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Investment work stream. GRI North-West Operators‘ Group Investment Work Stream SG London, 14 November 2008. Contact: Bas Barten Gas Transport Services [email protected]. Content. GRI NW investment website Urgency of a sound investment climate - PowerPoint PPT Presentation
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Gas Regional Initiative North-WestTransmission System Operators
Investment work stream
GRI North-West Operators‘ Group Investment Work Stream SG London, 14 November 2008
Contact:Bas BartenGas Transport [email protected]
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Gas Regional Initiative North-WestTransmission System Operators
Content
GRI NW investment website
Urgency of a sound investment climate
TSO view on a sound investment climate
Explanation of the status quo of the investment climate
TSO Principles and justification
Way forward
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Gas Regional Initiative North-WestTransmission System Operators
GRI NW website
Overview of investment activity in the NW region
Up to date information about investment and open seasons
Live since September 2008
www.gasinvestment.org
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Gas Regional Initiative North-WestTransmission System Operators
Urgency of a sound investment climate
• Additional gas infrastructure required in the North West region:Declining production, increasing import from outside the region (and the EU)Ability to choose in a competitive wholesale market
Lack of capacity at multiple key cross border points
Not enough incentives for most of TSOs to timely deliver the market demand for additional capacity at cross border points
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Gas Regional Initiative North-WestTransmission System Operators
TSO view on a sound investment climate
A climate where TSOs can build the market demand for capacity in a timely,
efficient and economically reasonable way
Not always possible to make clear distinction between national and cross
border investment
A sound regional investment climate in the region requires a integral
solution where multiple parties have to be involved (Member States, NRAs
and TSOs)
The individual national frameworks are hereby the corner stones of this
solution and a prerequisite for a regional investment climate
Some frameworks lack the principles proposed by TSOs whereas other
have them already implemented
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Gas Regional Initiative North-WestTransmission System Operators
Current status in Belgium
Relaunched Coordinated Open Season on 23/09/08
Close coordination with GRTgaz and GTS
Binding commitments expected by 03/12/08
Regulated tariff will be applicable
Comfort for shippers: step-out right if regulated tariff exceed the limits
stipulated in the proposed agreement
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Gas Regional Initiative North-WestTransmission System Operators
Current status in France
Pros Longer regulatory period (from 2 to 4) visibility and predictability
Additional rate for some new investments incentive for investment
Clearer criteria for granting this additional rate of return
Open seasons with long term commitments
Cons
2009 tariff has negative impact on profitability of new investments
Decrease of work in progress rate of return
Fix rate (during 4 years) while the interest rate evolves
In 2007, decrease of standard rate of return (-0.5%)
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Gas Regional Initiative North-WestTransmission System Operators
Current status in GB
Pros Auctions provide clear market signal in an open an transparent way
Long term auctions scheduled annually but users able to request adhoc
auctions at any time
Users commitment underwrite much of the investment
Cons Process not necessarily compatible with neighbouring networks
Requires user commitment before decision to invest. NG has little flexibility
to invest on receipt of other market intelligence. (This may lead to some
issues with users suggesting NG slow to respond)
Regulator retains ability to disallow investment from RAV if they deem it
inefficient or unnecessary
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Gas Regional Initiative North-WestTransmission System Operators
Current status in Germany
New System: Incentive RegulationNew regulatory framework starting in German TSOs in 2010
Approval of TSOs cost base by Bundesnetzagentur (BNetzA)
Investments are treated within so called investment budgets
Uncertainty factors for investing in GermanyApplication incentive regulation pending in court by actions of TSOs
Benchmark procedure within incentive regulation not defined yet
Design of investment budgets will influence rate of return
Equal return on equity for all kind of investment
Achievement of ROE not assured
Unpredictable framework for unbundling conditions
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Gas Regional Initiative North-WestTransmission System Operators
Current status in The Netherlands
Old method of regulation based on historical costs and not suited for large
cross border competitive infrastructure investment
Clarity new investment policy by MEA and parliament by declaring important
investment parameters (investment, ROI and depreciation)
Based on this high level decision investment decisions were taken
High level agreement still has to be translated in a new method of regulation
by NRA and amendments to the Dutch gas law
Without a method of regulation or new gas law it is not possible to adjust
tariffs and uncertain if GTS can fix tariffs in long term contracts.
GTS is confident that principles in policy will be translated in the method of
regulation and Dutch gas law
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Gas Regional Initiative North-WestTransmission System Operators
GRI NW operator principles
Stable, predictable and fair
Stable investment parameters
Predictability for the TSO what happens with higher/lower costs/revenues
Fair risk/reward ratio
Underpinning of investments
Sufficient binding commitments from market, regulators and governments
Improved cooperation both between regulators and TSOs
Clear division and definition of roles and responsibilities
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Gas Regional Initiative North-WestTransmission System Operators
Contact:Bas BartenGas Transport [email protected]
Thank you!
