LIBERALISATION OF THE ESTONIAN GAS MARKET
A.4.5.1 Financing The bulk of the financing for infrastructure investments will have to be delivered by the market, with costs recovered through tariffs, which should be set in a transparent and nondiscriminatory manner at levels consistent with financing needs and to the appropriate cost allocation for cross-border investments, enhancing competition and competitiveness and taking account of the impact on consumers. It is envisaged that some projects, justified from a security of supply/solidarity perspective, will be unable to attract enough market-based finance and may require some limited public finance to leverage private funding. The Commission was invited to report by June 2011 to the Council on the size of investments likely to be needed, suggestions on how to respond to financing requirements and how to address possible obstacles to infrastructure investment. As of the end of September, no results have been published. A.4.6
Experiences of selected gas markets
A.4.6.1 Germany The German gas market had a highly fragmented structure with more than 700 integrated gas companies. However, this position has changed over recent years. Germany produces about 10% of its gas requirement from its own onshore reserves, mainly located in the north-western state of Lower Saxony. Like Dutch gas it has a low calorific value. The majority is produced by BEB with about 20% split between companies such as RWE-Dea, GdF and Wintershall. The remaining gas is imported and historically this has been purchased under traditional long-term take-or-pay contracts with oil indexation. However, in the last year pressure from cheaper gas from spot markets and decreased demand caused by the recession has led to German buyers wishing to reduce their obligations under the main import contracts. The regulator, BNetzA, introduced rules requiring non-discriminatory network access based on an entry-exit system, which came into effect 1 October 2006. Operators were asked to unbundle sales and network activities and TPA tariffs were subject to regulatory checks. Incumbents were also ordered to end long-term supply contracts with only one supplier. 2006 also saw the start of competition in the gas household sector and in 2007 BNetzA standardised the market process for charging gas suppliers (GeLi Gas). The supply market is still dominated by E.ON Ruhrgas, which sells around 50% of Germany’s gas by volume and holds shares in 30% of the regional distribution companies. Further large market shares are held by RWE, VNG, Wingas, and BEB. New entrants to the German market currently tend to rely on the spot market and/or the balancing regime due to low balancing costs (based on spot prices). In 2007 Germany had 14 different market areas. This was reduced to six in 2009 and from October 2011 there will only be two – GASPOOL and Net Connect Germany (NCG). GASPOOL will include the low calorie gas (L-gas) area Aequamus, which means that the hub operator will have to include a fee to convert high calorie gas (H-gas) to L-gas. The smaller number of hubs has helped improve hub liquidity. A.4.6.2 Great Britain Before the 1960s, gas in the UK was town gas distributed through distribution networks local to towns. Town gas was derived from coal.
PÖYRY MANAGEMENT CONSULTING
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