Commission Regulation (EU) 2017/460Show full title

CHAPTER I U.K. GENERAL PROVISIONS

Article 1 U.K. Subject matter

This Regulation establishes a network code setting out the rules on F1 ... transmission tariff structures for gas, including rules on the application of a reference price methodology, the associated consultation and publication requirements as well as the calculation of reserve prices for standard capacity products.

Textual Amendments

F1 Word in Art. 1 omitted (31.12.2020) by virtue of S.I. 2019/531, Sch. 5 para. 1 (as substituted by The Gas Tariffs Code (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/1393), reg. 1(2), Sch. para. 1; 2020 c. 1, Sch. 5 para. 1(1))

Article 2 U.K. Scope

1. This Regulation shall apply to all entry points and all exit points of gas transmission networks with the exception of Chapters III, V, VI, Article 28, Article 31(2) and (3) and Chapter IX which shall apply only to interconnection points. Chapters III, V, VI, Article 28 and Chapter IX shall apply to [F2 entry points from or exit points to other countries that are not member States], or both, where the national regulatory authority takes a decision to apply Regulation (EU) 2017/459 at those points.

[F3 2. If a transmission system operator is regulated by both national regulatory authorities, where relevant they must cooperate with each other regarding the regulation of that transmission system operator.

3. If a transmission system operator is regulated by a national regulatory authority and a non-UK regulatory authority, where relevant the national regulatory authority must endeavour to cooperate with the non-UK regulatory authority regarding the regulation of that transmission system operator.

4. The interconnection points within the scope of this Regulation are those where transmission system operators or network users carry out functions or activities that are regulated by a national regulatory authority.

5. In any case where a transmission system operator cannot comply with an obligation set out in this Regulation without the cooperation of a non-UK TSO, the obligation must be interpreted as a requirement on the transmission system operator to—

(a) comply with the obligation in so far as it is able to do so without the cooperation of the non-UK TSO; and

(b) endeavour to cooperate with the non-UK TSO in order to comply with that obligation.

6. Paragraph 5 applies so that obligations that apply to transmission system operators at an interconnection point apply to a transmission system operator that is adjacent to a non-UK TSO at an interconnection point.]

F4 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F2 Words in Art. 2(1) substituted (31.12.2020) by S.I. 2019/531, Sch. 5 para. 2(2) (as substituted by The Gas Tariffs Code (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/1393), reg. 1(2), Sch. para. 2; 2020 c. 1, Sch. 5 para. 1(1))

F3 Art. 2(2)-(6) inserted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 2(4); 2020 c. 1, Sch. 5 para. 1(1)

F4 Art. 2(2) omitted (31.12.2020) by virtue of The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 2(3); 2020 c. 1, Sch. 5 para. 1(1)

Article 3 U.K. Definitions

For the purposes of this Regulation, the definitions in Article 2 of Regulation (EC) No 715/2009, Article 3 of Regulation (EU) 2017/459, Article 3 of Commission Regulation (EU) No 312/2014(1), [F5 and] Article 2 of Commission Regulation (EU) 2015/703(2) F6 ... shall apply. In addition, the following definitions shall apply:

(1)

‘reference price’ means the price for a capacity product for firm capacity with a duration of one year, which is applicable at entry and exit points and which is used to set capacity-based transmission tariffs;

(2)

‘reference price methodology’ means the methodology applied to the part of the transmission services revenue to be recovered from capacity-based transmission tariffs with the aim of deriving reference prices;

(3)

‘non-price cap regime’ means a regulatory regime, such as the revenue cap, rate of return and cost plus regime, under which the allowed revenue for the transmission system operator is set [F7 by the national regulatory authority];

(4)

‘non-transmission services revenue’ means the part of the allowed or target revenue which is recovered by non-transmission tariffs;

(5)

‘regulatory period’ means the time period for which the general rules for the allowed or target revenue are set [F8 by the national regulatory authority];

(6)

‘transmission services revenue’ means the part of the allowed or target revenue which is recovered by transmission tariffs;

(7)

‘transmission tariffs’ means the charges payable by network users for transmission services provided to them;

(8)

‘intra-system network use’ means transporting gas within an entry-exit system to customers connected to that same entry-exit system;

(9)

‘cross-system network use’ means transporting gas within an entry-exit system to customers connected to another entry-exit system;

(10)

‘homogeneous group of points’ means a group of one of the following types of points: entry interconnection points, exit interconnection points, domestic entry points, domestic exit points, entry points from storage facilities, exit points to storage facilities, entry points from liquefied natural gas facilities (hereinafter, referred to as ‘LNG facilities’), exit points to LNG facilities and entry points from production facilities;

(11)

‘allowed revenue’ means the sum of transmission services revenue and non-transmission services revenue for the provision of services by the transmission system operator for a specific time period within a given regulatory period which such transmission system operator is entitled to obtain under a non-price cap regime and which is set [F9 by the national regulatory authority];

(12)

‘transmission services’ means the regulated services that are provided by the transmission system operator within the entry-exit system for the purpose of transmission;

(13)

‘non-transmission tariffs’ means the charges payable by network users for non-transmission services provided to them;

(14)

‘target revenue’ means the sum of expected transmission services revenue calculated in accordance with the principles set out in Article 13(1) of Regulation (EC) No 715/2009 and expected non-transmission services revenue for the provision of services by the transmission system operator for a specific time period within a given regulatory period under a price cap regime;

(15)

‘non-transmission services’ means the regulated services other than transmission services and other than services regulated by Regulation (EU) No 312/2014 that are provided by the transmission system operator;

(16)

‘multiplier’ means the factor applied to the respective proportion of the reference price in order to calculate the reserve price for a non-yearly standard capacity product;

(17)

‘price cap regime’ means a regulatory regime under which a maximum transmission tariff based on the target revenue is set [F10 by the national regulatory authority];

(18)

‘cost driver’ means a key determinant of the transmission system operator's activity which is correlated to the costs of that transmission system operator, such as distance or technical capacity;

(19)

‘cluster of entry or exit points’ means a homogeneous group of points or group of entry points or of exit points located within the vicinity of each other and which are considered as, respectively, one entry point or one exit point for the application of the reference price methodology;

(20)

‘flow scenario’ means a combination of an entry point and an exit point which reflects the use of the transmission system according to likely supply and demand patterns and for which there is at least one pipeline route allowing to flow gas into the transmission network at that entry point and out of the transmission network at that exit point, irrespective of whether the capacity is contracted at that entry point and that exit point;

(21)

‘seasonal factor’ means the factor reflecting the variation of demand within the year which may be applied in combination with the relevant multiplier;

(22)

‘fixed payable price’ means a price calculated in accordance with Article 24(b) where the reserve price is not subject to any adjustments;

(23)

‘tariff period’ means the time period during which a particular level of reference price is applicable, which minimum duration is one year and maximum duration is the duration of the regulatory period;

(24)

‘regulatory account’ means the account aggregating at least under- and over-recovery of the transmission services revenue under a non-price cap regime;

(25)

‘auction premium’ means the difference between the clearing price and the reserve price in an auction;

(26)

‘floating payable price’ means a price calculated in accordance with Article 24(a) where the reserve price is subject to adjustments such as revenue reconciliation, adjustment of the allowed revenue or adjustment of the forecasted contracted capacity.

Textual Amendments

F5 Word in Art. 3 inserted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 3(2)(a); 2020 c. 1, Sch. 5 para. 1(1)

F6 Words in Art. 3 omitted (31.12.2020) by virtue of The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 3(2)(b); 2020 c. 1, Sch. 5 para. 1(1)

F7 Words in Art. 3(3) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 3(3); 2020 c. 1, Sch. 5 para. 1(1)

F8 Words in Art. 3(5) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 3(3); 2020 c. 1, Sch. 5 para. 1(1)

F9 Words in Art. 3(11) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 3(3); 2020 c. 1, Sch. 5 para. 1(1)

F10 Words in Art. 3(17) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 3(3); 2020 c. 1, Sch. 5 para. 1(1)

Article 4 U.K. Transmission and non-transmission services and tariffs

1. A given service shall be considered a transmission services where both of the following criteria are met:

(a) the costs of such service are caused by the cost drivers of both technical or forecasted contracted capacity and distance;

(b) the costs of such service are related to the investment in and operation of the infrastructure which is part of the regulated asset base for the provision of transmission services.

Where any of the criteria set out in points (a) and (b) are not complied with, a given service may be attributed to either transmission or non-transmission services subject to the findings of the periodic consultation by the transmission system operator(s) or the national regulatory authority and decision by the national regulatory authority, as set out in Articles 26 and 27.

2. Transmission tariffs may be set in a manner as to take into account the conditions for firm capacity products.

3. The transmission services revenue shall be recovered by capacity-based transmission tariffs.

As an exception, subject to the approval of the national regulatory authority, a part of the transmission services revenue may be recovered only by the following commodity-based transmission tariffs which are set separately from each other:

(a) a flow-based charge, which shall comply with all of the following criteria:

(i)

levied for the purpose of covering the costs mainly driven by the quantity of the gas flow;

(ii)

calculated on the basis of forecasted or historical flows, or both, and set in such a way that it is the same at all entry points and the same at all exit points;

(iii)

expressed in monetary terms or in kind.

(b) a complementary revenue recovery charge, which shall comply with all of the following criteria:

(i)

levied for the purpose of managing revenue under- and over-recovery;

(ii)

calculated on the basis of forecasted or historical capacity allocations and flows, or both;

(iii)

applied at points other than interconnection points;

(iv)

applied after the national regulatory authority has made an assessment of its cost-reflectivity and its impact on cross-subsidisation between interconnection points and points other than interconnection points.

4. The non-transmission services revenue shall be recovered by non-transmission tariffs applicable for a given non-transmission service. Such tariffs shall be as follows:

(a) cost-reflective, non-discriminatory, objective and transparent;

(b) charged to the beneficiaries of a given non-transmission service with the aim of minimising cross-subsidisation between network users within or outside [F11 the United Kingdom], or both.

Where according to the national regulatory authority a given non-transmission service benefits all network users, the costs for such service shall be recovered from all network users.

Textual Amendments

F11 Words in Art. 4(4)(b) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 4; 2020 c. 1, Sch. 5 para. 1(1)

Article 5 U.K. Cost allocation assessments

1. The national regulatory authority or the transmission system operator, as decided by the national regulatory authority, shall perform the following assessments and shall publish them as part of the final consultation referred to in Article 26:

(a) a cost allocation assessment relating to the transmission services revenue to be recovered by capacity-based transmission tariffs and based exclusively on the cost drivers of

(i)

technical capacity; or

(ii)

forecasted contracted capacity; or

(iii)

technical capacity and distance; or

(iv)

forecasted contracted capacity and distance;

(b) a cost allocation assessment relating to the transmission services revenue to be recovered by commodity-based transmission tariffs, if any, and based exclusively on the cost drivers of:

(i)

the amount of gas flows; or

(ii)

the amount of gas flows and distance.

2. The cost allocation assessments shall indicate the degree of cross-subsidisation between intra-system and cross-system network use based on the proposed reference price methodology.

3. The cost allocation assessment referred to in paragraph 1(a) shall be carried out as follows:

(a) the transmission services capacity revenue to be obtained from intra-system network use at both all entry points and all exit points shall be divided by the value of the relevant capacity cost driver(s) for intra-system network use in order to calculate the intra-system capacity ratio, which is defined as a monetary unit per measurement unit, such as [F12 in pounds sterling] per MWh/day, in accordance with the following formula:

Where:

• (a) is the revenue, defined in a monetary unit such as [F13 pounds sterling], which is obtained from capacity tariffs and charged for intra-system network use;

• is the value of capacity-related cost driver(s) for intra-system network use, such as the sum of the average daily forecasted capacities contracted at each intra-system entry point and intra-system exit point, or cluster of points, and is defined in a measurement unit such as MWh/day.

(b) the transmission services capacity revenue to be obtained from cross-system network use at both all entry points and all exit points shall be divided by the value of the relevant capacity cost driver(s) for cross-system network use in order to calculate the cross-system capacity ratio, which is defined as a monetary unit per measurement unit, such as [F14 in pounds sterling] per MWh/day, in accordance with the following formula:

Where:

• (b) is the revenue, defined in a monetary unit such as [F15 pounds sterling], which is obtained from capacity tariffs and charged for cross-system network use;

• is the value of capacity-related cost driver(s) for cross-system network use, such as the sum of the average daily forecasted capacities contracted at each cross-system entry and exit point, or cluster of points, and is defined in a measurement unit such as MWh/day.

(c) the capacity cost allocation comparison index between the ratios referred to in points (a) and (b), which is defined in percentage, shall be calculated in accordance with the following formula:

4. The cost allocation assessment referred to in paragraph 1(b) shall be carried out as follows:

(a) the transmission services commodity revenue to be obtained from intra-system network use at both all entry points and all exit points shall be divided by the value of the relevant commodity cost driver(s) for intra-system network use in order to calculate the intra-system commodity ratio, which is defined as a monetary unit per measurement unit, such as [F16 in pounds sterling] per MWh, in accordance with the following formula:

Where:

• (a) is the revenue, defined in a monetary unit such as [F17 pounds sterling], which is obtained from commodity tariffs and charged for intra-system network use;

• is the value of commodity-related cost driver(s) for intra-system network use, such as the sum of the average daily forecasted flows at each intra-system entry and exit point, or cluster of points, and is defined in a measurement unit such as MWh.

(b) the transmission services commodity revenue to be obtained from cross-system network use at both all entry points and all exit points shall be divided by the value of the relevant commodity cost driver(s) for cross-system network use in order to calculate the cross-system commodity ratio, which is defined as a monetary unit per measurement unit, such as [F18 in pounds sterling] per MWh, in accordance with the following formula:

Where:

• (b) is the revenue, defined in a monetary unit such as [F19 pounds sterling], which is obtained from commodity tariffs and charged on cross-system network use;

• is the value of commodity-related cost driver(s) for cross-system network use, such as the sum of the average daily forecasted flows at each cross-system entry and exit point, or cluster of points, and is defined in a measurement unit such as MWh.

(c) the commodity cost allocation comparison index between the ratios referred to in points (a) and (b), which is defined in percentage, shall be calculated in accordance with the following formula:

5. The transmission services revenue to be obtained from intra-system network use at entry points referred to in paragraphs 3(a) and 4(a) shall be calculated as follows:

(a) the amount of allocated capacity or, respectively, flows attributed to the provision of transmission services for cross-system network use at all entry points shall be deemed equal to the amount of capacity or, respectively, flows attributed to the provision of transmission services for cross-system network use at all exit points;

(b) the capacity and, respectively, flows, determined as set out in point (a) of this paragraph shall be used to calculate the transmission services revenue to be obtained from cross-system network use at entry points;

(c) the difference between the overall transmission services revenue to be obtained at entry points and the resulting value referred to in point (b) of this paragraph shall be equal to the transmission services revenue to be obtained from intra-system network use at entry points.

6. Where distance is used as a cost driver in combination with technical or forecasted contracted capacity or flows, the capacity weighted average distance or, respectively, commodity weighted average distance shall be used. Where the results of the capacity, or respectively commodity cost allocation comparison indexes referred to in paragraph 3(c) or, respectively paragraph 4(c), exceed 10 percent, the national regulatory authority shall provide the justification for such results in the decision referred to in Article 27(4).

Textual Amendments

F12 Words in Art. 5(3)(a) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 5(2)(a)(i); 2020 c. 1, Sch. 5 para. 1(1)

F13 Words in Art. 5(3)(a) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 5(2)(a)(ii); 2020 c. 1, Sch. 5 para. 1(1)

F14 Words in Art. 5(3)(b) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 5(2)(b)(i); 2020 c. 1, Sch. 5 para. 1(1)

F15 Words in Art. 5(3)(b) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 5(2)(b)(ii); 2020 c. 1, Sch. 5 para. 1(1)

F16 Words in Art. 5(4)(a) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 5(3)(a)(i); 2020 c. 1, Sch. 5 para. 1(1)

F17 Words in Art. 5(4)(a) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 5(3)(a)(ii); 2020 c. 1, Sch. 5 para. 1(1)

F18 Words in Art. 5(4)(b) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 5(3)(b)(i); 2020 c. 1, Sch. 5 para. 1(1)

F19 Words in Art. 5(4)(b) substituted (31.12.2020) by The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/531), reg. 1(2), Sch. 5 para. 5(3)(b)(ii); 2020 c. 1, Sch. 5 para. 1(1)

(1)

Commission Regulation (EU) No 312/2014 of 26 March 2014 establishing a Network Code on Gas Balancing of Transmission Networks (OJ L 91, 27.3.2014, p. 15).

(2)

Commission Regulation (EU) 2015/703 of 30 April 2015 establishing a network code on interoperability and data exchange rules (OJ L 113, 1.5.2015, p. 13).