Draft method decision for GTS takes into account decrease in natural-gas consumption

Over the next few years, Dutch transmission system operator Gasunie Transport Services (GTS) is allowed to charge network users, sooner than before, any costs that are associated with investments in the natural-gas network. In the draft version of its new method decision, the Netherlands Authority for Consumers and Markets (ACM) offers GTS such latitude, with an eye to the reduction in natural-gas consumption in the future. In the calculation of GTS’s revenues, ACM takes into account that development, for example, by accelerating by spreading depreciations over different time periods, so that the costs are spread differently over time. These are some of the conclusions found in the 2022-2026 method decision for GTS that ACM published today for consultation among market participants in the energy market.

GTS charges large industrial firms, power plants, manufacturers, and energy suppliers the costs of the gas transmission system, since those are its customers. These costs do not have a direct effect on the bills of consumers. The costs of the gas transmission network are currently still paid by a large group of gas buyers. As a result of the energy transition, this group will become smaller, if more and more businesses and households leave the natural-gas grid. The smaller that group of gas consumers becomes, the higher the tariffs for consumers will have to be in order to compensate GTS’s costs. By already taking into account that development now, the increase in the rates will be limited in the long term.

Not paying more than necessary

ACM takes into account the trends and developments associated with the energy transition, and, at the same time, ensures that GTS’s revenues are not higher than the necessary costs that the network operator incurs needed to perform its duties. Natural-gas consumers will thus not pay more than what is necessary. When determining the allowed revenues, ACM compares GTS’s performance with that of other European transmission system operators. That comparison reveals that there is still room for improvement in terms of efficiency on GTS’s part. Combined with a lower compensation for the cost of capital (WACC), particularly as a result of a decreasing interest rate, it means that, according to the draft method decision, GTS will get, in 2026, approximately 15 percent less revenues than in 2020, based on current projections. This may lead to lower rates for network users, depending on the volumes of transported natural gas.

Consultation

The draft method decision will be available for public consultation for six weeks. The final decision is expected to be released in February 2021. By then, it will also be clear how high GTS’s revenues will be. Interested parties have until October 12, 2020, to submit their opinions. These opinions can be sent to:

The Netherlands Authority for Consumers and Markets
Energy Department (DE)
P.O. Box 16326
2500 BH The Hague
The Netherlands

More in this case

31-08-2020 Draft version of 2022-2026 Method decision for GTS (in Dutch)