PUC announces a public consultation on amendments to the regulatory framework of the Inčukalns gas storage facility to strengthen security of gas supply

Drukāt
Natural Gas

To strengthen the security of natural gas supply in Latvia and ensure the largest possible amount of stocks in the next storage cycle (2022/2023), the Public Utilities Commission (PUC) has developed amendments to the Regulations on the Use of the Inčukalns Underground Gas Storage Facility. A public consultation has been announced on the prepared amendments.

PUC’s Chair Alda Ozola explains: “Considering that the natural gas stored in the storage facility is mainly used for the supply of natural gas to Latvian end-users in winter, the largest possible amount of stocks in the storage facility is one of the most important guarantees of security of natural gas supply in these rapidly changing and unpredictable conditions. The amendments made will have a positive impact on both natural gas final consumers, as their security of supply will increase, as well as the system users, as the requirements for withdrawal of stocks at the end of this storage cycle will be reduced.”

The procedure included in the Regulations on the use of the storage facility which are currently in force encouraged the storage facility users to remove as much natural gas as possible from the Inčukalns underground gas storage facility by the end of the natural gas withdrawal season to ensure the sustainability of the storage facility. As stocks were carried over to the next storage cycle, the storage capacity product booked for the storage of the relevant amount of stocks changed. Namely, in the next storage cycle, stocks were stored as part of a relatively more expensive stock transfer product. The Ŗegulations also stipulate that the natural gas injection season of the storage cycle shall begin on May 1 and end on October 14, while the withdrawal season shall start on October 15 and end on April 30 of the following year.

Meanwhile, the developed amendments provide for significant changes in the stock transfer procedure at the end of this (2021/2022) storage cycle (i.e. until 30 April 2022), minimizing the amount of stocks to be transferred to the stock transfer product in the next (2022/2023) storage cycle (i.e. from 1 May 2022). The rights of the system operator JSC Conexus Baltic Grid (hereinafter – Conexus) to perform natural gas injection during the natural gas withdrawal season of this storage cycle, as well as to extend the natural gas injection season in the next storage cycle have also been established.

According to the amendments, natural gas stocks which are not withdrawn at the end of this (2021/2022) storage cycle will be transferred to the capacity products booked at auctions for the next (2022/2023) storage cycle. In addition, the system users will be able to book the required capacity product for stocks for which no capacity product has been reserved yet in the relevant amount by the end of the 2021/2022 storage cycle.

Namely, on 2 May 2022, Conexus will inform the system users about the amount of stocks for which the system users have not booked the capacity product for the next (2022/2023) storage cycle. Meanwhile, on 3 May 2022, the system user will have to inform Conexus about the amount of stocks for which the system user will book the capacity product in the relevant amount at the storage capacity auction taking place after 3 May 2022.

However, if the storage user will not have booked the storage capacity products for the next storage cycle, it will be deemed to have booked the stock transfer product for the next storage cycle in the relevant quantity of stocks.

The system operator Conexus will also have to publish information on the planned injection of natural gas in this (2021/2022) withdrawal season on its website in a timely manner.

Conexus will also have to inform if the natural gas injection season is extended in the next (2022/2023) storage cycle. Information on changes in the duration of the season will have to be published by the system operator on its website no later than two weeks before the start of the withdrawal season. The amendments include these rights of the system operator to extend the injection season of the next storage cycle envisaging that the natural gas may be supplied to the storage facility mainly from the Lithuanian natural gas transmission system, as well as taking into account the Latvia-Lithuania interconnection capacity.

In addition, the draft amendments clarify the application of regulatory enactments in case any of the crisis levels in the natural gas supply sector specified in the European Union Regulation concerning measures to safeguard the security of gas supply has been announced in Latvia. According to the amendments, if the competent national administrative authority has imposed special security of supply obligations, the system operator and system users must comply with them even if the obligations do not comply with the Regulations on the use of the storage facility.

It has already been reported that in response to the escalation of the Russia-Ukraine conflict, on 25 February 2022, PUC received a Conexus proposal to amend the Regulations on the use of the storage facility. Taking into account the deteriorating geopolitical situation and the fact that natural gas is a very important resource for the Latvian economy and energy sector with a significant role both in the transformation sector – electricity and thermal energy production – and for the industry, PUC supported the proposal and started developing appropriate amendments to the Regulations on the Use of the Inčukalns Underground Gas Storage Facility.

The Inčukalns underground gas storage facility managed by Conexus plays a strategically important role in promoting the security of energy supply in Latvia and the region. It is one of the most modern in Europe and the only functioning natural gas storage facility in the Baltic States. It enables the seasonal storage of natural gas, thus avoiding sharp spikes in the price of natural gas during the heating season.

The consultation document on the amendments to the Regulations on the Use of the Inčukalns Underground Gas Storage Facility is available on the PUC website.

Please submit proposals and comments on the draft regulations to PUC by 24 March 2022 by e-mail to sprk@sprk.gov.lv.

 

Photo credit: JSC Conexus Baltic Grid