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NATURAL GAS TRANSMISSION USE-OF-SYSTEM CHARGE CHANGED

BELGRADE, Thursday, March 12, 2015.

As of February 1, 2015, natural gas transmission use-of-system charges in Serbia will be established in the same manner as it is done in the European Union since our procedures have been harmonised with the EU directives. In addition, the correction of the share of fixed and variable costs in the total price structure has been done, thus adjusting them to the actual situation and European practice, i.e. fixed costs account for 70% and variable 30% (it has been the opposite so far). This change has resulted in considerable increase in capacity price (which covers fixed costs) but the share of commodity price in transmission costs proportionally reduced.

AERS

This change stimulates efficient use of the transmission system since the users whose consumption becomes more balanced will be also in a position to pay considerably lower transmission charge in comparison to the average one. At the same time, transmission system users will be enabled to contract capacities on annual, monthly and daily level and, thereby, reduce natural gas transmission costs significantly.

Natural gas transmission use-of-system charge has not been changed since 2010. When modifying the price, the change in justifiable costs which arose in the past was also taken into account. One of the most important changes were evident in the increase in the value of facilities (gas pipeline and similar infrastructure) which was established in a new assessment. The value of infrastructure was underestimated until 2013. The level of funds necessary to cover the part of difference in costs arising due to gas supply of all customers at the price lower than the procurement price which was the case in the past has the greatest effect to natural gas transmission use-of-system charge, added to the total revenue of “Srbijagas” which is approved by the Energy Agency. Given the above, average transmission charge has been increased from 1.13 to 1.70 RSD/m3 or 2.4 times, while the charge increase is lower for those customers who have more balanced natural gas consumption during the year. Upon the transmission charge increase, the charge accounts to average around 5% in the total price for final customers.

The “Srbijagas” bill, which was available to the Agency, does not provide an opportunity for a customer to separate clearly the natural gas procurement costs and transmission use-of-system charges given as a fixed component – capacity and as a variable one – commodity. One may draw a wrong conclusion about the level of total transmission charge increase if old capacity charge and new capacity charge are compared. The Agency will insist on an upgrade of the bill structure, so as customers would be in a position to have clear indicators of the total amount of the transmission use-of-system charge and to estimate possible alternative offers for natural gas procurement more easily. The customers connected to the distribution system also pay distribution charges.

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