ENTSOG Tariff NC - Implementation Document 2nd Edition

FLOATING PAYABLE PRICE

ARTICLE 24(A)

Responsibility: no implications for TSO/NRA responsibility

General The floating price approach is used to ensure that network users who buy capacity at a given point, pay the same as each other, regardless of when they procured the capacity. This aims to reduce cross subsidies between network users independent of when the network user buys the capacity. The reference price for the yearly capacity product is calculated prior to the capac- ity auction immediately before the gas year. Network users will not know the reserve price for any yearly capacity product sold further ahead. The reference price of the capacity sold in following years will reflect the allowed/target revenues in the given year plus any reconciliation from previous years, if applicable. Benefits for network users Network users pay the same price for the capacity: Each network user, regardless of when they buy the yearly capacity, will pay the same price. Reduces cross subsidies: The risk of a change in revenues is shared evenly between all network users, reducing the uneven distribution of revenues across the network users who buy the same capacity product and therefore, reducing the potential for cross subsidies. Benefits for TSOs Reflects revenue in a given year: The floating price reflects the revenues and assumptions for the capacity for the next gas year, providing a more cost reflective tariff.

Calculation of the floating payable price Where the floating payable price approach is applied, the payable price for a given standard capacity product at an IP is calculated per formula below.

Where: P flo

is the floating payable price;

P R,flo

is the reserve price for a standard capacity product applicable at the time when this product may be used, as set or approved by the national regulatory authority;

‘AP’

is the auction premium, if any.

In a floating price regime, the payable price is determined prior to the annual auc- tion immediately before the gas year where the capacity may be used. The floating price is calculated using the RPM, with this price used as the reserve price in the auction. The payable price will then be determined by this reserve price and any auction premium. The TAR NC defines the auction premium as the ‘difference between the clearing price and the reserve price in an auction’ . Any auction premium is included in the floating payable price.

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