As from 1 April 2011 several significant provisions of the Act
"Wijziging van de Gaswet en de Elektriciteitswet 1998, tot
versterking van de werking van de gasmarkt, verbetering van de
voorzieningszekerheid en houdende regels met betrekking tot de
voorrang voor duurzame elektriciteit, alsmede enkele andere
wijzigingen van deze wetten1" will come into
force. These provisions intend to improve the functioning of the
Dutch gas market.
1. Improvement of the functioning of the gas market
In order to improve the functioning of the gas market, the Gas
Act is amended as follows:
a) Integration of gas quality
In the past, market parties were obliged to tender for
conversion capacity as provided by the grid operator of the
national gas transmission grid ("GTS")2, as a
result of which this conversion capacity was fully booked in
advance. In practice it turned out that the capacity booked was not
always used, while the unused capacity did not become available for
other parties. This caused a barrier for market parties with
high-calorific gas ("H-gas"), because it was not
possible, in the short term, to become active at the market for
low-calorific gas ("L-gas"). Moreover, there were costs
entailed to (reversed) quality conversion. Therefore GTS will have
the obligation to offer quality conversion and reverse quality
conversion without advance booking. The costs of quality conversion
will be incorporated in the transmission tariffs. This results in
an overall integration of the H-gas- and L-gas market which will
lead to a more liquid gas market, where the quality of gas should
not have any influence at the tradability of the gas.
b) Balancing regime
To ensure that gas will be transported in a safely manner
through the grid, the entry to and the exit of gas at the gas
transmission grid have to be balanced. At this moment the gas
transmission grid is regulated by the Groningenfield
(Groningenveld), causing the balancing of the Dutch grid
to be strongly dependent on this field. The Act introduces a market
based balancing regime. The new balancing regime assumes programme
responsibility as is also applied in the electricity sector,
provided that a distinction will be made between the programme of
the gas entry party and the programme of the gas exit party.
Programme responsibility means that supply and off-take takes place
in accordance with expected programmes of use which are compiled
for a particular time unit. A programme responsible party has to
provide GTS with its programmes giving GTS notice of the volume of
gas which it will enter into and/or exit from the gas grid.
Furthermore, the programme responsible party must state in his
programme the volume of net gas and the identity of the party to
which programme responsibility will be transferred. GTS receives
all programmes and can give instructions in the event of mistakes
in the individual programmes, inconsistencies between programmes or
in the case that these programmes are not practicable. In principle
the parties which enter gas into and/or exit the gas transmission
grid have programme responsibility, but the programme
responsibility can (voluntarily) be transferred to another
party.
The task of GTS is to keep the gas transmission grid in balance.
GTS hereby takes advantage of the buffer capacity of the gas
transmission grid. In case the gas transmission grid suffers
imbalance, taking into account this buffer capacity, GTS is then
obliged to buy or sell gas during the day. GTS can buy or sell this
gas on a intra-day market for gas (imbalance-market) and from
parties which participate in the balancing of the grid. The costs
are charged to the programme responsible parties which caused the
imbalance.
c) Tradability of gas
Gas transmission in the Netherlands is based on an entry-exit
system. At this moment, the entry- and exit capacity is contracted
by the entering party, who, consequently, directly controls the
transmission of the gas. After passing the exit point, the gas can
no longer be traded at the trade market. The buyer is in this
construction not able to on sell or exit his gas, in the case that
he does not need the gas at the day of delivery behind his exit
point. The Act states that the gas entering party or the gas
exiting party is solely responsible for his connection programme at
the gas transmission grid. Programmes for entering and exiting gas
are therefore in principle unlinked. The result is that a buyer of
gas no longer needs consent from his supplier to determine what it
will do with his gas. An important problem for the tradability of
gas should be resolved by this Act. The programme responsibility
will be transferred from the entering to the exiting party on a
virtual point ("VPPV"). The entering party is programme
responsible from its entry point until this virtual point and the
exiting party is programme responsible for this virtual point until
this exit point. In this system the exiting party determines where
the gas leaves the gas transmission grid.
The Netherlands Competition Authority ("NMa") published a
draft decision concerning amendments in the technical codes due to
the introduction of the new market model and the balancing regime.
This draft decision (in Dutch only) sets out
clearly which meaning these amendments have.
2. Competence NMa to a one-time adjustment of the tariffs
The NMa is granted the competence to a one-time adjustment of
the tariffs at the start of a new regulation period to a level that
is in conformity with an efficient cost level, with due observance
of a reasonable yield.
3. Gas connections by grid operator
The connecting of small end users (users with a connection with
a transmission capacity of less than 40 m3 an hour) is going to be
a legal and exclusive task of the grid operator. Connecting of
connections with a transmission capacity over 40 m3 an hour shall
remain at the free domain, but the creation of the connection point
(the part of the connection from the gas transmission grid up to
and including the first shutter) will become an exclusive legal
task of the grid operator.
Other provisions
The other provisions of aforementioned Act, such as priority for sustainable production (voorrang voor duurzaam, however the costs for executing congestion management will be socialised in the transmission tariffs instead of charging the producers to which the congestion management is applicable) expansion investments in the grids (uitbreidingsinvesteringen in de netten), gas field policy (kleine veldenbeheer), system services tariff at private grids (systeemdienstentarief) and safety of grids (veiligheid van netten), will in all probability come into force as from 1 July 2011.
Footnotes
1. "Amendment of the Gas Act and the Electricity Act 1998, strengthening the force of the gas market, improving the security of supply and providing rules concerning the supremacy of sustainable electricity, and some other changes to these Acts".
2. In the Netherlands both L-gas and H-gas are used. Through the mixation of several gas qualities or the addition of nitrogen it is physically possible to convert H-gas to L-gas (quality conversion). Also reversed quality conversion (from L-gas to H-gas, which is an administrative process) is possible by the swap of L-gas to H-gas. (Reversed) quality conversion is offered by GTS by having conversion capacity available.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.