender of Capacity (SoC) service in the incremental capacity process 2019.  We expect to publish our next newsletter coming October. Naturally, if in the meantime a subject requires an earlier communication, we will inform you when needed.  

Update operational implementation aspects NC TAR

On 11 December 2018 ACM published the final NC TAR decision. This decision describes the new tariff structure and conditions applicable as of 1 January 2020. With a half year ahead, we would like to inform you via this newsletter about the following changes and operational aspects:

  • Overview changed element based on NC TAR decision
  • Transitional provision
  • IT changes as of 2 July 2019 and migration of capacity contracts
  • Changes in contracting on FCFS network points
  • Introduction virtual point capacity LDC (VPC)
  • Adjustments Gasport
  • Adjustments invoicing
  • Adjustments Dutch gas codes and TSC
  • Adjustments website

Overview changed element based on NC TAR decision

The table below contains the changes based on the NC TAR decision. The first column shows the key elements, the second column describes the changes as stated in the NC TAR decisions. All elements are established by the NC TAR decision for 5 years (until 2024).

Key elements NC TAR decision
Reference Price Methodology (RPM) Postage stamps for:
- Entry non-storage
- Entry storage
- Exit non-storage
- Exit storage
Reserve prices 1) - NRA establishes and publishes the reserve prices before the annual yearly capacity auction (first Monday of July).
- Reserve prices for all 5 firm capacity products (year, quarter, month, day and within-day) and for the interruptible daily capacity product for all 4 different postage stamp points
Share of allowed revenues  
- Received from entry points 40%
- Received from exit points 60%
Discount  
- Storage 60%
- LNG 0%
- Interruptible capacity 0,01%
- Wheeling 94%
Multipliers  
- For quarterly products 1.25
- For monthly products 1.50
- For daily and within-day products 1.75
Seasonal factors for non-yearly products Yes
Other services  
- Diversion
- ToC
- ToC
Service still available, no separate transaction fee applicable anymore. Costs will be remunerated in the entry and exit tariffs.
- Shift of capacity on FCFS exit points Service still available, but only under strict conditions
- Backhaul
- Gas storage service
Replaced by regular firm or interruptible entry and exit capacity
Shorthaul Cease to exits

1) Until 2019, the starting point for all tariffs is the annual tariff. These annual tariffs apply to contracts with a flat capacity profile for a period of 12 months. In the annual tariff decision, ACM established for each network point individual tariffs for each statutory task. For capacity bookings for a period less than 12 months, the so-called 'monthly, daily and within factors' apply. Tariffs for interruptible capacity are calculated by applying a discount to the firm tariffs.

Starting the tariff decision 2020 ACM establishes reserve prices. Reserve price are established for the 4 postage stamp points for the 5 firm capacity products as well as for the daily interruptible capacity products. Wheeling reserve prices are also established by ACM in her tariff decision.

Transitional Provision

The NC TAR decision and the amended Dutch Definitions Code, Tariff Code Gas and Transmission Code Gas TSO entered into force on 1 January 1 2019 for the tariff period as of 2020. For the tariffs and services of GTS in 2019 (before the tariff period 2020) ACM has included a transitional provision. This provision states that the tariffs and services offered by GTS before the 2020 tariff period shall be governed by the codes provisions that applied before the entry into force of the NC TAR decision. For the services this means the following:

  • For diversions and transfers (ToC and ToU) contracted in 2019, the administrative fee will be charged. This is regardless of the period to which the diversion or transfers relates. For diversions and transfers that are contracted from 2020 onwards, no separate transaction fee will be charged;
  • The Shift of Capacity service under the current conditions can only be contracted for the period 2019. As of 2020 the new conditions apply (see article 2.1.8 Transmission Cod Gas TSO);
  • The services Shorthaul, Backhaul and the Gas Storage Service cannot be contracted as of 2020.

IT changes as of 2 July 2019 and migration of capacity contracts

On Tuesday evening 2 July our IT systems will be partially adjusted in preparation to the new tariff structure (as of 1 January 2020). From that moment on, capacity contracted with an effective date as of 1-1-2020 can only be booked according to the new tariff structure. New capacity bookings with an effective date in 2019 will be processed according to the current tariff structure. If those capacity bookings continue in 2020, we will migrate these bookings later this year to bookings according to the new tariff structure. Below an overview of the different situations.

  • Bookings with start and end date in 2019: these bookings are processed according the current tariff structure;
  • Bookings with start date in 2019 and end date in of after 2020: bookings are processed according to the current tariff structure. However, the part of the booking starting from 1-1-2020 will be migrated to the new tariff structure later this year;
  • Bookings with start date from 1-1-2020 will be processed according to the new tariff structure:
    • Contracted before 3 July 2019 will be registered according to the current tariff structure. The booking will be migrated to the new tariff structure later this year;
    • Contracted after 3 July 2019 will be registered according to the new tariff structure.

In the next newsletter we will inform you about the details of the migration from current to new tariff structure.

Changes in contracting on FCFS network points (at PRISMA and via manual processing)

What will change due to the new the tariff structure for contracting FCFS capacity?

In the new tariff structure the same 5 capacity products are being used as already apply to interconnection points: yearly capacity product, quarterly capacity product, monthly capacity product, daily capacity product and within-day capacity product. All these capacity products will have the same starting date, start time and duration as the standard capacity products at interconnection points. One exception is made for the yearly capacity product. This can start at every first day of a gas month (e.g. 1 February 2020 06:00 hour).

Per booking only one capacity product can be contracted: yearly, quarterly, monthly, daily or within-day capacity product. This assures a 1-on-1 relation between contract and capacity product from contracting until invoicing. A possible adverse effect of this change is that you have to make several bookings in the new tariff structure. An example: capacity from 1 February 2020 to 1 April 2020 can be booked in the current tariff structure in one contract. In the new tariff structure you have to contract the monthly capacity products for both February and March.

What does this new tariff structure mean for contracting an FCFS booking for a period unequal to the duration of a capacity product?

Per capacity product a booking has to be made. An example: for a desired booking period starting 25 March 2020 to 1 May 2020 shipper has to contract 7 daily capacity products in the month March. In addition, shipper has to contract a monthly capacity product for April.

Can GTS help me to determine the optimum combination of FCFS capacity products?

Shippers are responsible for contracting the right (combination of) capacity products. To help shippers to determine the optimum combination of capacity products for booking periods or profiled bookings that can be contracted with one booking in the current system, GTS will make a calculation tool available on their website. This calculation tool has two possibilities to optimise:

  • Conversion of a nonflat (profiled) booking for one year to an optimum combination of yearly, quarterly and monthly capacity products;
  • Conversion of a flat (nonprofiled) booking with a duration unequal to the duration of a capacity product to an optimum combination of yearly, quarterly, monthly and daily capacity products.

The calculation tool advises shipper the cheapest combination of capacity products, based on the given input. The calculation tool will be published on our website in due time.

Introduction virtual point capacity LDC (VPC)

As of 1 January 2020 all LDC exit points will have the same reserve prices. This makes it possible to simplify and optimise the booking and invoicing process. To minimise the number of contracts, GTS has proposed to totalise all LDC bookings per shipper and to registered it at a new (virtual) LDC exit point; the virtual point RNB capacity (VPC). The methodology for determining the profiled capacity booking will not change, the existing LDC exit points remain available for operational purposes. Per shipper a profiled capacity booking will be translated into an optimum combination of yearly, quarterly and monthly capacity products. These capacity products will be contracted for the shipper and will be invoiced on a monthly basis.

At the moment, market parties and ACM are assessing the proposal. We expect to give you more information in the next newsletter.  

This new virtual system connection point will also be used as an entry point for contracting green gas from the LDC network into the GTS network. The existing virtual point for injection (VPI) will cease to exist.

Adjustments Gasport

Due to the new tariff structure adjustment have been made to Gasport. Data that is no longer applicable will be no longer visible in the contract part of Gasport. This concerns amongst others the old individual tariff component such as the Balancing and QC tariff.

Adjustments invoicing

The new NC TAR tariff structure also has consequences for at least the contracted and exceeding invoice. As describe above, as of tariff period 2020 ACM establishes reserve prices. Multipliers, seasonal factors and discounts are part of these reserve prices. Therefore, we will adjust the invoice showing the reserve price and contracted capacity for each contracted capacity product.

Because the invoices involved have a monthly pattern, the invoice will include a conversion of the capacity products to the monthly period. For yearly and quarterly capacity products this conversion will be based on the number of days of the month of invoicing, compared to the number of days of the capacity product. Monthly capacity products will not be converted. For daily and within-day capacity products all capacity products in the month of invoicing will be taken into account. In our next newsletter we will elaborate more about the invoices.

Adjustments Dutch gas codes and TSC

The NC TAR decision has led to amendments of the Dutch codes Definitions Gas, Tariff Code Gas and Transmission Code Gas TSO. These codes are adjusted as of 1 January 2019 and can be found at wetten.overheid.nl (Dutch only). GTS is translating these Dutch codes into English and will publish this English version in due time at our website.

The NC TAR decision also has led to several adjustments to our TSC. Because there are more adjustments than in previous years, GTS will make available a draft TSC earlier than in previous years. We expect to publish this draft TSC in due time.

Adjustments GTS website

The new tariff structure, amended Dutch codes and general conditions will also lead to several adjustments at our website and in the application forms. We expect to adjust our website by the end of 2019. If you have any questions in the meantime, please contact our Customer Desk.

GTS makes final decision to implement hybrid VIP-model

On 20 May 2019 GTS informed you through a news item that we chooses to implement a hybrid VIP-model. In this model shippers with contracts beyond January 2020 can choose at the relevant interconnection to transfer them to the virtual interconnection point (VIP) or the keep them at the interconnection point that is part of the VIP.

In May we asked shippers to indicate their choice before 15 June 2019. The majority of the shippers chooses to keep the contracts on the interconnection points. This means that GTS is now preparing the implementation of the hybrid VIP-model. We are investigating the consequences for the implementation date (Q1 2020) and will contact the NNOs regarding our possibilities. Once an agreement is reached we will inform you. We expect to do so before or shortly after summer holidays.

On our VIP page you can read more information regarding the intended implementation of virtual interconnection points.

GTS incorporates SoC in the incremental capacity process

Upon request of the market, GTS will offer the service Surrender of Capacity (SoC) within the market demand assessment of incremental capacity 2019. In this way a single overview of demand and supply is obtained. If a market party has submitted a non-binding request for additional capacity, this overview can be used to investigate whether it is possible to match demand and supply to each other so that no or less technical measures need to be taken.

GTS will match, if possible, offered SoC capacity with demand for incremental capacity. If the SoC capacity  can be matched with the demand for incremental capacity, it will be offered in the corresponding incremental capacity auction. For the market demand incremental capacity 2019 this concerns the auction in 2021. If the offered SoC capacity cannot be matched with the demand for incremental capacity, the offered capacity will automatically be offered in the next yearly auction (2020).

It cannot be guaranteed that SoC capacity offered outside the market demand assessment phase can be included in the incremental capacity process.

Based on article 26 (1) CAM NC, the market demand assessment for incremental capacity will start on 1 July 2019 and close on 25 August 2019.

Please, check our website for more information and the market demand assessment form.