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TAR NC Implementation Document – Second Edition September 2017 |
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FLOATING PAYABLE PRICE
Responsibility: no implications for TSO/NRA responsibility
General
The floating price approach is used to ensure that network users who buy capacity
at a given point, pay the same as each other, regardless of when they procured the
capacity. This aims to reduce cross subsidies between network users independent
of when the network user buys the capacity.
The reference price for the yearly capacity product is calculated prior to the capac-
ity auction immediately before the gas year. Network users will not know the reserve
price for any yearly capacity product sold further ahead. The reference price of the
capacity sold in following years will reflect the allowed/target revenues in the given
year plus any reconciliation from previous years, if applicable.
Benefits for network users
Network users pay the same price for the capacity:
Each network user, regardless of
when they buy the yearly capacity, will pay the same price.
Reduces cross subsidies:
The risk of a change in revenues is shared evenly between
all network users, reducing the uneven distribution of revenues across the network
users who buy the same capacity product and therefore, reducing the potential for
cross subsidies.
Benefits for TSOs
Reflects revenue in a given year:
The floating price reflects the revenues and
assumptions for the capacity for the next gas year, providing a more cost reflective
tariff.
Calculation of the floating payable price
Where the floating payable price approach is applied, the payable price for a given
standard capacity product at an IP is calculated per formula below.
Where:
P
flo
is the floating payable price;
P
R,flo
is the reserve price for a standard capacity product applicable at the time when
this product may be used, as set or approved by the national regulatory authority;
‘AP’
is the auction premium, if any.
In a floating price regime, the payable price is determined prior to the annual auc-
tion immediately before the gas year where the capacity may be used. The floating
price is calculated using the RPM, with this price used as the
reserve price
in the
auction. The payable price will then be determined by this reserve price and any
auction premium.
The TAR NC defines the auction premium as the
‘difference between the clearing
price and the reserve price in an auction’
. Any auction premium is included in the
floating payable price.
ARTICLE 24(A)