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TAR NC Implementation Document – Second Edition September 2017 |
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Situation before April 2023
The TAR NC permits quarterly and monthly multipliers of between 1 and 1.5 inclu-
sive, that is including exactly 1 and exactly 1.5.
There is more flexibility as to daily and within-day multipliers. The default rule allows
such multipliers to range from 1 to 3 inclusive. The TAR NC allows for widening such
ranges in ‘duly justified cases’:
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The floor can range from 0 to 1 exclusive, that is excluding either 0 or 1;
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The cap can be more than 3 with no specific limit.
As for the first bullet point, ENTSOG views that multipliers less than 1 are consistent
with the economic principle of the efficiency of marginal cost pricing, in this instance
the short run marginal cost of making capacity available on a daily or within-day
basis. Such multipliers can encourage the short-term efficient use of the transmission
system, and can facilitate short-term trading, improving market liquidity. When
considering such multipliers, the NRA may balance the promotion of short-term gas
trades against the need for long-term capacity bookings that provide efficient invest-
ment signals. The NRA must also consider the risk of cross-subsidising particular
network users if a large proportion switch to non-yearly discounted products to
reduce their contribution to the recovery of some network costs.
As for the second bullet point, ENTSOG considers that a duly justified case could
involve the high utilisation of within-day capacity. Hourly tariffs for within-day
capacity can create an incentive to book within-day capacity instead of daily
capacity. For example, in systems that market capacity hourly in terms of kWh/h,
network users active at IPs could cut their costs at the expense of other network
users. Within-day capacity could warrant a higher multiplier than 3 to avoid the
problem. Another example could involve a price cap regime where it is necessary to
achieve a specific balance between short-term and long-term bookings.
Situation after April 2023
The TAR NC does not indicate any change in the ranges for quarterly and monthly
multipliers after April 2023. They should remain as set out above.
In contrast, ACER can make a recommendation by 1 April 2021 to cap the multipli-
ers for daily and within-day standard capacity products at 1.5 by 1 April 2023. The
recommendation must take into account the following aspects related to the use of
multipliers and seasonal factors before and as from the AD of 31 May 2019 for the
TAR NC Chapter III ‘Reserve prices’:
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Changes in booking behaviour;
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Impact on the transmission services revenue and its recovery;
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Differences between the level of transmission tariffs applicable for two
consecutive tariff periods;
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Cross-subsidisation between network users having contracted yearly and
non-yearly standard capacity products;
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Impact on cross-border flows.
Absent specific mention of the ‘floor’ for daily and within-day multipliers, it is reason-
able to conclude that the above exception regarding ‘duly justified cases’ still applies,
permitting a range from 0 to 1 exclusive.
For further details regarding the impact of low multipliers on reference price levels,
please refer to Annex I.