Creditworthiness for active parties
What is the process for demonstrating creditworthiness if you are already active?
The creditworthiness requirements which must be met by each shipper and end user with exit capacity are set out in the Transmission Code Gas - TSO (appendix 1). This page contains all the information about this topic of which you as a shipper must take into account.
The online Customer portal Gasport (“Financial” – “Exposure”) gives you access to your organisation’s current financial exposure situation. These data allow you to calculate the credit limit required using the calculation module set out below. Steps 1 and 2 of the text below contain comprehensive information about the structure of exposure and the credit limit.
*No rights can be derived from the calculation based on this calculation module
Step1. Determine your exposure
Your initial exposure is determined after you have submitted your licence application. The exposure can change, upwards or downwards, if you contract new services or transmission bookings.
You can contract new services if you have sufficient spent % to cover the credit risk associated with the service. To calculate your exposure for the service to be contracted with you, take the highest (future) monthly invoice of your transmission bookings and multiply it by 3. In the case of a 1- or 2-month booking, multiply by 1 or 2 respectively. If your credit limit is not sufficient for your new booking, your booking request will be rejected.
Any outstanding transmission contract invoices that have been outstanding for more than 60 days are added to the exposure.
Your initial imbalance exposure is determined during your licence application. But you should also take your current imbalance into account. This is because your imbalance exposure can increase because your imbalance is, at a certain point in time, greater than the imbalance exposure set up for this. GTS determines your current imbalance position at 06.00 a.m. (LET) every day and compares it with your existing imbalance exposure.
The value of the imbalance exposure is the maximum imbalance exposure achieved in the past 12 months, and consists of the sum of:
- financial value of the Portfolio Imbalance Signal (POS). The value of the POS must be greater than or equal to zero; if the POS is negative, this value is set to zero;
- outstanding Linepack Flexibility Service invoice sums; the LFS is always determined on an absolute basis.
- financial value of Balancing actions;
- outstanding Settlement invoices.
If the sum of the imbalance exposure amounts to a negative figure, a figure of 0 euros is used. The imbalance exposure is adjusted upwards for a period of 12 months as soon as the imbalance exposure achieved on the previous day is higher than the maximum value until that point.
When you are active as a shipper on TTF, GTS reserves 50,000 euros of your credit limit. If you are also active as a shipper on the LDC market, GTS also reserves an amount of the credit limit for this; in the first year the amount is at least 50,000 euros and this amount is reassessed each following year on the basis of 3 times the value of the highest invoice for exit points connected with the distribution network.
Step 2. Determine your credit limit and spent %
GTS sets an initial credit limit for each shipper on the basis of an analysis of financial annual reports. Depending on the shipper’s risk category (medium or low), a further financial analysis is carried out every 2 or 3 years. Securities covering exposure are always required for shippers in the high risk category.
Your credit limit must at least cover your exposure, but we advise you to have a minimum spent % of at least 15% of your credit limit. We also advise you to take account of additional credit (available amount) if you want to take transmission bookings in the future or to cope with any imbalance. Bookings that straddle two calendar years can cause exposure to rise (in the case of an increase in the tariff) or fall (in the case of a decrease in the tariff) once the new calendar year starts. In other words: exposure varies according to tariff changes.
You can increase your credit limit by transferring additional securities. You can also ask us to return (part of) your additional securities if you expect that you will no longer need the additional credit. For instance, if a transmission contract has come to an end, spent % becomes available.
GTS accepts the following additional financial securities: a parent company guarantee, a security deposit and/or a bank guarantee. The application documents can be found here. The Bank Guarantee must be issued by a bank with Moody’s long term credit rating of not less than Baa2 or Standard & Poor’s rating of not less than BBB. The lowest rating of the issuing bank shall be applicable. The financial securities must be valid for at least 2 months longer than the end date of the transmission contract with the longest duration.
Creditworthiness enforcement protocol
Protocol for Enforcing Creditworthiness applicable to shipper/programma verantwoordelijke (programme responsible party)/end user with exit capacity (ewex).
This enforcement protocol is a more detailed interpretation of the creditworthiness requirements as laid down in the Dutch Transmission Code Gas-TSO. This protocol should be read specifically in conjunction with and as a supplement to the Transmission Code Gas-TSO. GTS may, in exceptional circumstances, bring the enforcement protocol into force earlier or later or make the enforcement protocol, or parts thereof, inapplicable.
What measure does GTS take if your exposure exceeds your credit limit?
If the credit limit is exceeded, parties are alerted after no more than 1 working day by GTS. On the same working day the party is requested to provide additional financial securities within 1 working day.
If after 3 working days (= 2 working days after our request) additional security has not been provided and the credit limit is still exceeded, GTS will take the following actions on the basis of Article B1.6 of the Gas-LNB Transport Code:
- all suppliers are informed that switch messages in which the relevant party occurs are no longer accepted
- all parties are informed that (partial) nominations for sales transactions on TTF of the relevant party are no longer accepted.
If after 6 working days (= 5 working days after our request) the credit limit is still exceeded, GTS takes the following action on the basis of article 3.3.2 of the Transport Code Gas - LNB:
- withdrawal of the license of the relevant party
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.
The amended credit worthiness policy affects every customer. A large number of customers has to increase and/or extend their securities, which takes processing time within GTS. Therefore we request our customers to provide us their final additional securities (a final security is a valid security which is accepted by GTS) before 1 November 2018. Securities provided after 1 November 2018 will be processed on a best effort basis.
No, in case your organization features a valid “warehouse arrangement”, VAT can be excluded when calculating your exposure and related credit limit.
If your organization is registered under a Dutch VAT code and does not feature a warehouse arrangement, VAT will be added to your LDC reservation. GTS will adjust the LDC reservation during the second half of September 2018. Tis adjustment will be visible in Gasport immediately, starting January 2019.
During the second half of September, GTS will end your TTF reservation (€ 50.000) per gas day 1 January 2019. The same date, the imbalance reservation (€ 100.000) will start. VAT will be included in the LDC reservation per 1 January (if applicable). These changes will be visible in Gasport by the end of September 2018. Provided additional securities will be visible immediately after processing.
VAT on all services (for e.g. contracted capacities) and the amended daily imbalance will be visible as of 1 January 2019.