Natural gas transmission system usage rules are agreed to form a unified natural gas market
On Monday, 28 October, the Public Utilities Commission (PUC) agreed the new Natural Gas Transmission System Usage Rules that are enforced on 1 November. The changes are made as per the amendments in the Energy Law which define the regulation of regional natural gas market.
Till now, the issues of natural gas transmission system usage and balancing were regulated by the Natural Gas Transmission System Usage Rules approved by PUC in 2017. Amendments in the Energy Law were enforced on 23 October this year. They prescribe that Latvian natural gas transmission system operator may agree with the operators of another European Union Member State on creation of unified natural gas transmission entry-exit system. Consequently, PUC has agreed new natural gas transmission system usage and balancing regulation.
The draft tariff of JSC "Conexus Baltic Grid" is submitted on the base of the agreement among natural gas transmission system operators of Finland, Estonia and Latvia on creation of a unified natural gas transmission entry-exit system where payments regarding the border-crossing between the mentioned countries are not applied.
Currently, the entry-exit transmission tariff system applicable in the Baltics and elsewhere in Europe create barriers for the trade with natural gas among the Member States and frequently result in inefficient use of the infrastructure. Namely, the tariffs “accrue” if natural gas is transported through borders of several zones thus raising the price of gas and slowing down the trade with gas. So, the existing structure of transmission tariffs can be regarded as one of the main obstacles in development of an integrated natural gas market comprising the whole European Union.
When implementing the model of unified natural gas transmission entry-exit system, not transmission tariffs are applied to transportation of natural gas among Latvia, Estonia and Finland. This means that the tariff is applied only once when natural gas is imported into the unified natural gas transmission entry-exit system and it shall be equal in all entry points to the unified natural gas transmission entry-exit system.
The unified natural gas market shall strengthen the energy independence of Latvia, and diminish the dominance of the historical supplier "Gazprom" in the region, promote the competition in the natural gas market, facilitate more efficient use of regional infrastructure, incl. Latvian underground natural gas storage. This, in turn, results in more competitive natural gas prices and high-quality services, providing benefit for the natural gas users.
The regulators, the concerned ministries and natural gas transmission operators of Finland, Estonia and Latvia work at creation of the unified natural gas transmission entry-exit system. The Memorandum of Understanding on cooperation and coordinated action in creation of the unified natural gas market of these three countries was signed by the regulators of Finland, Estonia and Latvia last year on 14 November.