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Decision Of April 10, 2014, On The Decision On The Application Of Cross-Border Distribution Of Costs Between The France And Spain For The Project Of Common Interest Val De Saône

Original Language Title: Délibération du 10 avril 2014 portant décision relative à la demande de répartition transfrontalière des coûts entre la France et l'Espagne pour le projet d'intérêt commun Val de Saône

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JORF n ° 0108 of May 10, 2014
text #83




Deliberation of the 10 April 2014 decision on the demand for the cross-border distribution of costs between France and l ' Spain for the project d ' common interest Val de Saône

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Attended the session: Philippe de LADOUCETTE, Chairman, Olivier CHALLAN BELVAL, Catherine EDWIGE and Jean-Pierre SOTURA, Commissioners.


1. Subject


This deliberation is taken in accordance with the provisions of Regulation (EU) No 347/2013 of the European Parliament and of the Council of 17 April 2013 on guidelines for trans-European energy infrastructures. Pursuant to Article 12 of that regulation, it is intended to establish a decision on the cross-border allocation of the costs of the project of common interest Val de Saône between France and Spain at the request of the transmission system operator GRTgaz, project proponent. This decision is based on the conclusions reached by the CRE and the Spanish regulatory authority, the Comisión Nacional de los Mercados y la Competencia (CNMC), with regard to the evaluation of the gains that this project brings to France And Spain, from the analysis of the costs and benefits of the project proposed by GRTgaz.


2. General provisions of EU Regulation No 347/2013


Regulation (EU) No 347/2013 has set up a set of provisions to promote the interconnection of European networks. This regulation is an essential means of achieving the objectives of the European Union's energy policy, namely to enable the market to be competitive and to function properly, to achieve optimum use of infrastructure Energy efficiency, energy efficiency and the integration of renewable energies. It must help to reduce the fragmentation of the European market and the isolation of less-favoured regions.
This Regulation introduces the concept of a project of common interest (CIP) which, in the field of gas, may concern infrastructure Transport, storage or regasification of liquefied natural gas (LNG). These projects are necessary for the implementation of priority corridors. France belongs to two out of four priority corridors in the gas sector:
-North-South interconnections in Western Europe aimed at diversifying supply routes and improving delivery capacity in the short term. The other states included in this group are Germany, Belgium, Denmark, Spain, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal and the United Kingdom;
-the South-European corridor for creation Infrastructure for transporting gas from the Caspian Sea, Central Asia, the Middle East and the Eastern Mediterranean. The other states concerned are Austria, Bulgaria, Cyprus, Croatia, Greece, Hungary, Italy, Poland, Romania, Slovakia and Slovenia.
States belonging to a priority corridor A regional group responsible for the selection of projects of common interest, involving representatives of the Member States, national regulatory authorities and network operators, as well as the European Commission, the Agency Of the operation of energy regulators (ACER) and the European network of Gas transmission system operators (ENTSOG). The regional lists of projects of common interest are drawn up on the basis of a selection request submitted by the promoters.
Among the measures to promote the implementation of the CIP, the EU Regulation No 347/2013 provides for In place of funding mechanisms to address the problems of commercial viability of projects when they impede investment decision-making. Article 12 of this Regulation provides that, at the request of project promoters and on the basis of an analysis of the costs and benefits of a CIP for beneficiary countries, the corresponding national regulatory authorities shall decide on a distribution Coordinated investment costs. This decision opens the possibility of seeking financial assistance from the European Union under Article 14 of the Regulation.


3. Demand for GRTgaz for the cross-border distribution of costs for the Val de Saône project


The Val de Saône project is one of the projects of common interest selected by the North-South regional group for western Europe. One of the 248 projects in the list published by the European Commission in October 2013.
The Val de Saône project consists of laying a 200 km long pipeline in the north-eastern part of French territory, to build a compressor station And to renovate three interconnections. The realisation of the Val de Saône project is essential for the elimination of the congestions between the north and the south of France. It is necessary for the creation of a single market zone in France, in addition to reinforcements in the south of the territory (Eridan or Gascogne-Midi). Although not directly creating additional transport capacity for interconnections with neighbouring countries, this project reduces the constraints on gas flows between southern Europe, notably the Iberian Peninsula, and the northwest In order to reduce the isolation of the southern part of the French market.
On 31 October 2013, the request for a cross-border share of the costs of the Val de Saône project between France and Spain, formulated by GRTgaz, reached the CRE. An equivalent request was made to the CNMC which received it on November 6, 2013. Article 12 (4) of Regulation (EU) No 347/2013 provides that the national regulatory authorities shall make coordinated decisions on the allocation of the investment costs to be borne by each network manager in Six months from the date of receipt of the last investment request by the national regulatory authorities concerned.
The cost/benefit analysis that must accompany the request for a cross-border share of costs has been addressed to the CRE and CNMC by GRTgaz January 24, 2014. In the absence of the methodology developed by the ENTSOG (1) which can be used by the promoters, GRTgaz exploited the results of the study entrusted by the CRE to the firm Pöyry to establish the impact of the creation of a point of exchange for the Gas (PEG) unique in France. In addition, GRTgaz consulted the operator of the Spanish gas transmission network Enagas.

(1) Article 12.3 (a) of Regulation (EU) No 347/2013 of the European Parliament and of the Council of 17 April 2013 concerning guidelines for infrastructure Trans-European energy.



4. Analysis of the CRE and the CNMC on the benefits of the project


The cost/benefit analysis presented by GRTgaz replicates the results of the study conducted by the firm of Pöyry, which analysed three scenarios of context evolution International, in particular the price of liquefied natural gas. The methodology used is to assess the effects of the creation of a single market area on price formation according to the arbitrations carried out by market participants and according to the evolution of the flow patterns associated with disposal Congestion between the North and the South.
In the reference scenario, which extends the current market conditions, GRTgaz holds that the Val de Saône project produces a profit of EUR 1 681 million for the period 2019-2038. Taking into account the observed price differences between the PEG Nord and the South PEG, 7.4 €/MWh on average from November 2013 to January 2014 shows that these profits could be even more important. The sensitivity analysis shows, however, that if Europe were to become more attractive for LNG, the benefits could decrease significantly.
As regards cross-border profits, the study of the firm Pöyry determined that the creation of a single market area in France would bring benefits to Spain by connecting it to a liquid market itself well interconnected with the market places of northwestern Europe. In the reference scenario, over the period 2019-2038, the gains made by Spain on the basis of a decrease in gas prices are estimated at EUR 515 million, irrespective of the improvement in the opportunities for arbitration offered to stakeholders Market located in Spain. In alternative scenarios, where the price of LNG would fall, these benefits would be less significant and could even be zero from the point of view of price formation.
The CRE and the CNMC have jointly analysed these results Have nuanced in the light of the current operation of the Spanish market by not taking into account the arbitrage gains for Spanish players in the LNG market. On the other hand, the CRE and the CNMC point out the interest in the Iberian peninsula of being directly connected to a market place of the size of PEG France. Considering the results of the cost-benefit analysis and in the light of the qualitative factors relating to the interest of the Val de Saône project in the context of the creation of a single market area, France has a positive net benefit from the project to Even to justify its implementation. The benefits to Spain characterize the cross-border interest of this project.


5. Project Cost and Impact Estimate


The cost of the Val de Saône project estimated by GRTgaz in the cost/benefit analysis is 650 million euros with uncertainty estimated at more or less 20 %. Consisting of a reinforcement of the core of the network of GRTgaz, and in so far as the creation of a single market area in France would lead to the loss of the revenues collected at the North-South link, the realisation of the Val de Saône project would lead to a Average increase in the tariff levels of GRTgaz by 9.5 % in 2018. At the same time, France has embarked on a programme of significant investments complementary to the Val de Saône project for the realisation of the single market area, as well as developments aimed at, inter alia, the integration of the terminal Dunkirk LNG and the creation of France's physical interconnection capacity to Belgium.
By the position of France in the European market, all these investments contribute to the completion of the internal market and to the Security of supply. Financial assistance from the Union for the Val de Saône project would thus be an effective means of reducing the impact of the increase in transport loads for users of infrastructure located in France, in particular for exchanges Cross-border. It would reduce uncertainty about the actual benefits of the project from a market price point of view in the event of a sharp decline in international LNG prices.


6. CRE Decision


The CRE adopts the decision on the processing of the GRTgas request for a cross border cost allocation, which has been drafted jointly by the CRE and the CNMC and is appended to this release.
This joint decision takes account of the ACER's recommendations published on 25 September 2013, which call for compensation for projects of common interest on the first list drawn up by the European Commission Cross-border should be limited to cases where the host country of a project undergoes a Negative net profit. After studying the cost/benefit analysis proposed by GRTgaz and concluding that France has a positive net benefit from the Val de Saône project, the CRE and the CNMC decide that France will bear all the costs. These costs, in so far as they correspond to those of an efficient operator, will be included in the tariffs of GRTgaz, after deduction of any financial aid from the Union. Spain will therefore not be asked for a financial contribution to the investment costs.
This release will be forwarded to the CNMC and the ACER.
This release will be published in the Official Journal of the Republic. French.
Done at Paris, April 10, 2014.

  • Appendix



    A N N E X E


    CNMC AND LA JOINT DECISION CRE ON THE PROCESSING OF THE REQUEST FOR A CROSS-BORDER ALLOCATION OF COSTS GRTGAZ FOR THE DRAFT COMMON VALID INTEREST
    In the framework of the new guidelines for the trans-European energy networks, the European Commission adopted on 14 October 2013 a list of 248 energy infrastructure projects, Considered to be of significant benefit to the European Union, to which the status of a project of common interest (PIC) has been awarded. If the promoters of the CIP show, based on a cost-benefit analysis, that their project produces benefits beyond the borders of the host Member State (s) of the project, they have the opportunity to submit allocation requests Cross-border costs. These requests should be addressed to the national regulatory authorities (NRAs) of the Member States concerned. Only those CIP which will be the subject of a coordinated decision on the cross-border allocation of costs by NRAs are eligible for EU financial support in the form of grants for work
    Request for a cross-border allocation of costs for the project of common interest 5.7 (referred to as Val de Saône) to the Comisión Nacional de los Mercados y la Competencia (CNMC) and to the Commission for Energy Regulation (CRE). The application was received by the ERC on 31 October 2013 and by the CNMC on 6 November 2013. In addition, a cost-benefit analysis was sent by email on January 24, 2014, proposing a monetary valuation of the benefits that the Val de Saône project brings to France and Spain.
    CNMC and CRE have jointly evaluated The request by GRTgaz, taking into account the recommendations published by the Agency for the Cooperation of Energy Regulators (ACER) on 25 September 2013. After consulting with the project holder, GRTgaz, the CNMC and the CRE concluded that the cost of the Val de Saône project should be fully allocated to France. In view of the fact that this project does not create a marketable transport capacity, its costs will have to be integrated into the transport rates for GRTgaz.
    This joint decision is based on the following analysis:


    1. Description of the
    1.1 project. Objective


    The Val de Saône project involves the construction of a 200 kilometre pipeline along the north-south axis of the GRTgaz network in eastern France, the modernisation of three interconnections and the addition of a gas station. Compression.
    The objective of the project is to reduce transport constraints on the North-South Corridor in Western Europe by removing physical congestion at the interconnecting point between the north and south areas of GRTgaz, which is currently One of the most congested points in the European Union, and to allow for the creation of a Single market place in France. This objective is achieved with the development of Val de Saône, in addition to other projects such as Eridan or Gascogne/Midi.


    1.2. Investment Costs


    In the cross border cost allocation request, the cost/benefit analysis is based on the cost estimates provided by GRTgaz. The investment costs associated with the Val de Saône project are valued at 650 M€ and the operating costs updated over twenty years are valued at € 299 million. The detailed cost studies to be finalised in June 2014, GRTgaz estimates the costs May vary by 20 %, up or down.


    1.3. Project Maturity


    The Val de Saône project is considered mature enough to be the subject of a cross-border cost allocation decision. The design studies are sufficiently advanced and the public debate was conducted from 18 September 2013 to 18 December 2013.
    The CRE organised a public consultation on the creation of a single market place in France between 18 February 2013. 2014 and March 21, 2014. Based on the results of this consultation and the final cost studies, the CRE will take a deliberation on the start of the Val de Saône project during the second quarter of 2014.


    1.4. Commercial viability of the project


    When the congestion has been removed and a single market place is in place, the North-South interconnection point of GRTgaz will no longer be subject to capacity reservations. As a result, the project does not generate additional revenue due to capacity bookings, but results in lower revenues. By way of illustration, the revenue generated by capacity bookings at the North-South interconnection point amounted to € 75 million in 2013, or 4.5 % of the total authorised income of GRTgaz (1 662.4 M€). This decrease will have to be offset by an increase in the rates at other points in the GRTgaz network. As a result, the cumulative effect on GRTgaz rates, including the integration of new investments into the GRTgaz asset base, would be 9.5 % in 2018.


    2. Evaluating the benefits of project
    2.1. Benefits for France


    The cost/benefit analysis presented by GRTgaz provides a monetized assessment of the evolution of pricing mechanisms in wholesale markets resulting from the new flow structures and the Creation of a single market area in France. This analysis shows that, in the reference scenario, the Val de Saône project generates benefits for France, both in terms of the decrease in the overall supply price and the reduction of the fluctuation premium, and increases the liquidity of Market place. The project also allows for an increase in the arbitrage gains on LNG, of which 50 % would benefit the players present in the French market.
    These profits, calculated over the period 2018-2038, are estimated at € 1,680 million, or an amount Significantly higher than the investment costs. The sensitivity analysis indicates that the benefits to France would decrease in scenarios where Europe becomes more attractive for LNG imports.
    The CRE considers that the results of the analysis are sufficiently reliable for Conclude that the Val de Saône project generates a positive net present value for France, if the market conditions observed in 2012-2013 are maintained. In addition, the CRE points out that the cost-benefit analysis was conducted before winter 2013/2014. Taking into account the much higher price differentials between the PEG North and the South PEG between November and January 2013 (7.4 €/MWh on average), the profitability of the investment would increase in the base case.


    2.2 Cross-border benefits


    CNMC and CRE agree that the creation of a single PEG France is in line with the European gas target model and will benefit the European market as a whole. The proximity of a liquid PEG France will promote the development of the wholesale market in the Iberian Peninsula and will contribute to the convergence of prices between the markets of south-west and north-west Europe. More generally, the creation of a single PEG France facilitates the completion of the European internal market for gas and the establishment of a European gas price index.
    As regards the valuation exercise, the cost-benefit analysis Shows that, in the reference scenario, the removal of North-South congestion increases flows by pipeline from the north-west of Europe, thereby reducing Spain's dependence on LNG. For the period 2018-2038, the benefit in terms of the reduction in the cost of supply for Spain is estimated at € 515 M€. Other benefits may also be taken into account, taking into account the possibilities for further arbitration of the Market participants. As with France, the sensitivity analysis shows that benefits for Spain would fall in scenarios where Europe becomes more attractive for LNG imports. In these circumstances, with a lower LNG price than the gas pipeline, the CNMC considers that these profits could become negative for Spain. CNMC agreed that the Iberian Peninsula could benefit from an increase in gas pipeline flows from the north-west of Europe, which is the most advantageous source of supply in the reference scenario. However, the valuation results cannot be guaranteed to the extent that their calculation is based on the assumption that the Iberian customers subscribe to their contract of supply at a market price. This assumption is not correct at the moment, although reforms are being studied to promote the development of a deep and liquid Spanish wholesale market, in line with the European guidelines. For the same reason, the CNMC doubts that Iberian consumers can benefit from a price reduction thanks to the additional arbitrage possibilities of Iberian market players in the LNG market. The CNMC cannot therefore confirm its recovery. In addition, given the other scenarios (LNG abundance), the CNMC is concerned about whether the Val de Saône project alone is sufficient. Bidirectional flows should be possible. Other reinforcements, such as Eridan and MIDCAT, should be studied.


    3. Cost Allocation


    In its September 2013 recommendations, ACER believes that cross-border offsets should be restricted to situations where the country hosting the project could have a negative net benefit.
    According to the cost-benefit analysis presented in the previous section, the Val de Saône project is expected to generate a positive net benefit for France.
    In conclusion, the CNMC and the CRE made the following joint decision:
    The project will not be subject to cross-border compensations; therefore, the investment costs of the Val de Saône project will have to be fully allocated to France. Investment costs and operating costs corresponding to those of an efficient operator shall be financed by the transport tariffs of GRTgaz


For the Regulatory Commission Energy:

The President,

P. Ladoucette


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