ENTSOG Tariff NC - Implementation Document 2nd Edition

ARTICLE 8(1)(E)

ENTRY-EXIT SPLIT

Responsibility: subject to consultation per Article 26(1) by TSO/NRA, as NRA decides; subject to decision by NRA

One RPM parameter is the split between revenue derived from entry points and exit points. The entry-exit split may be either an input to the RPM or an output. Article 8(1)(e) requires the counterfactual CWD to use a 50/50 entry-exit split as an input. The TAR NC does not define the entry-exit split for the proposed and approved RPM, but Article 30(1)(b)(v)(2) requires its publication. In any case, the broader principles established by Article 13 of the Gas Regulation always apply. Table 4 below provides a simple example showing the result of different entry-exit splits using the postage stamp methodology. Where the entry-exit split is an input , the split sets the entry and exit revenues, which then determine the tariffs. The steps appear in sequence from left to right. Where the entry-exit split is an output , the cal- culation of the tariffs comes first. The example assumes identical entry and exit tar- iffs under the postage stamp RPM, and the steps then proceed from right to left, ending in the derivation of the split based on the percentage of revenue recovery yielded by the identical tariffs. The cells show the numbering of the steps.

THE EFFECT OF DIFFERENT ENTRY-EXIT SPLITS ON THE TARIFFS

Assumptions

Transmission services revenue

€100

Forecasted contracted entry capacity 25 units Forecasted contracted exit capacity 50 units

Calculation

1. Entry-exit

2. Total entry revenues 50% × €100 = €50 40% × €100 = €40 2. Total entry revenues

2. Total exit revenues

3. Entry tariff

3. Exit tariff

split as input

50% × €100 = €50 60% × €100 = €60

€50/25 units = €2.0/unit €40/25 units = €1.6/unit

€50/50 units = €1.0/unit €60/50 units = €1.2/unit

50 : 50

40 : 60

3. Entry-exit

2. Total exit revenues 50 units × €1.33/ unit = €67

1. Entry tariff

1. Exit tariff

split as output

25 units × €1.33/ unit = €33

€100/75 units = €1.33/unit

€100/75 units = €1.33/unit

33 : 67

Table 4: The effect of different entry-exit splits on the tariffs

As of September 2017, European TSOs apply a different range of entry-exit splits for their RPM. The mandatory comparison with the CWD 50/50 entry-exit split shall be made in any case as part of the final consultation document per Article 26(1). Some MSs do not appear in the figure displaying current entry-exit splits below: Estonia, Finland and Latvia do not follow entry-exit tariff principles, while Cyprus and Malta have no transmission system.

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TAR NC Implementation Document – Second Edition September 2017