Today, the Board of the Public Utilities Commission (Regulator) approved the application of the natural gas storage service tariffs submitted by JSC “Conexus Baltic Grid” for the 2019/2020 Incukalns underground gas storage cycle, as well as the long-term storage tariff. It provides new values of storage service tariffs and the value of the two-year capacity product. This decision directly relates to natural gas traders, so the impact on natural gas users will depend on the proportion of the new storage tariffs included by traders in the end-user bills.
The fee for the natural gas storage service in the total end-user payment for gas makes up only a small part, so there should be no significant changes in end-user payments. The new tariffs for storage service products will affect the household payments for natural gas starting from January 1, 2019.
Compared to the previous Incukalns underground gas storage cycle, a new two-year capacity product (long-term) is planned for the new cycle in addition to the existing products (grouped capacity product (GCP), market product (MP) and virtual flow product).
The maximum tariff value of the applicable grouped capacity product for the 2019/2020 storage cycle is set at 3.52056 EUR/MWh, the minimum tariff value of the applicable market product for the 2019/2020 storage cycle is 1.38000 EUR/MWh, the tariff value of the two-year grouped capacity product for the combined 2019/2020 and 2020/2021 storage cycle is 4.90056 EUR/MWh.
The approved tariffs will enter into force on January 15, 2019. This means that natural gas traders can begin to reserve natural gas from January 15, 2019, while the injection can be started at the beginning of the injection season.
When calculating tariff values, it is planned that the estimated used storage capacity for the 2019/2020 storage cycle will be 14 872 000 MWh, which corresponds to a three-year average natural gas volume. It is 10.8% more than the estimated natural gas volume of the 2018/2019 storage cycle in the tariff calculation of April 2018.
In order to hear market participants' opinions on the new values for storage service tariffs offered by Conexus and the value of the two-year capacity product for the 2019/2020 Incukalns underground gas storage cycle, the Regulator organized a public hearing (discussion) on November 9, 2018.
On April 26, 2018, the Regulator approved the Conexus natural gas storage tariffs and set the procedure for the application of the GCP and MP tariffs for the 2018/2019 Incukalns underground gas storage cycle. At the same time, the Regulator imposed an obligation on Conexus1 to submit to the Regulator, by December 30 of each year, an estimate of the applicable maximum value of the GCP tariff for the next storage cycle. In turn, the minimum value of the MP and virtual counter-flow product tariff for the next storage cycle shall be submitted by March 1. At the same time, the Regulator determined that until 1 February 2019, in addition to the existing products, Conexus should submit to the Regulator tariff calculations for long-term products that are longer than one storage cycle.
On October 23, 2018, Conexus submitted to the Regulator natural gas storage tariff values for the new cycle. After assessing the received information, the Regulator requested additional information and clarifications from the merchant. The latest information was submitted by the merchant on December 12, 2018. In the light of the information received, the Regulator’s Board decided to approve the values of the natural gas storage service tariffs applicable by Conexus for the 2019/2020 Incukalns underground gas storage cycle and approved the long-term storage tariff.
If the factors affecting tariffs change, the Regulator may propose a revision of tariffs and cancel this decision.
1 within the framework of the tariff review cycle