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Gas: new tariff criteria to support investments in storage

Milan, August 05, 2010

Italian version

The Energy Authority adopted the criteria for defining natural gas storage service tariffs for the third regulatory period (1 January 2011 to 31 December 2014).

The approved resolution defines a comprehensive framework favouring new investments in storage sites - given their crucial role in the improvement of the natural gas sector security and efficiency - with no impact on gas bills for end consumers and in view of regulatory stability.

The adopted measure confirms the compensations which the law provides shall be contributed by storage companies to local communities and requires further investigations in order to assess whether, according to the preferences of the local authorities concerned, such compensations may be directly transferred to end users through a mechanism similar to gas bonus. In essence, if municipalities make an express request in such respect, rebates will be introduced in gas bills for the residents of municipalities hosting storage facilities.

Among the main innovations impacting on the value of storage tariffs, the following are worth noting:

• the recovery of the surplus of productivity in order to transfer to consumers the increased efficiency achieved by the companies;
• introduction of a specific tariff component to cover the costs of storage site re-commissioning;
• update of depreciation charges during the regulatory period to reflect new investments;
• contribution with increased revenues (from competition-based allocation procedures) to cover costs, if companies opt of keeping safeguard mechanisms and investment incentives.

In addition, the Authority substantially confirmed the mechanisms already in place in the last four years and a real pre-tax payback rate was defined of 6.7 %. In particular, the Authority confirmed the application of a single national tariff, a number of guaranteed-revenue mechanisms to cover capital costs and the incentive mechanism designed for new investments with the recognition of an increase in the payback rate related to the construction of new storage sites and the upgrade of existing sites. 

Further adopted initiatives - which will be subject to further regulatory interventions in the future - include: a tariff component for the metering service (which will prospectively be reabsorbed in the context of more general regulatory measures for the transmission metering service) and an incentive mechanism to ease new investments.

The resolution ARG-gas 119/10 can be found on the website www.autorita.energia.it