ENTSOG Tariff NC - Implementation Document 2nd Edition

Mandatory minimum premium The incremental process introduced the concept of the mandatory minimum premium to facilitate the satisfaction of the economic test if the reference price resulting from the RPM would not generate sufficient revenue. Figure 42 shows the components of the economic test.

PV User Commitments

PV Increased Allowed Revenues

≥

×

f-Factor

=

(RP+AP+MMP) × Inc C

Proportion of uncov- ered costs, to be paid later and/or by all network users

Based on estimated costs related to Incremental capacity

+

(AP+MMP) × AC

RP – reference price AP – (potential) auction premium MMP – (potential) mandatory minimum premium AC – available capacity Inc C – Incremental capacity

Offer level

Figure 42: Components of economic test

When incremental capacity is offered, the mandatory minimum premium may be applied in the first auction or in an alternative allocation mechanism. The mandatory minimum premium may also be applied in subsequent auctions when: \\ The offered capacity was initially set aside for the annual quarterly capacity auctions; or \\ The offered capacity initially remained unsold. The level of the mandatory minimum premium must allow the project to pass the economic test with the revenues generated by the allocation of all offered capacity in the first auction in which the incremental capacity is on offer. The range of the level for the mandatory minimum premium depends on the expected amount of allocated capacity, and must be submitted to the NRA for approval. The decision whether and in which auctions to apply a mandatory minimum premium must consider Article 41(6)(a) of the Gas Directive. In contrast to the possible split of a potential auction premium between all involved TSOs, the mandatory minimum premium must only be allocated to the TSO for which the applied mandatory minimum premium was approved.

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TAR NC Implementation Document – Second Edition September 2017