Category: European Union Electricity Market Glossary

Published: 31 January 2021

Last Updated: 15 February 2022

 

Gas Tariffs Network Code (NC TAR) stands for the Commission Regulation (EU) 2017/460 of 16 March 2017 establishing a network code on harmonised transmission tariff structures for gas 

14 February 2022   ACER Report, Analysis of the Consultation Document on the Gas Transmission Tariff Structure for Denmark ACER concludes that the Danish transmission system operator (TSO), Energinet, does not sufficiently demonstrate the compliance of the proposed reference price methodology (RPM) with the requirements of the NC TAR.   20 July 2021 ACER publishes recommendations on tariff multipliers for non-yearly products   ACER Recommendation No 01/2021 of 19 July 2021 on setting the level of the multipliers used for the calculation of gas transmission tariffs applied to non-yearly capacity products   Annexes 1 and  2

  

The ACER Market Monitoring Report 2019 (Gas Wholesale Market Volume of 23 September 2020) underlined the importance of the NC TAR for the functioning of the EU internal energy market indicating heavy reliance on gas imports - 80% of EU gas consumption is imported from third countries.

 

This unfavourable phenomenon is aggravated by the declining domestic production (concentrated in only a few EU Member States) as well as many legacy contracts expiring in the upcoming years.

 

This is complemented by the known fact that variations of cross-border tariffs may impact the wholesale gas price formation and extent of cross-border flows not only in immediately neighbouring zone(s) but also in more distant ones.

NC TAR allows network users to better reproduce and forecast future transportation tariffs.

 

In this context the key aims of the NC TAR enumerated by the ACER in the said ACER Report of 23 September 2020 are:

See also:   ACER's website on the Gas Tariffs Network Code   ENTSO-G's website on the Gas Tariffs Network Code   National tariff consultation documents

• to set a more transparent and harmonised framework to determine tariffs,
• to avoid discrimination between network users,
• to charging network users in a more cost reflective manner, avoiding undue cross-subsidies,
• to increase harmonisation and transparency,
• to facilitate cross-border trade.

 

ACER indicates that the TAR NC’s transparency provisions lead to better market functioning by allowing network users to better reproduce and forecast future transportation tariffs and by publishing the reserve price of capacity before the capacity auctions.

 

Usually, the gas supply prices in an entry/exit zone are set by summing the gas commodity cost to the transportation tariffs at the relevant IP sides and directions.

 

However, in some cases, cross-border tariffs are not fully included in the final gas supply prices.

 

Before the TAR NC, the yearly capacity tariffs and the short-term multipliers in many EU Member States were published only after the yearly transportation capacity auctions were carried out, so network users did not know the price of the capacity booked until some months after its having been allocated. 

 

ACER Market Monitoring Report 2019 – Gas Wholesale Market Volume, 23 September 2020, p. 13 The intended role of the Commission Regulation (EU) 2017/460 of 16 March 2017, establishing a network code on harmonised transmission tariff structures for gas (‘NC TAR’), was to create a level playing field amongst domestic and cross-border network users, reduce cross-subsidisation between these users, increase tariff transparency and by these beneficial impacts facilitate cross-border trade. When the EU regulatory debates started on tariffs in 2012, tariffs still showed a wide variety of pricing structures. Different approaches were not necessarily problematic where tariffs derived from an objective and transparent methodology, but inconsistent tariff structures across MSs impacted effective cross-border gas transportation. The NC TAR has been designed to foster market integration in two ways. On the one hand, its objective is to facilitate cross-border trade by imposing higher consistency for national tariff structures and to increase reliability of tariff methodologies by ensuring that its components are published. On the other hand, the NC TAR should improve transparency on tariffs and facilitate the active participation of stakeholders in public consultations, which were to be published both in English and the national language.

 

 

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