CEPA assesses the impact of applying equal charging treatment with storage for bi-directional flows at the Bacton interconnection point and finds significant benefit for GB consumersUNC Modification 0621 and its alternatives seek to change many aspects of gas transmission charging in Great Britain (GB) to ensure compliance with the EU gas Tariffs Network Code (TAR). The UNC0621 modification also follows a review of gas transmission charges launched originally by the GB energy regulator Ofgem in 2013.
Under the proposed new charging regime, GB storage facilities would receive a discount on transmission capacity charges of 50%. Interconnector UK (IUK) has put forward an alternative modification proposal to UNC0621 (UNC0621F) which proposes to introduce a similar capacity discount structure for NTS capacity products at the physically bi-directional Bacton IP for the proportion of bookings entry = exit.
CEPA was commissioned by IUK and BBL (the gas interconnectors connecting GB with Belgium and the Netherlands respectively) to conduct a study into the impacts of adopting the equal charging treatment regime set out under UNC0621F
CEPA evaluated the impact of this equal charging treatment regime by analysing the Bacton interconnectors’ historical position in the GB gas market and by using a global gas market model to simulate wholesale market prices and gas flows under a range of future market scenarios and NTS charging regimes. The study finds that:
- IUK and BBL compete directly with the different types of GB storage.
- Applying equal charging treatment for the proportion of bookings entry = exit at the physically bi-directional Bacton IP as for GB storage would further the interests of GB consumers. CEPA estimates that this benefit would be significant, with GB consumers benefiting in the region of £47m to £72m per annum through lower gas prices.
The UNC0621 modification report consultation opened on 18 May, with responses requested by 22 June. The CEPA report is available to download.
To find out more about CEPA's experience in the energy sector, please contact Richard Rodger by email or T. +44 (0)20 7269 0210