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Our analysis of the impact of an equal charging treatment regime for storage and bi-directional gas interconnectors demonstrated that applying equal charging treatment at Bacton IP as for GB storage would further the interests of GB consumers through lower gas prices. 

Context

We were asked to conduct a study into the impacts of applying equal transmission charging treatment as applied to gas storage to bi-directional flows at the Bacton interconnection point by IUK and BBL; the gas interconnectors connecting GB with Belgium and the Netherlands respectively.

UNC Modification 0621 and its alternatives seek to change many aspects of gas transmission charging in Great Britain (GB) to ensure compliance with the EU gas Tariffs Network Code (TAR). The UNC0621 modification also follows a review of gas transmission charges launched originally by the GB energy regulator Ofgem in 2013.

Under the proposed new charging regime, GB storage facilities would receive a discount on transmission capacity charges of 50%. IUK put forward an alternative modification to UNC0621 (UNC0621F) which proposes to introduce a similar capacity discount structure for NTS capacity products at the physically bi-directional Bacton IP for the proportion of bookings entry = exit.

What we found

CEPA evaluated the impact of this equal charging treatment regime by analysing the Bacton interconnectors’ historical position in the GB gas market and by using a global gas market model to simulate wholesale market prices and gas flows under a range of future market scenarios and NTS charging regimes. We found that:

• IUK and BBL compete directly with the different types of GB storage; and
• applying equal charging treatment at Bacton IP as for GB storage would further the interests of GB consumers through lower gas prices.