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TAR NC Implementation Document – Second Edition September 2017
Benchmarking
Following the Gas Regulation, the NRA can perform benchmarking in order to adjust
the reference price at a given entry or exit point if the point faces competition from
the entry or exit point(s) of other TSOs. The adjustment should bring the resulting
reference price in line with the competitive level set by competing points.
Equalisation
Equalisation means the application of the same reference price to some or all points
within a homogeneous group. Where necessary, equalisation seeks to ensure the
same reference prices at points deemed similar because of their characteristics. An
initial application of the RPM may imply large differences in reference prices for
similar points, so equalisation would constitute a correction at a second or ‘ex-post’
stage of the process. The rules for ‘how to equalise’ are:
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Equalisation may apply to some or all points of the same homogeneous group.
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Equalisation is not permitted among points that do not belong to the same
homogeneous group.
Table 1 compares clustering and equalisation.
The TAR NC does not explicitly restrict equalisation. When applying equalisation,
the entity in charge may compare the potential simplicity offered by equalisation to
the efficiency gains that locational signals offer, based on information provided in the
public consultation.
Several factors may motivate equalisation in practice, including but not limited to the
need to avoid cross-subsidies, especially regarding cross-system and intra-system
uses; to encourage the use of assets that offer security of supply; to enhance the
stability of prices and flows, especially in cases where reference prices were already
equalised before implementing the TAR NC; to foster retail and wholesale market
competition; for simplicity and transparency; or the simple desire to avoid price
differences within homogeneous groups of points.
For each homogeneous group, the decision on equalisation should assess the pros
and cons of equalisation relative to the alternative of locational signals. Locational
signals offer the advantage of incorporating cost drivers such as distance and
capacity, with the goal of enhancing cost-reflectivity.
Equalisation is used as an ex-post mechanism after the RPM application. After all
reference prices for all points are calculated, homogeneous points subject to
equalisation have their reference prices equalised so that the resulting prices are the
same.