Gas Tariffs Network Code (NC TAR)
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
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:
- 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.