Introduction of a decoupled entry-exit tariff system in the Portuguese natural gas sector

A major element of the 3rd EU energy package is the mandatory entry-exit tariff systems that shall be adopted to the transmission network access. There is a huge consensus around decoupled entry-exit tariff systems, because they can be more cost reflective, avoid cross subsidies between network users, facilitate gas trade and can provide signals for the location of gas injections or off-takes. The importance of transmission tariffs for the completion of the EU internal energy market is such that EC Regulation 715/2009 foresees a network code on rules regarding harmonised transmission tariff structures. This paper presents the methodology applied by the Portuguese Energy Regulator (ERSE) to implement a decoupled entry-exit tariff system for the Portuguese natural gas transmission network. Different entry-exit prices independent of the contractual paths are obtained leading to an efficient use of the transmission network, facilitating gas trade and thus contributing to market development. For the calculation of transmission gas tariffs in Portugal a matrix approach is applied based on the unit capacity costs of every possible path. As entry-exit tariffs should be independent from the contractual path, unit capacity costs in each entry point and exit zone, independent of the contractual path, are obtained through an optimization problem.