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TAR NC Implementation Document – Second Edition September 2017
Mandatory minimum premium
The incremental process introduced the concept of the mandatory minimum
premium to facilitate the satisfaction of the economic test if the reference price
resulting from the RPM would not generate sufficient revenue. Figure 42 shows the
components of the economic test.
When incremental capacity is offered, the mandatory minimum premium may be
applied in the first auction or in an alternative allocation mechanism. The mandatory
minimum premium may also be applied in subsequent auctions when:
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The offered capacity was initially set aside for the annual quarterly capacity
auctions; or
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The offered capacity initially remained unsold.
The level of the mandatory minimum premium must allow the project to pass the
economic test with the revenues generated by the allocation of all offered capacity
in the first auction in which the incremental capacity is on offer. The range of the
level for the mandatory minimum premium depends on the expected amount of
allocated capacity, and must be submitted to the NRA for approval. The decision
whether and in which auctions to apply a mandatory minimum premium must
consider Article 41(6)(a) of the Gas Directive.
In contrast to the possible split of a potential auction premium between all involved
TSOs, the mandatory minimum premium must only be allocated to the TSO for
which the applied mandatory minimum premium was approved.
Figure 42:
Components of economic test
PV User
Commitments
(RP+AP+MMP)
×
Inc C
(AP+MMP)
×
AC
Offer level
f-Factor
Proportion of uncov-
ered costs, to be paid
later and/or by all
network users
PV Increased
Allowed Revenues
Based on estimated costs
related to Incremental
capacity
≥
+
=
×
RP – reference price
AP – (potential) auction premium
MMP – (potential) mandatory minimum premium
AC – available capacity
Inc C – Incremental capacity