ENTSOG Tariff NC - Implementation Document 2nd Edition

One regulatory account From the TSO’s perspective, having one regulatory account instead of several addresses the overall financial viability and stability of the TSO rather than the financial performance of each specific source of revenue recovery, such as revenues from entry points and from exit points, from new infrastructure and from old infra- structure. From the perspective of network users, having one regulatory account, which implic- itly attributes under-/over-recovery to all entry and exit points for all the transmission tariffs, effectively minimises the impact on prospective changes to transmission tariff levels. As explained above, and further to stakeholder feedback, ENTSOG suggests that, as an option, the one regulatory account may be split into sub-accounts: \\ With the aim of avoiding undue cross-subsidisation when reconciling non- transmission services revenue. \\ For the purpose of tracking the under-/over-recovery from certain charges or certain points, such as homogenous groups of points.

ARTICLE 19(3)

REGULATORY ACCOUNT AND INCENTIVE MECHANISMS

Responsibility: subject to NRA decision

The TAR NC envisages that if incentive mechanisms are set for capacity sales, then only a part of the under-/over-recovery must be logged on to the regulatory account. An example of a ‘positive’ incentive mechanism is a NRA decision to allow the TSO to keep a portion of over-recovery stemming from capacity sales at certain points. Retaining a portion of over-recovery implies withholding a portion from the regulato- ry account. The same principle applies if an incentive mechanism entails a penalty for the TSO; an effective penalty implies withholding from the regulatory account. In other words, the portion of under-/over-recovery not logged on to the regulatory account is ‘kept or paid by the TSO’ which means that the TSO pays the portion of the deficit due to the under-recovery and keeps the earned portion of profit due to the over-recovery.

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TAR NC Implementation Document – Second Edition September 2017