PUC approves amendments to the regulatory framework of the Inčukalns gas storage facility to strengthen the security of gas supply

Natural Gas

To strengthen the security of natural gas supply in Latvia and ensure the largest possible quantity of stocks in the next storage cycle, the Public Utilities Commission of Latvia (PUC) in cooperation with JSC Conexus Baltic Grid (Conexus) has developed and approved amendments to the Regulations on the Use of the Inčukalns Underground Gas Storage Facility. The amendments entered into force on 2 April 2022.

The PUC’s Chair Alda Ozola has expressed the following comments on the approved amendments: "We are pleased that in these rapidly changing and unpredictable circumstances, together with the support of the sector’s representatives and operator, we have been able to respond quickly in such a short time by developing and approving amendments to strengthen the security of gas supply. The amendments made will have a positive impact on both natural gas end-users, as their security of supply will increase, and system users, as the requirements for withdrawal of stocks at the end of this storage cycle will be reduced”.

To facilitate the availability of largest possible quantity of stocks in the storage facility in the next (2022/2023) storage cycle (i.e. from 1 May this year), the system operator (Conexus) in the natural gas withdrawal season of this (2021/2022) storage cycle (i.e. until 30 April this year) will be able to organize the injection of natural gas by publishing the relevant information on its website in a timely manner.

Stocks accumulated as a result of natural gas injection organized in such a manner will be transferred to the next (2022/2023) storage cycle for storage within the capacity product booked by the system user for the next (2022/2023) storage cycle. The system user will be able to choose how to transfer to the next (2022/2023) storage cycle the stocks at the end of this (2021/2022) storage cycle, which have been accumulated by injecting natural gas from 1 May 2021 to 14 October 2021.

In accordance with the process specified in the amendments, on 2 May 2022, Conexus will inform the system user about the quantity of stocks for which the system user has not booked the capacity product for the 2022/2023 storage cycle. Meanwhile, on 3 May 2022, the system user will have to inform Conexus about the quantity of stocks for which at the storage capacity auction taking place after 3 May 2022 the system user will book the capacity product in the relevant amount and the quantity of stocks to which the already booked capacity product applies. However, if the user will not have booked storage capacity products for stocks for the 2022/2023 storage cycle, it will be deemed that the system user has booked the stock transfer product in the relevant quantity of stocks.

In addition, 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 regislation has been announced in Latvia. According to the amendments, if the competent national authority has imposed special security of supply obligations, the system operator and system participants must comply with them even if the obligations do not do not comply with the regulation of the Inčukalns gas storage facility.

During the public consultation on the announced draft amendments, which took place from 10 March 2022 to 24 March 2022, opinions were submitted to PUC by seven energy supply companies (JSC AJ Power Gas, JSC Conexus Baltic Grid, JSC Eesti Energia, JSC Eesti Gaas, JSC Ignitis, JSC Latvijas Gāze, JSC Rīgas siltums), as well as the Finnish Energy Authority. A total of ten comments were received. After the conciliation meeting on 30 March 2022 with the participation of sector representatives, all comments were taken into account. They are available on the PUC website.

It has already been reported that in response to the escalation of the Russia-Ukraine conflict, on 25 February 2022, PUC received the Conexus’ proposal to amend the storage regulations. PUC, 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 the industrial sector, supported the proposal and started developing appropriate amendments to the Regulations on the Use of the Inčukalns Underground Gas Storage Facility.

Decision on the amendments to the Regulations on the Use of the Inčukalns Underground Gas Storage Facility can be found on the PUC website.

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.