ENTSOG First Report on Implementation Monitoring and Baseline for Effect Monitoring of the Tariff Network Code

This monitoring report 2017 provides the status of the implementation of the TARNC by European TSOs and its effect on the European gas market, as of 31 Decem- ber 2017. Information was collected by ENTSOG from European TSOs by questionnaire (for the IM part) and survey (for the EM part), the information is analysed in this report and conclusions drawn. The IM part of this report covers the publication requirements the TSOs had in 2017, at what stage the TSOs are in their preparation for the ‘final’ consultation, and any ‘intermediate’ consultation that was or is to be carried out. ENTSOG also includ- ed other information in the IM part of this report: application of the ‘limited scope’ rules at points other than IPs, introduction of the TARNC definitions, the TSOs plans for the auction premium from the sale of bundled capacity, and plans, if any, to change their arrangements in relation to offering floating or fixed payable price, sending information to the National Regulatory Authorities ('NRAs') on ‘exiting con- tracts’, and derogation applications by interconnector operators. The IM part of the report is structured per the provisions listed above, which generally reflects the workload the TSOs had with the TARNC implementation in 2017. From analysing the responses TSOs provided to the IM questionnaire, we can con- clude that the 40 of the 46 TSOs taking part have published the information they should as per the TARNC. For a very small number of TSOs this is still a work in pro- gress, and in a number of cases user-friendliness and the non-use of English should be addressed. For the consultation process, even though for the majority of cases it is the NRA who is responsible, the respective TSOs have contributed towards the preliminary work for 2018, attending meetings and providing documents where needed. About a quarter of TSOs identified key challenges they are/or will face with the implementation of the TARNC. For example, the application of the capacity weighted distance methodology ('CWD') in multi-TSO entry-exit zone, implementing the TAR NC for an entry-exit zone covering more than one MS or the classification of transmission and non-transmission services. Many have already identified solutions to these challenges and for the rest it is work in progress. The EM part of this report constitutes a baseline study for the coverage of the ef- fects of the TARNC on the European gas market. The 5 indicators include: revenue recovery for TSOs, tariff changes, the profile of capacity bookings, publication in English, and the level of short-term multipliers. All EM indicators aim to analyse the data covering the latest years available, except for the indicator on publication in English which focuses on the future consultations to take place before 31 May 2019 as set out in the TARNC and future publications. The results collected from TSO responses provide the baseline for the measurement of the effects of the TARNC in future years. They show that for most European TSOs the tariff changes are generally moderate year-on-year, capacity bookings are mostly based on yearly products – even though a trend towards short-term products may exist – and short-term multipliers are very often in the allowed ranges set out by the TARNC. In terms of revenue recovery, it is too early to draw any conclusion on the effect of the TAR NC. And regarding publication in English, many TSOs indicated that an English version would be available for information on yearly auctions and tar- iff periods, while the decisions of NRAs as to English versions will be key for other information. Overall, TSOs are already often compliant with the TARNC provisions for the range of parameters or transparency of information. This EM baseline report should not be read or interpreted as the result of the TARNC application but as a picture of the current and previous years. In future years, it will be possible to measure the full effects of the TARNC, especially by comparing future EM reports to the current one.

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