Gas prices : price systems 2006.
Date: 2008-04-02
Institutions: Eurostat
Subjects: Croatia, EU Member State, EU statistics, Norway, gas, household consumption, intermediate consumption, price of energy

S t a t i s t i c a l   b o o k s

Gas prices – Price systems 2006

2007 edition

EuropE an Commission

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ISBN 978-92-79-07036-5
ISSN 1830-8732 
Cat. No. KS-EQ-07-001-EN-C

Theme: Environment and energy
Collection: Statistical books

© European Communities, 2007
© Cover photo: European Commission

 
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

CONTENT 

I. 

IINTRODUCTION 

II. 

PRICE SYSTEMS IN THE MEMBER STATES  
OF THE EUROPEAN UNION 

7 

  9 

5 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
Gas price systems 2006 



INTRODUCTION 

Since  1  July  1991,  a  Community  procedure  has  been  in  force,  under  Council  Directive  90/377/EEC,  for 

improving the transparency of gas and electricity prices charged to industrial end-users 

In Accordance with Article 1(2) of that Directive, this note sets out a summary of the price systems applying 

in 2006 and supplements information provided in the half-yearly “Statistics in Focus”. 

The  survey  on  which  the  study  is  based  was  conducted  by  the  Statistical  Office  of  the  European 

Communities  and  would  not  have  been  possible  without  the  cooperation  of  the  administrations,  institutes, 

companies and associations responsible for the gas sector, to whom we express our sincere thanks. 

7 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



SYMBOLS AND ABBREVIATIONS 

m3 

MW 

kWh 

MWh 

GWh 

MJ 

GJ 

TJ 

kPa 

MPa 

GCV 

NCV 

Cubic metre 
Megawatt (103 kW) 

Kilowatthour 
Megawatthour (103 kW) 
Gigawatthour (106 kWh) 

Megajoule 

Gigajoule 

Terajoule 

Kilopascal 

Megapascal 

Gross calorific value 

Net calorific value 

EUR 

Cent  

CZK 

Euro € 

Euro cent (1/100 EUR)  

Czech Crown 

DKK – ore 

Danish Crown – ore = 1/100 DKK 

LVL 

HUF 

PLN 

SIT 

SEK 

GBP 

USD 

Latvian Lats 

Hungarian Forint 

Polish Zloty 

Slovenian Tolar 

Swedish Crown 

Pound Sterling 

US Dollar 

8 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

1. 

General framework 

BELGIUM 



The  Federal  Minister  for  Economic  Affairs  is  responsible  for  setting  the  maximum  prices  for  the  supply  of 
natural  gas  pursuant  to  the  law  of  12  April  1965  on  the  transmission  of  gaseous  and  other  products  by 
pipeline and the law of 22 January 1945 on economic regulation and prices. The Minister may intervene in 
relation  to  prices  for  sale  to  final  customers,  but  only  after  the  Electricity  and  Gas  Regulation  Committee 
(Commission de Régulation de l’Electricité et du Gaz – CREG) has expressed its opinion. Furthermore, there 
is a system of specific maximum prices for protected residential customers on low incomes or in precarious 
situations.  

Network  operators  submit  their  tariffs  for  connection  to  transmission  and  distribution  networks  and  use 
thereof to the CREG for approval. These tariffs must be in line with the general price structures set by the 
Royal Decrees of 15 April 2002 (transmission) and 29 February 2004 (distribution).  

Since 1 July 2004, the gas market has been completely liberalised for all non-residential customers. In the 
Flemish Region, residential customers are also eligible. In the Walloon Region and Brussels Capital Region, 
residential customers became eligible on 1 January 2007. 

2. 

Pricing of gas  

2.1. 

Industrial customers 

Natural gas prices for industrial customers are made up of the following elements: 
– 
– 
– 

energy price; 
transmission price; 
distribution price. 

Sales of natural gas to industrial customers are governed by bilateral contracts or by suppliers’ tariffs. Prices 
include a standing charge and a commodity charge. Prices can be affected by a number of factors including 
amounts used, regularity of use, etc. 

The transmission price includes: 
– 

transmission of natural gas using primary and secondary transmission pipes, including compression 
and  pressure  reduction  on  the  network,  throughput  and  pressure  regulation  systems  and  all 
connecting pipelines and the upkeep and utilisation of these systems; 
the flexibility service for the transmission network; 
basic services linked to the integrated operation of the transmission network : 
•  administration  and  marketing  of  the  various  activities  relating  to  gas  transmission,  liquefied 

– 
– 

natural gas terminals and storage; 
technical management of the network; 
connection; 

• 
• 
•  access to the system of general data; 
•  emergency balancing of the network. 

The distribution price covers: 
– 

charges for basic services: 
• 

• 

the  periodic  charge  for  transmission,  which  covers  reception  stations,  substations,  pipelines, 
connections and metering facilities; 
the periodic charge for the management of the network system, which covers: 
(cid:131)  administrative and commercial management of access to the network; 
(cid:131)  dispatching, flow management, odourisation and network balancing 

– 

the periodic metering charge; 

• 
charges for supplementary services including pressure reduction for customers. 

9 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

2.2. 

Domestic customers 



The  pricing  system  for  eligible  residential  customers  (Flemish  Region)  is  similar  to  that  described  for 
industrial  customers,  except  that  the  energy  pricing  is  simplified  (fixed  charge  where  applicable  and  a  unit 
price per kWh). 

For  non-eligible  residential  customers (Walloon  Region  and  Brussels Capital Region),  prices  are regulated 
until 31 December 2006 (ministerial decree of 12 December 2001) and are as follows. 

There are several types of domestic customer tariff: 
– 

Tariff A, generally applicable, which includes a fixed charge and a two-instalment commodity charge 
based on consumption. 

– 

– 

Tariff B, applicable to comprehensive natural-gas heating; the conditions cover heating, cooking and 
domestic  hot  water;  immediately  applicable  when  annual  consumption  exceeds  19 444  kWh,  or 
2 000 m³/Slochteren gas; includes a fixed charge and a commodity charge. 

Tariff  C,  applicable  to  the  communal  heating  of  blocks  of  not  less  than  10  apartments  and  all 
consumption recorded on the same meter; this is also a two-instalment tariff. 

Moreover, certain specific categories of customer (recipients of the “integration income”, disability allowance, 
etc.) may benefit from the A, B or C social tariffs, which involve the granting of free kWhs, a tax exemption 
and/or a reduced commodity charge (ministerial decree of 23 December 2003). 

3. 

Taxes on gas 

Sales of natural gas are subject to 21% VAT. 

An  energy  levy,  introduced  by  a  law  of  22  July  1993  and  amounting  to  0.11589  cent  per  kWh  in  2006,  is 
applied to sales to domestic customers apart from those eligible for specific social tariffs. 

A federal levy, 0.01252 cent per kWh in 2006, is applied to cover the running costs of the CREG and certain 
federal public service obligations. A surcharge to finance the social tariffs, 0.00878 cent per kWh in 2006, is 
also applied. 

Fixed  charges  are  collected  at  the  regional  level  so  as  to  guarantee  the  financing  of  public  service 
obligations (social measures and measures to encourage the rational use of energy). 

1. 

General framework 

BULGARIA 

The  legal  rights  of  the  authorities  to  regulate  and  control  the  production,  import,  export,  transport,  transit, 
distribution and trading of natural gas are governed by the “Energy Law”, in force since 09.12.2003. 

Final  user  gas  prices  are  determined  by  an  independent  state  agency  —  the  “State  Energy  and  Water 
Regulatory Commission” (SEWRC).  

In exercising its regulatory powers, the SEWRC is guided by the following general principles: 

- 
- 
- 

- 
- 

preventing and precluding the limitation or distortion of competition on the energy market; 
balancing the interests of energy companies and customers; 
ensuring  non-discrimination  between  the  various  categories  of  energy  companies  and  between 
groups of customers; 
providing incentives for the efficient operation of regulated energy companies; 
providing incentives for the development of a competitive market for energy sector activities, where 
conditions so permit. 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



The SEWRC determines the prices at which: 

- 

- 
- 

the public provider sells gas to public suppliers and end consumers connected to the transmission 
network. 
the public provider sells gas to end consumers connected to the distribution network. 
a public supplier sells gas to end consumers connected to the distribution network. 

There  are  39  companies  on  the  gas  market,  with  one  public  provider  and  12  public  suppliers.  For  each 
company, the SEWRC determines and periodically (usually every three months) revises a tariff of maximum 
natural gas prices for final users. The tariff has separate price structures for: 

- 
- 
- 

industrial consumers 
public, administrative and business consumers  
households.  

2. 

Pricing of natural gas  

The prices in the tariff are per 1000 m3 measured at 200 C and 101 325 Pa and do not include VAT. 

2.1. 

Domestic customers 

The  maximum  natural  gas  price  is  different  for  each  public  supplier.  The  price  is  independent  of  annual 
volume consumption. 

2.2. 

Industrial customers 

For  industrial,  public,  administrative  and  business  consumers,  the  gas  price  depends  on  annual 
consumption.  The  maximum  natural  gas  prices  are  single-component  prices,  different  for  each  regional 
company and for the following user categories: 
annual consumption up to 10 000 m3  
annual consumption from 10 001 to 100 000 m3 
annual consumption from 100 001 to 1 000 000 m3 
annual consumption from 1 000 001 to 10 000 000 m3 
annual consumption over 10 000 000 m3. 

- 
- 
- 
- 
- 

Users  with  an  annual  consumption  of  over  20 000 000 m3  are  defined  as  ‘eligible  consumers’  under  the 
Energy  Law  and  have  the  legal  right  to  choose  the  supplier  and  negotiate  their  gas  prices.  These  users 
account for approximately 80% of national consumption. 

3. 

Taxes on natural gas 

Sales of natural gas are subject to 20% VAT. 

1. 

General framework 

CZECH REPUBLIC 

The  joint  stock  company  RWE-Transgas  imports  natural  gas  and  sells  it  to  eight  distribution  companies 
covering the whole area of the Czech Republic. Domestic gas production accounts for approximately 0.5% of 
domestic consumption. 

Act No. 458/2000 Coll., also called the ‘Energy Act’, sets the main legal conditions for electricity and natural 
gas  business.  On  1  January  2001,  the  Energy  Regulatory  Office  (ERO)  set  up  under  the  Energy  Act  took 
over the regulation of electricity and natural gas prices from the Ministry of Finance.  

11 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



Gas prices are calculated quarterly and published in the ‘Energy Regulatory Bulletin’. 

From  1st  April  2007  the  price  regulation  for  eligible  consumers  ends.  The  regulation  was  established 
temporarily on 1st January 2006 for the natural gas market in the Czech Republic. 
The reasons to continue in the regulation cease to exist with regard to the readjustment of the organization 
system  of  natural  gas  market  from  1st  January  2007  and  with  regard  to  the  readjustment  of  contractual 
relations among individual market participants. 
Thus the authority will not determine the prices quarterly, but yearly and concerning the regulated activities 
only. 
The commodity prices are already subject to business policy of trade licensees. 

The Energy Act also defines the progress of gas market liberalisation and specifies the ‘eligible’ consumers. 
An eligible consumer is a natural or legal person who  is entitled to choose the natural gas supplier and to 
have  regulated  access  to  the  transmission,  distribution,  line-pack  and  upstream  pipeline  network,  and 
negotiated access to underground gas storage. 

The process of unbundling in the Czech Republic started at 1st January 2006, when RWE Transgas, split into 
RWE Transgas, which stores and trades in gas, and its subsidiary RWE Transgas Net, which transports gas. 
The unbundling of the distribution system operators continued and in accordance with the Energy Act was 
completed by the end of the year 2006. 

Opening of the gas market 
1st January 2005: eligible consumers are all end-consumers with consumption of more than 15 million m3 of 
natural gas for one point of supply in the year 2003, and all electricity generation licence holders burning gas 
in thermal power stations or using gas for combined production of electricity and heat. 

1st  January  2006,  eligible  consumers  will  be  all  end-consumers  except  households,  but  the  Energy 
Regulatory Office still calculated maximum prices for these eligible consumers.  

1st January 2007, eligible consumers will be all end-consumers but maximum prices will be finished from 1st 
April 2007. 

2. 

Pricing of gas  

2.1. 

Industrial consumers 

Regulation involves setting the maximum natural gas prices both for supplies from Transgas to the traders 
and for supplies from distribution companies to end-consumers.  

Natural gas prices are set as two-component maximum prices: the price of natural gas (CZK/MWh) and the 
capacity charge — an annual payment for maximum daily consumption (CZK/MWh) or a monthly standing 
charge (CZK per point of supply). The two-component maximum prices are set for each regional distribution 
company and for the following categories of consumers:   

– 

– 
– 

annual  consumption  of  up  to  630  MWh  —  commercial  (this  category  has  the  same  system  and 
pricing as households, since 2006 more detailed ranges), 
annual consumption from 630 to 4 200 MWh — medium-scale, 
annual consumption of more than 4 200 MWh — large industrial consumers.  

Since  2002,  these  categories  of  consumers  have  been  broken  down  into  more  detailed  ranges,  which  are 
different for the individual distribution companies. Since 1 January 2002, maximum natural gas prices have 
been different for each regional distribution company. 

Since 1 January 2006 large industrial consumers were divided into three ranges: 
- 
- 
- 

annual consumption from 4 200 to 52 500 MWh 
annual consumption from 52 500 to 157 500 MWh 
annual consumption of more than  157 500 MWh 

12 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



Changes in regulated gas prices are made on 1 January of each year. In the event of significant changes in 
the  import  price  of  natural  gas,  every  trader  can  have  the  different  terms  for  the  changes  of  natural  gas 
prices (monthly, quarterly, etc.). 

2.2. 

Domestic consumers 

Maximum natural gas prices consist of two components: 
the price of natural gas (CZK per MWh) and a monthly standing charge (CZK per point of supply). 

Since 1 January 2006 annual consumption range from 9.45 to 63.00 MWh has been broken down into more 
detailed ranges 
- annual consumption from 9.45 to 15.00 MWh 
- annual consumption from 15.00 to 20.00 MWh 
- annual consumption from 20.00 to 25.00 MWh 
- annual consumption from 25.00 to 30.00 MWh 
- annual consumption from 30.00 to 35.00 MWh 
- annual consumption from 35.00 to 40.00 MWh 
- annual consumption from 40.00 to 45.00 MWh 
- annual consumption from 45.00 to 50.00 MWh 
- annual consumption from 50.00 to 55.00 MWh 
- annual consumption from 55.00 to 63.00 MWh 

Since  1  January  2002,  maximum  natural  gas  prices  for  households  have  been  different  for  each  regional 
distribution company. 

3. 

Taxes on gas 

VAT is 19% since 1. May 2004. 

1. 

General framework 

DENMARK 

Regulation of gas prices and state of play in liberalisation process: The Danish natural gas market has been 
fully  liberalised  since  1  January  2004.  Thus,  domestic  consumers  can  buy  their  natural  gas  freely  on  the 
market. The legal status is described in the Act on natural gas supply. 

The actual gas price depends on the Rotterdam (as well as other North European price indices) gas and fuel 
oil  spot  price.  The  price  of  natural  gas  for  both  industrial  consumers  and  domestic  consumers  consists  of 
three elements.  
The first is an energy charge, which depends on the amount of consumption as well as consumption profile.  
The second element is distribution costs, which also depend on the amount of consumption.  
Finally, there is a standing charge, which depends on the size of the gas meter. 

2. 

Pricing of gas  

2.1. 

Industrial consumers 

Tariff/price  components  including  rebates  (energy  charge,  standing  charge,  transmission  and  distribution 
costs,  etc):  The  price systems  for both  industrial  and  domestic consumers  are  basically  the  same.  Set out 
below are some factors which affect price. 

Factors affecting tariffs/prices (demand levels, interruptibility clauses, peak/off-peak periods, etc.): Rebates 
are  negotiable  on  the  basis  of  an  individual  contract  stating  conditions  with respect  to  warnings  in case of 

13 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



interruptions. Industrial consumers can choose between different schemes. For example, there is a scheme 
whereby the price can be fixed for a specific period 

2.2. 

Domestic tariff 

Tariff/price components including rebates.  
The price systems for both industrial and domestic consumers are basically the same.  

Factors affecting tariffs/prices. 
Domestic  consumers  can  choose  between  different  schemes.  For  example,  there  is  scheme  whereby  the 
price can be fixed for a specific period. 

3. 

Taxes on gas 

The tax on natural gas is 0,27412 € (204,2 øre) per Nm3 (Normal cubic meter), which is supplemented by a 
carbon  dioxide  tax  of  € 0,02658  €  (19,8  øre)  per  Nm3.  The  natural  gas  tax  is  refundable  for  Companies 
registered  for  VAT  that  use  natural  gas  in  processes  and  for  process  heating  as  well  as  for  power 
generation.  This  does  however  not  include  space  or  water  heating  for  non-process  issues.  The  Carbon  -
Dioxide tax is refundable for companies which use natural gas for heavy process.  

Natural gas is subject to 25 % VAT. 

4. 

Price collection methodology 

The collection methodology is at present undergoing a revision and will be centered on price data collected 
from a range of gas suppliers as well as weighting of gas suppliers' portfolios.  
Further information will be available no later than 1. January 2008. 

1. 

General framework 

GERMANY 

The  implementation  of  the  EU  Directive  2003/55/EC for  a  gas  single  market  occurred with  the  second  Act 
reorganising  the  Energy  Industry  Act  (Energiewirtschaftsgesetz  –  EnWG)  of  7 July 2005.  It  includes  far-
reaching competences for the newly-established regulatory authority and foresees the transition towards an 
incentive-based regulation. This is intended to ensure that progress in network productivity is passed on to 
transportation customers over the course of time via network charges. 

Two regulations specifying the economic and technical framework for access to the system for gas – the gas 
network  access  regulation  (Gasnetzzugangsverordnung  –  GasNZV)  and  the  access  charges  regulation 
(Gasnetzentgeltverordnung  -  GasNEV)  of  25 July 2005  –  are  in  force.  The  gas  network  access  regulation 
makes  provision  for  the  introduction  of  entry/exit  terms  for  supra-regional  and  regional  pipelines.  The  gas 
access charges regulation contains provisions concerning the cost basis for system charges at distribution 
level and for comparative procedures. With regard to transmission pipelines, the regulatory authority is to be 
empowered to conduct a comparison based on the comparative market principle.  

2. 

Pricing of gas  

The  market  behaviour  of  gas  supply  companies  is  influenced  by  gas-to-gas  competition  and  by  inter-fuel 
competition generated by the market presence of other forms of energy. 

Gas suppliers compete with other gas companies for customers as well as with other sources of energy such 
as heavy fuel oil, gas oil, coal, electricity and district heat. With such tough competition, the price of gas in 
the  marketplace  has  to  be  competitive  for  each  application.  The  prices  users  pay  for  gas  are  negotiated 

14 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



between the supplier and the consumer on the basis of a common evaluation of the criteria relevant to an 
assessment of the competitive position. 

For the consumer, the competitive price is determined from all the costs one has to pay for the conversion of 
the  particular  feedstock  into  useful  energy,  i.e.  the  cost  of  the  fuel  and  the  cost  of  converting  a  source  of 
energy  into  useful  energy  (capital  charges  and  other  running  costs).  In  addition  to  these  quantifiable  cost 
parameters, a consumer's choice of energy also depends on qualitative criteria such as security of supply, 
environmentally sound use of energy and convenience of use. 

2.1. 

Industrial consumers 

In  the  industrial  sector,  the  prices  at  which  major  users  receive  gas  are  negotiated  by  the  parties  to  the 
particular  contract  on  a  case-by-case  basis.  Standard  rates  do  not  exist  in  Germany,  given  that  inter-fuel 
competition differs for each individual industrial customer. 

Two-part pricing. As a rule, the gas price comprises a demand charge and a commodity charge:  

–  The  demand  charge  represents  the  amount  payable  by  the  consumer  for  specific  rights  to  the  agreed 
capacity:  the  consumer  acquires  these  rights  for  an  unlimited  period  of  time.  Industrial  consumers  with 
interruptible  supply  contracts  must  operate  dual-fuel  plant  and  must  store  fuel  oil  whenever  it  is  not 
possible to reduce the volume of gas taken by technical measures. In return, these customers either do 
not pay a demand charge or only pay a reduced demand charge, determined for example by the term of 
the interruptible agreement. 

–  The commodity charge is the charge for the gas taken. 

Competition  with  heavy  fuel  oil  and  gas  oil.  Gas  companies  throughout  Germany  face  similar  competitive 
environments for the different industrial consumer categories. In the case of the I1 (116 000 kWh) through I3 
(11.63  million  kWh)  categories,  gas  oil  is  the  main  competitor.  In  the  case  of  I4  (116.3  million  kWh) 
consumers,  gas  competes  with  both  gas  oil  and  heavy  fuel  oil.  For  the  largest  industrial  users  (I5,  1.163 
billion kWh), heavy fuel oil is the most important competitor. 

Price  adjustment  clauses.  In  the  industrial  sector,  the  gas  prices  agreed  during  contract  negotiations  only 
reflect  the competitive  situation  at  the  time  the contract  is concluded.  These  prices are  adjusted  to  market 
changes  on  the  basis  of  price  adjustment  clauses  where  the  parameters  and  reference  periods  are 
individually  negotiated.  In  Germany,  the  “fuel  oil  clause”  is  often  used,  reflecting  the  competitive  situation. 
Under the fuel oil clause, the price of gas is geared to the price of oil. 

Gas prices are automatically adjusted at intervals agreed in the gas contracts. For example, there may be 
quarterly  or  monthly  adjustments.  On  each  adjustment  date  the  price  of  gas  is  adjusted  to  reflect  average 
fuel oil prices during an earlier, contractually agreed reference period. In Germany, the oil prices used in the 
price adjustment formulae are the prices published each month by the Federal Statistics Office. 

2.2. 

Domestic consumers 

In  the  residential  and  commercial  sector,  individual  gas  pricing  is  not  practicable  because  of  the  large 
number of consumers. Uniform tariffs for the different customer groups are determined by each gas supplier 
(about 730). Nationwide tariffs do not exist in Germany, given the differences in competitive situation. 

Two-part pricing. The gas price comprises a standing charge and a commodity charge:  

–  The standing charge represents the amount payable by the consumer for specific rights to supply facilities 

and services: the consumer acquires these rights for an unlimited period of time.  

–  The commodity charge is the charge for the gas taken. 

Price adjustment clauses. The principle of the fuel oil price indexation formulae (Point 2.1) pegging the price 
of gas to the price of gas oil also applies for residential and commercial users. Rates fixed for residential and 
commercial users are not usually adjusted via price adjustment clauses. They are generally modified as and 
when changes in market conditions necessitate such a modification. 

15 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

3. 

Taxes on gas 



The  tax  rate  for  natural  gas  when  used  as  a  heating  fuel  is  € 5.50/MWh,  that  for  light  heating  oil 
€ 61.35/1 000 l, for heavy heating oil € 25/1 000 kg and for liquid gas € 60.60/1 000 kg. 

Tax reductions for the manufacturing sector 

The manufacturing industry in Germany has been granted a special tax reduction, namely 40% tax relief on 
ecological tax, i.e. for natural gas this means 40% of € 3.66/MWh. The figure of € 3.66/MWh is made up of 
the  increases  in  the  tax  on  natural  gas  since  1  April  1999.  In  relation  to  the  tax  rate  for  natural  gas 
(€ 5.50/MWh)  tax  relief  amounts  to  € 1.464/MWh.  This  tax  reduction  also  affects  gas,  water,  power  and 
district heat suppliers as undertakings in the manufacturing sector. Undertakings in the manufacturing sector 
can also benefit from further tax relief under what is known as “peak adjustment”. 

1. 

General framework 

ESTONIA 

The main legal act regulating the Estonian gas market is the Natural Gas Act (as from 1 July 2003). This Act 
regulates activities related to the import, distribution and sale of natural gas by means of gas networks, and 
connection  to  networks.  Under  the  Act,  a  seller  of  gas  must  obtain  the  approval  of  the  Energy  Market 
Inspectorate for the maximum prices of gas to be sold to non-eligible final customers. 

A seller of gas may sell gas within its licensed territory at a price which does not exceed the maximum price 
approved by the Inspectorate. Maximum prices are approved on the basis of the quantity of gas consumed 
per calendar year and have to be applied uniformly over the entire licensed territory of a seller of gas. Sellers 
of  gas  are  obliged  to  publish  the  maximum  prices  set  within  their  licensed  territory  in  a  daily  national 
newspaper at least three months before the date as of which such prices apply. 

A  network  operator  has  to  submit  network  services  prices  and  the  bases  for  setting  such  prices  to  the 
Inspectorate for approval, except in the case of gas transit. 

The Inspectorate has the right to: 

-  approve the maximum prices for gas sold to the domestic customers and the prices for network services, 
-  establish  temporary  prices  for  the  transmission  or  distribution  of  gas  for  no  longer  than  two  months  in 
situations where the transmission or distribution prices are not justified or the gas undertaking does not 
comply with a precept issued by the Inspectorate. 

The  Gas  Market  Act  provides  the  necessary  framework  for  opening  up  the  market  and  implementing  EU 
principles. At the moment, the gas market has been opened up to the extent of 95 % in Estonia.  

The eligible customers are all non-domestic customers. An eligible customer has the right to purchase gas 
from any provider within the technical limits of the network. 

2. 

Pricing of gas  

The  approved  price  is  calculated  on  the  basis  of  the  price  cap  and  consumer  price  index  which  applied 
before the period, and on the basis of the efficiency factor, i.e. the cost reduction factor (x) determined by the 
regulator. 
Prices subject to ex-ante regulation by the Inspectorate comprise a price cap for small users of natural gas 
and for network services. 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



Charges  for  services  related  to  the  main  activity  of  the  company  which  are  subject  to  ex-post  regulation 
comprise  connection  charges  reviewed by  the  regulator,  natural  gas  prices  for eligible customers,  charges 
for changing the technical conditions of gas consumption and charges for other services. 

There is only one importer of gas, and 16 or so distribution companies. 

2.1. 

Industrial consumers 

In the industrial sector, prices are negotiated by the parties to a particular contract on a case-by-case basis. 

2.2. 

Domestic consumers 

The tariff rates depend only on the annual consumption volume and are grouped as follows: 

•  up to 200 m³ per year, 
•  201 – 750 m³ per year. 
•  above 750 m³ per year. 

There are no specific social tariffs for gas. 

3. 

Taxes on gas 

Natural gas sales are subject to 18% VAT. 

1. 

General framework 

IRELAND 

The Gas (Interim Regulation) Act 2002 established responsibility for the regulation of the Irish Gas Market 
under  the  Commission  for  Energy  Regulation  (CER).  All  Industrial  or  Commercial  customers  are  currently 
eligible for Third Party Access in the Irish Gas Market. The CER expects that the rest of the market will be 
liberalised by 2007 when the necessary legislation is put in place. 

Competition  in  the gas  market  for  industrial  and commercial customers  has  been  in  place since  2004 with 
three  suppliers  active  in  this  segment.  The  CER  has  been  working  with  industry  participants  to  develop 
market  processes  to  support  full  market  opening  and  the  development  of  competition  for  the  benefit  of  all 
customers. Full market opening in the Irish natural gas market is due to take place by 1st July 2007.  

By  July  2007  Ireland’s  retail  gas  market  will  open  to  competition  and  all  gas  customers  will  be  eligible  to 
switch  their  gas supplier.  This  represents  over half a  million  domestic  customers.  Increased  competition  in 
the natural gas market can potentially offer a number of important benefits to consumers, including increased 
choice, greater efficiency, lower prices and higher standards of service. 

2. 

Pricing of gas  

2.1. 

Industrial consumers 

Unregulated Consumers: Very large gas users (over 264 GWh per annum) are free to choose their supplier 
or to purchase their own gas on the wholesale market. 

Regulated  Tariff  Formula  (RTF)  Consumers:    RTF  customers  are  those  industrial  and  commercial  gas 
customers that consume between 5.3 GWh and 264 GWh of gas per annum (circa 181,000 and 9m therms). 
These are medium to large customers and generally can chose alternative suppliers, where such suppliers 

17 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



serve their area. In this segment of the market, the CER regulates the charges of BGS in accordance with a 
pre-set formula. 

The  formula  takes  into  account  the  costs  to  BGS  of  supplying  this  particular  group  of  customers  and  it  is 
calculated each year based on the CER’s finding as to the allowed revenue that BGS can recover from this 
customer group. 

Non-Daily  Metered  Conusmers:    These  customers  use  less  than  5.3  GWh  of  gas  per  annum  and  this 
category  includes  all  domestic  customers  who  currently  do  not  have  the  freedom  to  chose  an  alternative 
supplier to BGS. The tariffs that BGS can charge this category of customer are approved by the CER each 
year.  There are three published tariffs available to Non Daily Metered Industrial/Commercial Customers.  

Standard Industrial/Commercial Tariff 
This tariff consists of four decreasing rate blocks and a monthly standing charge. It is generally suitable for 
customers consuming less than 450,000 kWh per annum 

I/C Blocked Rate Tariff Profile 
Supply Charge 
Band 1 (0-3,000 kWh) 
Band 2 (3,001-7,500 kWh) 
Band 3 (7,501-15,000 kWh) 
Band 4 (15,001+ kWh) 
Prices exclude VAT 

€ 145.44 per year 
€ 0.05376 per kWh 
€ 0.04963 per kWh 
€ 0.04548 per kWh 
€ 0.04136 per kWh 

Applied monthly per meter installed 

Banding  is  applied  on  a  monthly 
basis 

Demand & Commodity 1 Tariff 
This tariff is generally suitable for customers consuming between 450,000 and 2,400,000 kWh per annum. It 
consists of an annual standing charge with a single flat rate for all gas used. 

Demand & Commodity 1 Profile 
Supply Charge 
Meter Charge 
Commodity rate 
Prices exclude VAT 

€ 2,909 per year 
€ 145.47 per additional meter per year 
€ 0.03641 per kWh 

Applied monthly 
Applied monthly 

Demand & Commodity 2 Tariff 
This tariff is generally suitable for customers using more than 2,400,000 kWh per annum. It consists of an 
annual standing charge with a single flat rate for all gas used. 

Demand & Commodity 2 Profile 
Supply Charge 
Meter Charge 

Commodity Charge 
Prices exclude VAT 

€ 8726 per year 
€  145.47  per  additional  meter  per 
year 
€ 0.03389 per kWh 

2.2. 

Domestic consumers 

Customers have a choice of 4 tariff rates as follows.  

Standard Rate Profile 
Supply Charge 
Commodity Charge 
Prices include VAT @ 13.5% 

€ 308.58 per year 
€ 0.04091 per kWh 

1 

Applied monthly 
Applied monthly 

Applied bi-monthly 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

High User Commitment Profile 
None  
Supply Charge 
16000 kWh per year 
Minimum Take 
€ 0.05385 per kWh 
Commodity Charge 
Prices include VAT @ 13.5% 

Low User Commitment 
Supply Charge 
Minimum Take 
Commodity Charge 
Prices include VAT @ 13.5% 

None  
8750 kWh per year 
€ 0.07089 per kWh 

Reducing Rate Profile 
Supply Charge 
Band 1 (0-585 kWh) 
Band 2 (586-1170 kWh) 
Band 3 (1171+ kWh) 
Prices include VAT @ 13.5% 

€ 57.30 per year 
€ 0.10771 per kWh 
€ 0.08074 per kWh 
€ 0.05709 per kWh 

3. 

Taxes on gas 



Applied bi-monthly 
Banding  is  applied  on  a  bi-monthly 
basis 

VAT is charged at a rate of 13.5 % on gas in Ireland. There are no other taxes currently applying to natural 
gas. 

Information for the gas price systems in Greece is not available.  

GREECE 

Spain has not provided an update of gas price systems referring to year 2006. 

SPAIN 

1. 

General framework 

FRANCE 

Law No 2003-8, as amended, on the gas and electricity markets and public service energy was an important 
step for the gas sector as it introduced new operating rules. The main provisions are as follows: 
-  Network  operators  must  guarantee 

their 
representatives  to  access  the  natural  gas  transmission  and  distribution  infrastructure  and  tanker 
terminals; 

the  right  of  eligible  customers, 

their  suppliers  and 

-  All customers will be eligible with effect from 1 July 2007 and will be free to choose their supplier; 
-  So  as  to  prevent  cross-subsidies  and  distortions  of  competition,  operators  carrying  out  more  than  one 
activity  within  a  single  undertaking  must  prepare  separate  accounts  for  each  activity  carried  out  in  the 
natural gas sector; 

-  The setting up of an independent regulatory authority for the natural gas sector, the Energy Regulation 

Commission (Commission de Régulation de l’Energie – CRE); 

19 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

-  Public service obligations are laid down. 



Furthermore, Law No 2004-803 on public service electricity and gas and electricity and gas companies, as 
amended, extended this law by introducing a negotiated system of third party access to stocks.  
In consequence, the French gas market is organised as follows: 

•  Two  operators  of  natural  gas  transmission  networks:  GRTgaz  and  Total  Infrastructure  Gaz France 

(TIGF); 

•  One distribution network operator, Gaz de France Réseau Distribution, which allows all suppliers to 
access  the  distribution  network  to  transport  natural  gas  to  their  customers.  It  is  responsible  for  all 
tasks concerning the distribution of natural gas and guarantees non-discriminatory, transparent and 
equitable access to the network. Revenue levels and transmission tariffs are set by the CRE and the 
public authorities; 

•  22  operators  of  local  public  natural  gas  distribution  networks  with  their  own  tariffs  for  use  of  their 

network, represented by local distribution companies (semi-public and public companies); 

Law No 2006-1537 of 7 December 2006 on the energy sector provided for the legal separation of the largest 
operators of distribution networks (+ 100 000 customers). This affects GDF, Gaz de Strasbourg and Gaz de 
Bordeaux. 

•  Around  40  authorised  gas  suppliers  including  Gaz  de  France,  Total,  EDF,  Statoil,  ENI,  Gaselys, 
Rhodia Energy, Electrabel, E.ON Ruhrgas, Gas Natural Commercialisation France, Distrigaz, Nosrk 
Hydro, Wingas GmbH, BP, Gazprom, Exxon Mobil, Iberdrola and Altergaz. 

Alongside these regulatory issues, Gaz de France and the State signed, on 10 June 2005, a public service 
contract for the 2005-2007 period. This mainly deals with the safety and continuity of supply to the whole of 
France, improvements of infrastructure in line with increased demand for gas, inspections by Gaz de France 
to ensure the safety of customers and third parties, refurbishment of distribution pipelines and measures to 
combat the greenhouse effect. 

Since 1 July 2004, the gas market for professional customers has been open to competition. The market for 
domestic customers will be open to competition from 1 July 2007. 

2. 

Pricing of gas  

The tariffs shown below are tariffs for the sale of gas to eligible customers and eligible customers who have 
not exercised their eligibility and therefore continue to receive the regulated tariffs. 

The  sale  price  of  gas  to  eligible  customers  who  have  exercised  their  eligibility  is  unrestricted.  Eligible 
customers enter into a contract to purchase natural gas with a supplier authorised by the Minister for Energy. 
As well as the energy charge, customers pay a transmission charge (covering transmission, distribution and 
tanker terminals) which is regulated on the proposal of the CRE, and any cost of access to stocks under the 
commercial offers published by the operators (Gaz de France and TIGF). 

As at 1 January 2006, 52% of eligible customers by consumption (68 400 sites and 198 TWh out of a total of 
640 000  eligible  sites  and  380  TWh)  had  exercised  their  eligibility.  These  figures  cover  renegotiated 
contracts and changes in supplier: around 800 sites changed supplier (17% of volume consumed). 

2.1  

Gas sales tariffs 

Gas pricing is based on two main principles:  

•  cost-based  pricing,  under  which  price  changes  are  linked  to  changes  in  costs,  with  the  margin 
being  set  exogenously.  More  precisely,  it  is  a  pricing  system  based  on  the  marginal  cost  of 
development and which aims to optimise the geographical spread of gas availability in the country 
and ensure the development of the network; 

20 

 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



•  equal treatment of customers, which means that pricing is based on their profile and consumption 

volume rather than on the use made of the gas or the value gained from it. 

In accordance with these general principles, gas tariffs in France are fixed using two intervention methods: 

• 

the price regulation system for gas, which requires that all gas tariffs for non-eligible customers be 
subject to a joint decision of the Minister for the Economy, Finance and Industry and the Minister for 
Energy  following  an  opinion  delivered  by  the  CRE  pursuant  to  Article  7  of  Law  No  2003-8  of  3 
January 2003. For customers connected to the distribution network (including domestic customers), 
such decisions take the form of ministerial orders, while for customers connected to the transmission 
network or similar they take the form of tacit approval. 

•  under the contract between the State and Gaz de France, a tariff formula provides a framework 
for  price  changes  affecting  customers  connected  to  the  distribution  network.  This  formula  enables 
natural gas distributors’ final price for customers to fully reflect variations in the cost of importing gas. 
Over time, this has a smoothing effect which alleviates the volatility in the price of oil products. 

These formulae reflect developments in: 

o  supply costs, i.e. the purchase of gas and directly related costs. Almost all French supply is 
covered by long term “take or pay” purchase contracts which include indexation clauses for 
oil products based on the international price in dollars; 

o 

internal  charges  not  linked  to  supply  costs,  so  that  consumers  benefit  from  any  gains  in 
productivity on the part of distribution companies. 

2.1.1 So-called “subscription” tariffs for manufacturing companies 

These tariffs are mainly offered to customers connected to natural gas transmission networks. 

These tariffs change in line with supply costs and inflation. 

In the event of any tariff change, a price schedule must be filed with the Ministry of the Economy, Finance 
and Industry, which has the right to oppose the change. 

•  Gaz de France  

There are two possible types of contract with Gaz de France, depending on whether: 
- 
- 

consumption is less than 300 000 kWh per year (standard contract); 
consumption is greater than 2 GWh per year (direct delivery contract). 

If annual consumption is between 300 000 kWh and 2 GWh, customers may choose either type of contract, 
according to their needs. 

(cid:137) 

- 
- 

- 

- 

the GDF STS tariff is applied to customers in the Gaz de France transmission network. It comprises 
four elements: 
an annual standing charge which is the same at any point in the network; 
an annual premium for the winter daily throughput requested by the customer. Paying this premium 
guarantees the customer this daily supply throughout the year; 
a fixed annual premium for any supplementary throughput requested during the seven months of the 
summer period only; 
commodity  charges  which  differ  according  to  the  season  (winter/summer)  and  three  consumption 
bands: 

•  Band 1:  0-24 GWh per year 
•  Band 2:  24-200 GWh per year 
•  Band 3:  > 200 GWh per year 
-  Summer prices are lower than winter prices. 

21 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



The elements of the STS tariff are the same on the main pipelines which link the different gas supply 
sources.  On network spurs, the tariff elements other than the standing charge are supplemented by 
charges specific to each spur (toll method). 

(cid:137) 

- 
- 
- 

- 

the  Gaz  de  France  S2S  tariff,  which  was  introduced  on  1  November  1998,  is  aimed  at  public 
distribution customers  and  is  suitable for  all  types of  use:  heating,  processing  and cogeneration.  It 
comprises: 
a standing charge; 
a fixed premium for the daily winter throughput, expressed in kWh/day; 
a reduced fixed premium for summer for any additional throughput requested by the customer during 
the seven months in question (April to October); 
commodity charges which differ according to the season and include three consumption bands: from 
0 to 3 GWh/year, from 3 to 200 GWh/year and over 200 GWh/year. 

The S2S is more economical than the B2S for consumption exceeding around 5 million kWh/year. 

•  TEGAZ (Total group) 

With  TEGAZ,  eligible  customers  can  choose  between  three  types  of  contract;  the  “made  to  measure”  (sur 
mesure)  contract  which  enables  them  to  chose  their  own  price  formulae,  indices  and  coverage  products, 
while  adapting  consumption  levels  to  production  constraints,  the  “flexibility”  (souplesse)  contract  which  is 
based on real needs so as to enable customers to manage their energy purchases in a flexible manner, and 
the “serenity” (sérénité) contract. 

- 

- 

(cid:137)  TEGAZ’s “regularity” (régularité) or R tariff comprises the following five elements: 
- 
- 

an annual standing charge per delivery point; 
a  fixed  annual  premium  based  on  a  maximum  daily  throughput  specified  by  the  customer,  which 
TEGAZ undertakes to supply throughout the year; 
a reduced fixed annual premium for any consumption in addition to the daily specified throughput in 
summer (April to October inclusive); 
a  premium  proportional  to  the  number  of  kWh  actually  delivered.  Seasonal  commodity  charges 
(winter prices, reduced summer prices), with three consumption bands: 
•  Band 1:  0-24 GWh per year 
•  Band 2:  24-75 GWh per year 
•  Band 3:  > 75 GWh per year 

o  a load-matching discount based on the customer’s annual modulation rate. 

The modulation rate is a good indicator of consumption regularity. It is expressed in terms of the number 
of days per year and is defined by the ratio “annual consumption/maximum daily throughput”. The load-
matching discount is granted for any modulation rate greater than 100 days per year. 

(cid:137) 

the  S  tariff  on  TEGAZ’s  transmission  network  consists  of  a  standing  charge,  two  throughput 
brackets,  commodity  charges  which  differ  according  to  the  season  (winter/summer)  and  a 
consumption band. There is no reduced fixed annual premium. 

Contracts are signed for a period of three years. 

2.1.2. Gaz de France’s public distribution prices for domestic and professional customers 
Public  distribution  prices  are  regulated  and  the  average  rate  of  change  is  set  by  order  of  the  Ministry  of 
Economic Affairs, Finance and Industry. 

Prices for such customers are made up of the following: 

- an annual standing charge; 
- one or more prices for consumption. 

There are six tariffs depending on annual consumption and, in certain cases, depending on the seasonality 
of consumption, thus enabling tariffs to be better suited to different profiles (communal boilers, SMIs, SMEs, 
etc.): 

22 

 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



• 

• 

• 

• 

• 

• 

• 

the basic tariff for annual consumption less than 1 000 kWh which usually means customers who use 
gas only for cooking; 

the  B0  tariff  for  annual  consumption  between  1 000  and  6 000  kWh/year  (usually  cooking  and  hot 
water); 

the B1 tariff for annual consumption between 6 000 and 30 000 kWh/year, usually for individual heating, 
which may or may not include cooking and hot water; 

the  B2I  tariff  for  annual  consumption  between  30 000  and  150 000-350 000  kWh/year,  usually  for 
heating which may or may not include the production of hot water in medium-sized steam plants; 

the  B2S  tariff  for  annual  consumption  higher  than  150 000-350 000  kWh/year.  The  B2S  tariff  is 
seasonal: winter consumption (November-March) is charged at a higher price than summer consumption 
(April-October); 

the  B2M  standby  tariff  for  supplementary  supplies  or  gas  used  to  boost  other  energy  sources  (ratio 
between annual quantities/daily throughput of less than 60 days). 

the  TEL  tariff,  which  was  created  in  1992,  is  intended  for  very  large  boiler  rooms.  It  comprises  an 
annual standing charge and commodity charges differentiated between winter (from November to March) 
and  summer  (from  April  to  October).  It  also  includes  reductions  when  the  consumption  thresholds  (4 
million kWh in winter and 2 million kWh in summer) are surpassed. 

In the 150 000-350 000 kWh range, the question of whether the B2I or the B2S tariff is cheaper depends on 
customers’ seasonal consumption. The calculation has to be made on a case-by-case basis. 

Standing charges are applied to the whole of GDF’s public gas supply, as are the gas charges of the basic 
and  B0  tariffs.  In  contrast,  the  gas  charges  of  the  B1,  B2I  and  B2S  tariffs  are  grouped  into  six  levels 
according to the costs of delivering gas for public distribution. 

2.1.3. Individual contracts 
Gas  companies  may  offer  interruptible-supply  contracts  to  high-consumption  customers  (those  consuming 
more  than  20  GWh/year).  Such  customers  thus  undertake  to  stop  consuming  gas  should  the  supplier  so 
request.  In  the  event  of  supply  crises  or  (where  the  contract  so  allows)  at  times  of  peak  demand,  gas 
companies can give customers notice that their supply will be cut off . The period of interruption is not fixed.  

Customers with interruptible-supply contracts must therefore be able to switch to another energy source at 
any  time.  As  a  result,  they  must  keep  back-up  equipment  in  working  order.  They  must  also  undertake  to 
consume at least 80% of the annual quantities which they have agreed. 

Gas companies incentivise customers to enter into such contracts either through fixed rate reductions or by 
guaranteeing prices in comparison with oil products. 

2.2.  Tariffs for  third-party  access  to gas  infrastructure  (transmission  and  distribution  networks and 
tanker terminals) 

In  the  gas  sector,  there  are  three  different  types  of  tariff  for  the  use  of  infrastructure,  i.e.  for  the  use  of 
transmission  networks,  distribution  networks  and  liquefied  natural  gas  facilities.  These  tariffs  are  regulated 
on the proposal of the CRE. 

Pursuant to Article 7 of the law of 3 January 2003, each of these tariffs is set using published, objective and 
non-discriminatory criteria on the basis of the costs incurred by the operators. These costs include operating 
costs and capital charges (depreciation and compensation for  use of capital). These costs are assessed by 
the CRE and recovered through tariffs. 

23 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



2.2.1 Tariffs for the use of natural gas transmission networks 
Decree  No 2005-607  of  27  May  2005 established  the  pricing rules  for  the  use  of  natural gas  transmission 
networks. 

The third set of tariffs for the use of these transmission networks was adopted by means of an order of 27 
December 2006. It will apply with effect from 1 January 2007 for a duration of two years. 

2.2.2. Tariffs for the use of public natural gas distribution networks 
Decree No 2005-22 of 11 January 2005 set the tariff principles for the use of distribution networks. 

The tariffs in force result from the decision of 27 December 2005 approving the tariffs for the use of public 
natural gas distribution networks, which ratified the CRE proposal  These tariffs have been in force since 1 
January 2006 for a theoretical duration of two years. 

2.2.3 Tariffs for the use of liquefied natural gas facilities 
Following  a  proposal  from  the  CRE,  the  tariffs  for  the  use  of  methane  terminals  were  adopted  by  the 
Ministers responsible for economic affairs and energy by non-opposition in accordance with the provisions of 
Decree No 2005-1616 of 20 December 2005 concerning the pricing rules for the use of liquefied natural gas 
facilities. After the pricing principles had been established, a decision by the Ministers dated 27 December 
2005 approved the CRE’s pricing proposal. These new tariffs have been in force since 1 January 2006 and 
were devised in line with the decree of 20 December. 

3. 

Taxes on gas 

Sales of gas are subject to value-added tax. Industrial and service-sector customers may claim back VAT. 
Since  1  January  1999,  the  rate  of  VAT  on  standing  charges  (5.5%)  has  been  different  from  that  on 
commodity charges (19.6% since 1 April 2000). 

A specific tax on the use of natural gas as an industrial fuel, the Domestic Tax on Natural Gas Consumption 
(Taxe Intérieure à la Consommation de Gaz Naturel - TICGN), was introduced on 1 January 1986. The rate 
of this tax is EUR 1.19/MWh. The use of gas for heating residential buildings or as a raw material is exempt. 
TICGN is payable by non-exempt customers whose annual consumption exceeds 5 GWh per year, with an 
allowance on the first 4.8 GWh per year used. 

1. 

General framework. 

ITALY 

Following the European Gas Directive 98/30/01, the legislative Decree No 164/2000 was issued, which came 
into force on 21 June 2000. The main features of this Decree are: 

market opening (eligible customers) 

- 

up to 31 December 2002: 

final  customers  over  200,000  m3/year  including  consortia  of  companies  (individual 
consumption greater than 50,000 m3/year) 
all gas-fired power generators 
gas producers located in Italy 
wholesalers and local distribution companies 

- 

as from 1 January 2003: all customers. 

24 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

•  Separation of activities 



o  Each  activity  of  the  gas  sector  related  to  gas  infrastructures  is  legally  separated  from 
production, import, and sales (wholesale and final customers) activities. It is only possible for 
a company to perform transport and storage activities, with unbundling of accounts. 

o  Gas  can  only  be  sold  by  companies  with  no  other  activities  within  the  gas  sector,  except 

import, export and wholesale customer activities. 

o  The activities of distribution and sales to end-users must be legally separated. 
o  Storage must be legally separated or can be part of the network company but unbundled. 

Antitrust ceilings 

o  As  of  1  January  2002:  input  into  the  national  transmission  system  gas  (imported  or 
produced) is restricted to 75% of the annual domestic gas consumption (- 2% each year up 
to 61%). 

o  As of 1 January 2003: supply to the final market is restricted to 50% of annual domestic gas 

consumption. 

2. 

Pricing of gas 

2.1. Industrial customers 

Before the liberalisation of the gas market in Italy, prices for natural gas sales were calculated in accordance 
with  national  agreements  established  between  SNAM  (dominant  supply  company)  and  the  most 
representative industrial association (Confindustria and Confapi). 

Prices for firm supply were composed of: 

- 
- 
- 

an annual subscription based on the cost of service 
a standing charge based on the capacity at the customer’s disposal 
a commodity charge based on the quantity of gas consumed. 

The commodity charge was updated each month with reference to the average quotations of diesel-oil, low 
sulphur fuel oil (LSFO) and high sulphur fuel oil (HSFO) of the 12 months preceding the month of supply. 

Prices  for  interruptible  supplies,  related  to  LSFO  international  quotation,  were  different  in  relation  to  the 
period of interruptibility (4, 8, 12 or 16 weeks per year). 

At the end of 2001, the above charges were the most widely applied. 

As a result of the liberalisation, new prices negotiated between the different sellers and buyers are replacing 
the  old  price  methodology.  Pricing  systems  are  different  for  each  seller  (competitive  market)  but  it  is 
important to point out that access to public facilities (transmission networks, storages, LNG plants and local 
distribution  networks)  is  regulated  by  tariffs  determined  with  reference  to  criteria  given  by  the  Energy 
Regulator (Autorità per l’Energia Elettrica e il Gas). New industrial prices are communicated to the Energy 
regulator every three months, in accordance with the categories listed by Eurostat.  

2.2. Domestic customers 

As far as the tariffs to domestic consumers are concerned, the tariffs charged by local distribution companies 
(LDCs)  to  companies  that  sell  gas  to  domestic  customers  are  determined  on  the  basis  of  a  conventional 
procedure  settled  by  the  Energy  Regulator  and  have  to  be  published  by  the  LDCs.  These  tariffs  differ  for 
each LCD and gas distribution area. 

The commodity  charge  is updated  every  three  months with reference  to  the average  quotations of  gas-oil, 
LSFO and crude oil of the six months preceding the month of supply. 

As  of  January  2003,  since  all  customers  will  be  eligible,  the  gas  prices  for  domestic  consumers  can  be 
renegotiated. The Energy Regulator established a reference price that the selling company previously acting 

25 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



as part of the local distribution company must continue to offer to local civil customers until they change their 
supplier. 

3. 

Taxes on gas 

•  Residential sector 
There is a national excise tax on natural gas consumption. The rates applied during 2006 are shown in the 
following table, which shows standard consumer prices reported to Eurostat.  

Standard consumers 
T1 
T2 (<250 m3/year) 
T2 (>250 m3/year) 
T3 

€/m3 

Middle-North 
0.04140 
0.04140 
0.17320 
0.17320 

South 
0.0386516 
0.0386516 
0.1242182 
0.1242182 

In addition, there is a regional tax of up to € 0.031 per m3 depending on the region and on the consumption. 
In  any  case,  this  additional  tax  cannot  exceed  50%  of  the  value  of  national  excise  tax.  Regional 
administrations establish their own values. 

Industrial sector 

• 
Natural  gas  used  for  industrial  purposes  is  subject  to  an  excise  tax  amounting  to  €  0.012498  per  m3  for 
consumption up to 1 200 000 m³/year and € 0.0074988 per m³ above that consumption. In addition, there is 
a regional tax between € 0.00516 and € 0.031 per m3 depending on the region. In any case, this additional 
tax cannot exceed 50% of the value of national excise tax.  

Value added tax 
For domestic consumers VAT rate is 10% if the gas is used only for cooking and hot water up to 250 m3 per 
year, otherwise, it is 20%. For industrial consumers, the general rate is 20%. 

The provisions of the new Directive 2003/55/CE have been largely implemented by the legislative decree No 
164/2000  and,  with  reference  to  article  22,  by  Law  No 239/2004.  Only  the  provision  of  Article  9  on 
unbundling related to the organisation and the decision-making of a separate legal transport or distribution 
company has not been implemented. 

Information for the gas price systems in Cyprus is not available. 

CYPRUS 

1.  

General framework 

LATVIA 

In conformity with the Energy Law and Law on the Regulators of Public Services of the Republic of Latvia, 
natural gas tariffs for all users and the methods for calculating tariffs are determined by the Public Utilities 
Commission (the Regulator). 

26 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

2. 

Gas pricing 

System since 1 May 2006 



The methods for calculating tariffs are determined for the following types of services: transmission of natural 
gas, storage,  distribution and  sales.  Under  the  methodology  used,  the  tariffs  for  transmission,  storage  and 
distribution services and the final sales tariffs are approved for all users of natural gas. The final sales tariffs 
are approved in relation to the volume of gas consumed by users annually and are tied to 1% residual fuel oil 
quotations on the Rotterdam stock exchange, BARGES FOB ARA. 

Based  on  the  final  consumption  of  natural  gas,  users  are  divided  into  eight  groups.  Users  in  the  first  two 
groups  with  an  annual  gas  consumption  of  up  to  500  m3  and  from  500  to  25 000  m3  are  theoretically 
considered to be populations using gas for their everyday needs plus heating, while the others are regarded 
as industrial and commercial users. The tariffs are tied to the residual fuel oil quotation in USD/t, divided into 
26 groups. 
Separate  tariffs  are  approved  for  gas  used  in  transport.  As  regards  sales  tariffs,  a  constant  monthly 
subscription fee is set for all gas users. 

Tariff structure 
Final sales tariffs for natural gas in LVL/thsd m3 having a calorific value of 7900 ccal/m3 excluding VAT: 

User groups according to yearly consumption, thsd.m3 

Fuel oil 
quotation, 
USD/t  

Up to 100 
Up to110 
Up to 120 
Up to 130 
Up to 140 
Up to 150 
Up to 160 
Up to170 
Up to 180 
Up to 190 
Up to 200 
Up to 210 
Up to 220 
Up to 230 
Up to 240 
Up to 250 
Up to 260 
Up to 270 
Up to 280 
Up to 290 
Up to 300 
Up to 310 
Up to 320 
Up to 330 
Up to 340 
Up to 350 

1 

2 

3 

4 

5 

Under 
0,5 

from 0,5 
to 25 

from 
25 to 
126 

from 
126 to 
1 260 

from 
1 260 to 
12 600 

110,91 
112,62 
114,33 
116,05 
117,76 
119,48 
121,19 
122,90 
124,62 
126,33 
128,05 
129,76 
131,47 
133,19 
134,90 
136,62 
138,33 
140,04 
141,76 
143,47 
145,19 
146,90 
148,62 
150,33 
152,04 
153,76 

109,84 
111,55 
113,26 
114,98 
116,69 
118,41 
120,12 
121,83 
123,55 
125,26 
126,98 
128,69 
130,40 
132,12 
133,83 
135,55 
137,26 
138,97 
140,69 
142,40 
144,12 
145,83 
147,55 
149,26 
150,97 
152,69 

87,54 
92,29 
89,25 
94,01 
90,97 
95,72 
92,68 
97,44 
94,40 
99,15 
96,11 
100,86 
97,82 
102,58 
104,29 
99,54 
106,01  101,25 
107,72  102,97 
109,43  104,68 
111,15  106,39 
112,86  108,11 
114,58  109,82 
116,29  111,54 
118,00  113,25 
119,72  114,97 
121,43  116,68 
123,15  118,39 
124,86  120,11 
126,57  121,82 
128,29  123,54 
130,00  125,25 
131,72  126,96 
133,43  128,68 
135,14  130,39 

82,79 
84,50 
86,22 
87,93 
89,64 
91,36 
93,07 
94,79 
96,50 
98,21 
99,93 
101,64 
103,36 
105,07 
106,78 
108,50 
110,21 
111,93 
113,64 
115,35 
117,07 
118,78 
120,50 
122,21 
123,92 
125,64 

27 

6 
from 
12 600 
to 
20 000 
78,62 
81,33 
83,05 
84,76 
86,48 
88,19 
89,90 
91,62 
93,33 
95,05 
96,76 
98,47 
100,19 
101,90 
103,62 
105,33 
107,04 
108,76 
110,47 
112,19 
113,90 
115,61 
117,33 
119,04 
120,76 
122,47 

7 

8 

from 
20 000 to 
100 000 

Above 
100 000 

70,91 
72,62 
74,33 
76,05 
77,76 
79,48 
81,19 
82,90 
84,62 
86,33 
88,05 
89,76 
91,47 
93,19 
94,90 
96,62 
98,33 
100,04 
101,76 
103,47 
105,19 
106,90 
108,61 
110,33 
112,04 
113,76 

64,09 
65,81 
67,52 
69,24 
70,95 
72,66 
74,38 
76,09 
77,81 
79,52 
81,23 
82,95 
84,66 
86,38 
88,09 
89,80 
91,52 
93,23 
94,95 
96,66 
98,37 
100,09 
101,80 
103,52 
105,23 
106,94 

 
 
 
 
 
 
 
 
Gas price systems 2006 



The residual fuel oil quotation is calculated by the gas provider, Latvijas Gāze (a joint stock company), based 
on the average BARGES FOB ARA price quoted for residual fuel oil in the previous six months. 

The tariffs for natural gas from Latvijas Gāze are determined as follows: 

For domestic customers, tariffs are determined twice a year, on 1 January and on 1 June for the fallowing 

six months, and depend on the average  residual fuel oil quotation in previous six months. 

For users with a natural gas consumption of more than 25 000 m3, tariffs are determined each month, 
taking into account the average residual fuel oil quotation in the previous six months before the 
reference period.  

Rebates 
For customers paying their bills on time, Latvijas Gāze offers discounts to industrial and commercial users of 
up to LVL 0.60 per 1000 m3 excluding VAT. 
Customers who make an advance payment for 12 months receive one month’s discount. 
Latvijas  Gāze  offers  a  monthly  discount  of  LVL  0.30  excluding  VAT  to  families  with  three  or  more  young 
children who are recognised as indigent and to category 1 and 2 disabled persons living alone or with young 
children, under Regulation No 97 of 25.05.2003 of the Cabinet of Ministers of the Republic of Latvia. 

Taxes on gas 

In addition to the approved tariffs a VAT of 18 % is applied to users. No excise duties or other specific taxes 
are levied in Latvia for natural gas. 

1. 

General framework 

LITHUANIA 

The following legal acts of the Republic of Lithuania regulate gas prices:  
Law on Energy (2002, No. IX-884),  
Law on Natural Gas (2000, No. VIII-1973), 
Methodology  for  Setting  Natural  Gas  Maximum  Price  Thresholds  approved  by  the  National  Control 

Commission for Prices and Energy on 12 April 2005, 

Natural gas transmission, distribution, storage and supplying rules, approved by Order of the Minister of the 

Economy No 43 on 5 February 2002. 

The  general  principles  governing  the  natural  gas  sector  and  the  operations  of  natural  gas  enterprises  and 
relations with customers in the supply, distribution, transmission and storage of natural gas are set out in the 
Natural Gas Law. This Law regulates  the following: transmission service prices, distribution service prices, 
storage  service  prices,  and  the  maximum  price  thresholds  for  regulated  customers.  The  setting  of  these 
prices has been delegated to the National Control Commission for Prices and Energy.  

The  liberalisation  of  the  natural  gas  market  started  in  1992  when  the  Government  of  the  Republic  of 
Lithuania liberalised the procedure for the supply of energy resources to consumers. Both state and private 
companies  were  allowed  to  supply  natural  gas  freely  within  Lithuania  without  any  quantitative  limitations. 
Moreover,  entities  and  individuals  supplying  natural  gas  were  allowed  to  use  the  transmission  and 
distribution  pipelines  belonging  to  the  main  supplier  of  natural  gas,  the  joint-stock  company  AB  “Lietuvos 
dujos” (“Lithuanian Gas”), on a contractual basis. A new draft of the Law on Natural Gas has been submitted 
to the Seimas (parliament) of the Republic of Lithuania for consideration. This draft is intended to implement 
all  the  provisions  of  Directive  2003/55/EC  within  the  Lithuanian  legal  system,  including  the  requirement  to 
open the gas market to all consumers as from 1 July 2007. 

28 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



Under the Law on Natural Gas, the Government of the Republic of Lithuania or an institution authorised by it 
decides on the degree of market openness. Gas consumers are classified into regulated and unregulated (or 
eligible) customers. The criteria for eligible customers are determined by the Government of the Republic of 
Lithuania or its authorised institution. Eligible customers have the right to conclude supply contracts with any 
natural  gas  supplier  for  the  consumption  of  a  given  amount  of  gas.  Applications  to  become  eligible 
customers are submitted to the National Control Commission together with data on natural gas consumption. 
The following customers are eligible to choose their natural gas supplier: 

power stations, 
customers with an annual consumption of over 1 million m3, 
customers whose systems are directly connected to transmission pipelines, 
distribution enterprises whose systems are directly connected to transmission pipelines. 

Regulated  customers  are  all  customers  who  do  not  have  the  status  of  an  eligible  customer.  In  contrast  to 
eligible  customers,  regulated  customers  are  not  entitled  to  choose  their  gas  supplier.  Almost  all  regulated 
customers in Lithuania purchase gas from AB “Lietuvos dujos”. 

2. 

Gas pricing 

In principle, the same pricing methodology is used for both industrial and domestic (residential) consumers. 
Prices in the gas sector may be contracted and state regulated. The National Control Commission for Prices 
and  Energy  sets  the  maximum  price  thresholds  for  gas  transmission  and  distribution  as  well  as  maximum 
price thresholds for the regulated consumers for a three-year-term. The maximum price thresholds revised 
annually in line with inflation, productivity coefficients set by the National Control Commission for Prices and 
Energy, changes in the volume of gas consumption and other factors that are independent of the enterprise.  
Every year gas companies set specific transmission, distribution and storage prices as well as on a half year 
basis  prices  for  regulated  customers  not  exceeding  the  maximum  price  thresholds.  The  prices  are  applied 
following the “post stamp” principle irrespective of the transmission and distribution distance. Maximum price 
thresholds are subject to the changes in the prices of gas purchased from foreign suppliers, and once a year, 
caps. 
According to their annual gas consumption volumes, all regulated non-residential consumers are split into six 
customer groups (the first group is split into two subgroups): 

Customer Groups and 
Subgroups 
1 
   1 a 
   1 b 
2 
3 
4 
5 
6 

Amount Q of gas consumed per year 

Q ≤ 90 m3 
90 m3 < Q ≤  800 m3 
800 m3 < Q ≤ 20 thousand m3 
20 thousand m3 <Q ≤ 0.1 million m3 
0.1 million m3 < Q ≤ 1.0 million m3 
1.0 million m3 < Q ≤ 5.0 million m3 
5.0 million m3 < Q ≤ 15.0 million m3 

According  to  their  annual  gas  consumption  volumes,  all  residential  consumers  are  split  into  four  customer 
subgroups: 

Customer Subgroups 
1 
2 
3 
4 

Amount Q of gas consumed per year 
Q ≤ 90 m3 
90 m3 < Q ≤  800 m3 
800 m3 < Q ≤ 20 thousand m3 
Q  > 20 thousand m3 

Maximum price thresholds for natural gas transmission and distribution as well as for natural gas prices for 
regulated customers are determined according to the “Methodology for Setting Natural Gas Maximum price 
thresholds”, prepared according to the Law on Natural Gas of the Republic of Lithuania and in accordance 
with the requirements of EU directives. 

29 

 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

Tariffs/prices components 
The gas price cap for regulated customers (Treg) is calculated according to the following formula: 



Treg= Tav.purchase + Ttransm + Tdistrib + Tav.supply  , where 

Tav.purchase – the average gas purchase price, 
Ttransm      –  the gas transmission price cap, 
Tdistrib           – the gas distribution price cap, 
Tav.supply   – the average gas supply price. 

The price is calculated exclusive of VAT. Following approval by the National Control Commission for Prices 
and  Energy,  VAT  is  added.  The  new  natural  gas  prices  come  into  force  not  earlier  than  30  days  of  their 
official publication.  

For regulated customers, a one-component or two-component natural gas price is set. The one-component 
natural gas price is set for customers consuming less than 90 m3 of natural gas, and covers only the price 
per  m3.  The  two-component  natural  gas  price  covers  the  fixed  price  component,  which  is  payable  every 
month independent whether gas was consumed or not, and the variable price component, depending on the 
amount of gas consumed. The variable price component consists of the transmission, distribution and supply 
service  price  and  the  natural  gas  price.  The  price  components  are  the  same  for  industrial  and  domestic 
consumers.  

Eligible  customers  pay  for  the  transmission  and  distribution  services  (according  to  the  determinate  tariffs) 
and  the  natural  gas  contract  price  to  the  gas  company.  The  transmission  price  is  a  two-component  price 
consisting of the constant part reflecting a specific customers’ capacity (i. e. his demand during the peak of 
the  system)  and  the  variable  part  dependent  on  the  volume  of  gas  consumption.  The  distribution  price  is 
varying. The difference among distribution prices depends on the category of a customer.  

Natural  gas  consumption  in  Lithuania  is  accounted  for  each  customer  individually,  by  means  of  a  meter 
installed by the gas company. The meter installation charge is included in the gas price. 

Factors affecting tariffs/prices  
Natural  gas  prices  for  customers  are  set  according  to  their  declared  planned  annual  natural  gas 
consumption.  The  amount  of  gas  transmitted  and  distributed  or  supplied  to  the  customers,  as  well  as  the 
stated (ordered) capacity is laid down in a contract with the gas company. Customers are categorised into 
customer groups by their planned consumption of natural gas. If on expiration of the year their consumption 
has exceeded or fallen below that planned, payment for gas is recalculated according to the prices set for 
the appropriate customer group.  

Eligible  customers  may  choose  between  two  gas  supply  companies:  AB  “Lietuvos  dujos”  and  UAB 
“Dujotekana”.  

Interruptions and seasonal variations in the gas supply are not taken into account when calculating natural 
gas prices.  

2.1. 

Industrial consumers 

AB  “Lietuvos  dujos”  is  the  main  supplier  of  natural  gas  for  regulated  customers.  Natural  gas  for  eligible 
customers is supplied by AB “Lietuvos dujos” and UAB “Dujotekana”. Data for standard consumers I1, I2, I3-1, 
I3-2 are submitted only by AB “Lietuvos dujos”, and for the standard consumer I5 – only by UAB “Dujotekana”. 
Data on prices for standard consumers I4-1 and I4-2 are submitted by these two enterprises.  

2.2. 

Domestic consumers 

Data on prices for the standard consumer groups (D1-D4) are submitted only by AB “Lietuvos dujos”. 

These  groups  of  customers  use  gas  for  cooking,  water  heating  and  central  heating.  The  price  of  gas 
depends only on volume of annual gas consumption. 

30 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

3. 

Taxes on gas 

The only tax levied on natural gas is VAT, currently fixed at a rate of 18 %. 



Luxembourg has not provided an update of gas price systems referring to year 2006. 

LUXEMBOURG 

HUNGARY 

1. 

General framework 

Legal basis: 
– 
– 

principles of gas price setting: Ministerial Decree 
actual prices: Ministerial Decree 

Status of liberalisation process:  
– 

Non-household  consumers  are  all  eligible.  Eligibility  means  that  consumers  have  the  right  to 
purchase gas from the free market. 

2. 

Gas pricing 

2.1. 

Industrial consumers 

Tariff/price components including rebates  
– 

industrial  consumers  on  the  public  market  have  a  regulated  two-component  (standing  charge  + 
energy charge) tariff system. Transmission and distribution costs are included, 
industrial  consumers  on  the  free  market  pay  a  regulated  two-component  transmission  (standing 
charge  +  quantity  charge)  tariff  and,  if  applicable,  a  four-component  storage  tariff  (injection  fee  + 
withdrawal fee + peak fee + mobile fee). 

Factors affecting tariffs/prices  
– 
– 

capacity, 
interruptions  (depending  on  the  rate  of  interruptions,  the  standing  charge  may  be  reduced  by 
60%/100%), 
incentive to consume during off-peak periods if capacity is higher than peak-period capacity. 

– 

– 

2.2. 

Domestic consumers 

Factors affecting tariffs/prices: consumed quantity + capacity where household consumers have a capacity 
demand  of  over  20  m3/h  in  some  cases.  Normally,  household  consumers  have  a  capacity  demand  below 
20 m3/h. 

3. 

Taxes on gas 

VAT  is  levied  at  a  rate  of  20%,  and  an  energy  tax  is  applied  to  non-household  consumers  at  a  rate  of 
56 HUF/GJ. 

31 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

Information for the gas price systems in Malta is not available. 

MALTA 

1. 

General framework 

NETHERLANDS 



Under the June 2000 Gas Act (Gaswet), gas market was liberalised in several stages.  

The stages in which liberalisation actually took place were:  
•  Major consumers, with effect from 1 January 2001. These are users with an annual consumption of more 

• 

than 10 million cubic metres. 
Intermediate  users,  with  an  annual  consumption  of  between  1  million  and  10  million  cubic  metres,  with 
effect from 1 January 2002. 

•  Small  consumers,  with  an  annual  consumption  of  up  to  1  million  cubic  metres,  with  effect  from  1  July 

2004. 

Since 1 July 2004 the gas companies were split into a transport company, a supply company and a meter 
company.  These  companies  charge  the  consumer  for  the  services  they  provide.  The  transport  part  of  the 
charge is, according to the Gas act, regulated by the Office of Energy Regulation (DTe), whereas the supply 
and meter part are not regulated.  As part of its regulation of the transport element, maximum charges are 
determined. This regulation applies to all kinds of consumer.  
In addition to the transport, supply and meter charges, the consumer is also required to pay duties and VAT. 

The  provisions  of  the  Gas  Act  cover  gas  which  primarily  comprises  methane  or  other  comparable 
substances. Given that natural gas comprises mainly methane, the supply of natural gas is also covered by 
the Act. 

After the adoption of the Gas Act, it was amended a number of times, including in relation to the liberalisation 
stages planned and the further implementation of the various regulatory tasks. Moreover, the Implementation 
and  Supervision  Service  for  Energy  (Dte)  was  also  assigned  supervisory  functions  with  relation  to  gas, 
including the transport charges. 

2. 

Gas pricing 

Transport tariffs 
For each transport company, the Dte establishes maximum charges for each market segment. Within each 
market segment, the transport charge comprises a fixed rate and a rate per cubic meter. The rate per cubic 
metre is dependent on the annual volume of consumption. Examples of market segments are major users, 
market gardeners, combined heat and power (CHP) plants and small consumers. 
Tariffs related to metering are not subject to regulation. 

Supply tariffs 
With effect from 1 July 2004, supply tariffs are not regulated for any consumer 

Meter tariffs 
With effect from 1 July 2004, Meter tariffs, including standing charges, are not regulated for any consumer. 
The meter company component of the charge is to cover the cost of providing and reading meters. 

32 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

3. 

Taxes on gas 



Duties 
The  duty  on  natural  gas  is  known  as  the  energy  tax  (energiebelasting).  The  tax  complies  with  the 
requirements of the EU directive on energy taxation (2003/96/EC). 

In 2006, the following energy tax was payable: 

•  <= 5 000 m3 
•  > 5 000 – <= 170 000 m3 
•  > 170 000 - <= 1 mio m3 
•  > 1 mio - <= 10 mio m3   
•  > 10 mio m3, non-business 
•  > 10 mio m3, business    

0.1507 €/ m3 
0.1238 €/ m3 
0.0340 €/ m3 
0.0116 €/ m3 
0.0108 €/ m3 
0.0077 €/ m3 

With effect from 1 January 2003, lower energy tax rates were charged on so-called "green gas". These lower 
charges ceased to apply on 1 January 2005. 

For  each  connection,  there  is  a  rebate  on  the  duty  to  be  paid.  This  is  a  fixed  amount  for  each  12-month 
consumption period. This rebate has been accorded since 2001 and replaced the zero-duty rating used up to 
2000 for the first 800 cubic metres of annual gas consumption 

VAT 
19% VAT is charged on the entire amount of the gas bill.  

1. 

General framework 

AUSTRIA 

Austria’s  Energy  Liberalisation  Act  (Energieliberalisierungsgesetz)  (Gas  Act  (Gaswirtschaftsgesetz)  in  the 
version published in BGBl I under No 106/2006) concerns the distribution and sale of natural gas, customer 
access  to  the  network  and  the  construction,  modification  and  operation  of  gas  pipelines.  Since  1  October 
2002 Austria’s gas market has been fully liberalised and all customers are free to choose their suppliers. 

2. 

Gas pricing 

With liberalisation, the two components that used to be charged for jointly – energy and network use – have 
been separated, the energy price being arrived at on the basis of supply and demand on the market, while a 
fixed price for use of the network is laid down by the competent authority using a regulation as the legislative 
instrument. 

When  deciding  on  energy  prices,  companies  generally  distinguish  between  small  and  special  contract 
customers  (in  Austria  known  as  “Tarifkunden” and “Sondervertragskunden”  respectively).  Small  “tariff” 
customers  conclude  agreements  at  uniform  published  prices  (price  sheets  (Preisblätter)).  This  group 
includes  both  households  and  commercial  customers.  It  has  the  opportunity  to  reduce  energy  costs  by 
changing gas supplier.  

Large customers (larger commercial customers and industrial companies) may negotiate prices directly with 
the energy companies. An annual consumption limit of approximately 100 000 Nm³ may be set, above which 
a cost allocation is laid down, in order to ensure that the amounts invoiced correspond as closely as possible 
to the amounts actually consumed.  

33 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

Tariff customers 



Many of the local operators offer only all-inclusive prices in their own catchment area. Energy and network 
costs are charged and presented jointly, and in most cases the prices are zoned. Offering all-inclusive prices 
can, however, sometimes lead to higher energy prices  if large quantities are purchased, since the network 
tariffs  are  also  zoned  and  decrease  as  the  amounts  purchased  increase.  If  the  zones  do  not  correspond 
(network  tariff  and  energy  price),  there  are  sometimes  price  increases  despite  a  higher  level  of  annual 
consumption. 

Energy prices to small customers differ widely from one local operator to another. The cheapest supplier can 
offer savings of as much as 35% (the average being around 13%). There are also substantial differences in 
network prices from one area to another, with these being determined by the authorities on the basis of cost. 

It is also noteworthy that energy prices are low in areas where the network price is high and vice versa. Due 
to the cost orientation of network prices, owners of network operators only have the possibility of disposing 
freely  of  the  financing  costs  granted  in  accordance  with  the  Gas  System  Access  Tariffs  Order  (GSNT-VO 
(Gas-Systemnutzungstarife-Verordnung)) for interest on equity and liabilities.   

Large customers 

Network charges to large customers also take the form of prices for given zones, which fall as the amount 
purchased rises.  

1

On the basis of the industrial price surveys on gas carried out by E-Control GmbH (January and July 2006), 
energy  prices  have  been  divided  into  three  categories.   Average  prices  (in  cent/kWh)  for  category  A  are 
around  12%  lower  than  for  category  C.  Prices  in  categories  B  and  C  are  also  more  volatile  than  those  in 
category A. For instance, the standard deviation for pure energy prices in categories B and C is around 18% 
of  the  arithmetical  average  and  for  major  consumers  only  12%.  There  is  therefore  greater  scope  for 
negotiation among smaller customers. The average length of contract also increases in line with size (A: 38 
months;  B:  25  months;  C:  22  months).  Price-fixing  for  category  C  customers  is  still  based  in  equal 
proportions  on  fixed  prices  and  price  adjustment  clauses.  In  the  higher-consumption  groups,  price 
adjustment  clauses  are  more  frequently  agreed.  With  regard  to  readiness  to  change,  it  was  found  that 
around  half  of  the  undertakings  asked  had  received  alternative  offers,  with  the  proportion  of  higher-
consumption undertakings being higher.  

3. 

Taxes on gas 

Since 1 June 1996 there has been a tax on the supply and consumption of natural gas (Erdgasabgabe). It is 
calculated on the basis of the volume of gas supplied/consumed. Up to the end of 2003 this tax was charged 
at the rate of 0.0436 €/m3 (0.6 ATS/m3). This rate was raised to 0.066 €/m3 as from 1 January 2004. Use of 
natural gas for purposes other than energy is exempt from this tax. 

Up to the end of 2003, companies were reimbursed the proportion of the energy taxes on natural gas and 
electricity that exceeded 0.35% of the net value of production. Until the end of 2001, this reimbursement had 
been granted only to companies that primarily manufactured goods. As from January 2002 the possibility of 
reimbursement was extended to all companies. 

As  from  1  January  2004  the  reimbursement  was  modified  as  a  consequence  of  the  implementation  of 
Directive 2003/96/EC (taxation of energy products): on the one hand, the threshold for reimbursement was 
raised to 0.5% of the net value of production, and on the other, the reimbursement system was extended to 
include  all  energy  sources  used  for  heating  (coal,  oil  etc.),  in  addition  to  natural  gas  and  electricity.  The 
minimum levels of taxation laid down in the Directive must also be complied with (0.15 €/GJ, corresponding 
to around 0.00598 €/m3, in the case of natural gas).  

The gas tax forms part of VAT (20%), which is calculated on the basis of network use, levies, and surcharges 
etc., as well as energy supply. 

1
 Category A: more than 100 Mio. kWh; category B: 10-100 Mio. kWh; category C: 1-10 Mio. kWh 

34 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Gas price systems 2006 

1. 

General framework 

POLAND 



Under  the  Energy  Law,  the  institution  responsible  for  regulating  the  activities  of  the  energy  sector  is  the 
Energy  Regulatory  Office  (Urząd  Regulacji  Energetyki,  URE).  Regulation  mainly  comprises  licensing  the 
operations of entities participating in the energy and gas markets and approval of the tariffs for the prices of 
various forms of energy.  

The basic legislation governing the actions of gas-market participants includes: 

–  European Law  

(cid:131)  Directive 2003/55/EC (repealing Directives 98/30/EC and 91/296/EEC), 
(cid:131)  Directive 2004/67/EC,   
(cid:131)  Regulation (EC) No 1775/2005, 

–  The  national  Energy  Law  and  its  secondary  legislation,  the  most  important  being  the  ordinances  of  the 

Minister of Economy on: 

•  Rules on the methodology of tariffs for natural gas, 
•  Specifications laying down the terms and conditions of connection to the gas network, 

–  The Law on Business Activities, 
–  The Code of Commercial Companies,   
–  The Civil Code, 
–  The Law on Protection of Competition and Consumers. 

The  share  of  natural  gas  in  primary  fuels  is  currently  over  13%.  Natural  gas  consumption  in  Poland  is 
approx.  14  billion  cubic  metres  annually.  In  total,  the  natural  gas  market  has  approx.  7  million  users.  The 
market  structure  is  diversified.  Households  consume  almost  30%  of  natural  gas  and constitute  97%  of  the 
total  number  of  users,  whereas  industrial  users  consume  about  60%  and  account  for  only  1%  of  total  gas 
users. The rest is consumed by the trade and services sector. 

transmission, 

Poland’s natural gas market has entities engaged in: 
–  gas exploration  and production, 
– 
–  distribution, 
– 
trading, 
–  storage. 

Apart from transmission, all core activities in the gas sector are carried out by one dominant entity, the Polish 
Oil and Gas Capital Group – POGC CG (PGNiG – Polskie Górnictwo Naftowe i Gazownictwo). In addition, 
there  are  many  relatively  small  companies  operating  on  the  Polish  gas  market,  e.g.  MOW,  GEN  GAZ 
Energia. 
The  transmission  system  is  operated  by  OGP  Gaz-System  Joint-Stock  Company  (100%  owned  by  the 
Treasury),  which  is  the  transmission  system  operator.  Gaz-System  operates  a  gas  pipeline  transmission 
network with total length of 15 500 km. 

Gas  distribution  is  carried  out  by  6  regional  companies,  which  were  hived  off  on  1 July 2004  from  other 
POGC  activities.  By  decision  of  the  President  of  the  Energy  Regulatory  Office,  these  gas  distribution 
companies have been functioning since 1 January 2007 as distribution system operators. 

Following the implementation of the EU Gas Directive, trade and technical activities in distribution will be fully 
separated as of 1 July 2007.  

In  Poland,  non-household  consumers  have  had  the  right  since  1 July 2004  to  freely  choose  their  supplier. 
This right will be available to all customers from 1 July 2007. 

In 2006, there were 145 licences approved for the provision of gas under the Energy Law: 3 for production, 
64 for transmission and distribution, 77 for gas trade and 1 for gas storage.  

35 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



Due  to  barriers  still  existing  in  the  transmission  system  (e.g.  monopolistic  structure  of  this  sector,  lack  of 
measuring  equipment,  shortage  of  available  transmission  capacity  due  to  physical  congestion,  capacity 
shortage of interconnections ), no eligible customers have made use of the third-party access principle. 

2. 

Pricing of gas  

In  general,  under  the  Energy  Law  and  the  ordinance  on  detailed  rules  governing  the  establishment  and 
computation of tariffs and rules governing financial settlements in gas fuel trading, gas tariffs should take the 
following factors into consideration: 

coverage  of  the  justified  expenses  of  energy  enterprises  related  to  the  generation,  transformation, 
transmission, distribution and trading of gas, the storage of gas and the liquefaction or regasification of 
gas,  including  a  justifiable  return  on  investment  from  such  activities,  and  coverage  of  the  justified 
expenses borne by the transmission and distribution system operators in the execution of their tasks; 

protection of customers against unjustified prices and fees; elimination of cross-subsidies; 
–  equal treatment of all consumers. 

Each  tariff  devised  by  a  company  should  comprise,  depending  on  its  business  activities,  the  following 
elements: 

 consumer groups, 

– 
 types and levels of prices and fees as well as the conditions for their applicability, with  

rebates for failure to meet the quality standards of gaseous fuels, 

• 
•  charges for illegal uptake of gaseous fuel, 
•  charges for failure to meet the quality standards for customer service. 

The  prices  and  charges  set  out  in  a  tariff  are  different  for  each  tariff  group  and  correspond  to  the  justified 
costs for the group in question. Tariffs apply to the following three grades of natural gas sold in Poland: 
– 
– 
– 

 high-methane natural gas, symbol E (GZ-50) – tariff groups “W” (GCV 39.5 MJ/m3), 
low-methane natural gas, symbol Lw (GZ-41,5) – tariff groups “S” (GCV 32.8 MJ/m3), 
low-methane natural gas, symbol Ls (GZ-35) – tariff groups “Z” (GCV 28.8 MJ/m3). 

As  high-methane  natural  gas  dominates  sales,  the  following  sections  will  be  confined  to  this  particular 
product. 

2.1. 

Industrial consumers 

In general, gas tariffs for industrial consumers supplied from the distribution network are broken down by the 
following user groups: 

Tariff category 

Contracted capacity 
b [m3/h] 

Gas network with pressure up to 0.5 MPa  
W-5 
W-6 
W-6A 
W-6B 
W-7 
W-7A 

W-7B 
Gas network with pressure over 0.5 MPa 
W-8 
W-9 
W-10 

10<b<=65 
65<b<=600 
65<b<=600 
65<b<=600 
b>600  
b>600  
(600<b<=5000 
b>5000 

0<b<=3300 
3300<b<=10000 
b>10000 

36 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



For large industrial consumers supplied from the transmission network (operated by the transmission system 
operator  Gaz_System  SA),  the  supplier,  the  Polish  Oil  and  Gas  Company  (Polskie  Górnictwo  Naftowe  i 
Gazownictwo, PGNiG), has developed a breakdown into tariff categories based on the grade of gas supplied 
and on the contracted capacity set out in the contract. There are four tariff categories for each type of gas, 
including high methane natural gas, identified by the symbol “E”. 

Industrial consumers 
Tariff category 
E1 
E2 
E3 
E4 

Contracted capacity a[m3/h] 
0<a<=1500 
1500<a<=3300 
3300<a<=20000 
a>20000 

The charge for gas fuel offtake during the accounting period is calculated by multiplying the quantity of fuel 
as metered by its tariff price.  

Regardless of the length of the accounting cycle, all users of gas fuel are also obliged to pay the monthly 
subscription fee. Exemptions from the fee are granted in the case of high-methane gas for motor vehicles. 
The subscription fee is based on the provision of customer services (meter readings, invoicing, computation 
and  collection  of  payments  for  gas,  inspection  of  measuring  equipment).  Subscription  fees  apply  to  all 
measuring systems.  

Fee rates for network connection 
Fees for connection to the transmission grid are based on one quarter of the annual average investment 
costs for installing new segments of grids to which customers request connection.  
According to the ordinance on detailed rules governing the establishment and computation of tariffs and 
rules governing financial settlements in gas fuel trading, fixed amounts are to be charged for the first pipeline 
segments of 5 and 30 metres, with further segments being charged for by the metre. 

The total connection fee is calculated according to the following formula: 

Op=Or+Sp*Lp 

Where: 

Op – total connection fee, expressed in PLN, 
Or  –  fee  for  construction  of  distribution  grid  segments  up  to  5  metres  or  construction  of  transmission  grid 
segments up to 30 metres, expressed in PLN, 
Sp  –  fee  rate  charged  for  connecting  of  every  metre  of  distribution  grid  segments  over  5  metres  or 
transmission grid segments over 30 metres, expressed in PLN/m, 
Lp – length of the distance over 5 metres to the distribution grid or over 30 metres to the transmission grid, 
expressed in metres.  

Rates for transmission services are calculated separately for the transmission and distribution grids. For the 
transmission grids, rates can be divided into distance-related rates and rates not related to distance. These 
two transmission service rates are calculated as a fixed rate and a variable rate based on the justified costs 
of supplying gaseous fuels to customers in each tariff group.  

37 

 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



The total fee for transmission services (here: group rates for customers receiving high methane gas over 10 
m³/h, W-8 to W-10 and E1 to E4) is calculated using the following formula: 

where: 

Og = Szg*Q + Ssg*Mp*T 

Og – total fee for transmission services, expressed in PLN, 
Szg – variable group rate for transmitted gas, expressed in PLN/m3, 
Q – quantity of gas transmitted, expressed in m3, 
Ssg – fixed group rate [PLN/m3/h per hour during the accounting period], 
Mp – contracted capacity [m3/h or m³/day], 
T – number of hours or days during the accounting period, according to the fixed unit of contracted capacity. 

The total fee for transmission services for distance-related rates is calculated using the following formula: 

where: 

Od = Szd*Q + Ssd*Mp*L*T 

Od – total fee for transmission services, expressed in PLN, 
Szd – variable distance-related rate, expressed in PLN /m3, 
Q – quantity of gas transmitted, expressed in m3, 
Ssd – fixed distance-related rate during the accounting period, expressed in PLN for the unit of contracted 
capacity and the unit of distance of gaseous fuel transmission, 
Mp – contracted capacity [m3/h or m³/day], 
L – distance of gaseous fuel transmission, computed as the shortest possible distance between the point of 
purchase and the point of offtake, calculated for the transmission grids described in the energy company's 
transmission grid scheme and expressed in metres.  
T – number of hours or days during the accounting period, according to the fixed unit of contracted capacity. 

In the event of supply capacity limitations or when a break in gas supply occurs, caused by system outages, 
maintenance or new connections, the fee for transmission services is decreased in proportion to the capacity 
reduction and the time during which gas was not supplied or the supply was limited.  

Fee rates for distribution services 
For consumers in the tariff groups W-5 to W-7B, the charge for distribution services is calculated according 
to the same formula as for transmission service fees not related to distance: 

where: 

Og = Szg*Q + Ssg*Mp*T 

Og – charge for distribution services, expressed in PLN, 
Szg – rate of variable payment for the supplied gas, expressed in PLN/m3, 
Q – volume of the supplied gas, expressed in m3, 
Ssg – rate of constant payment [PLN/m3/h for every hour of settlement period], 
Mp - capacity subscription [m3/h], 
T – the number of hours in a given settlement period. 

2.2. 

Domestic consumers 

Poland’s  household  consumers  purchase  two  types  of  gas:  high-methane  natural  gas  (88%)  and  low-
methane natural gas (12%). In the tariffs offered by individual distribution companies, household users are 
broken  down  into  four  tariff  groups  depending  on  the  contracted  capacity  and  the  volume  of  annual  gas 
offtake. 

For high-methane natural gas: 
GROUP 
W1 
W2 
W3 
W4 
Gross calorific value: 39.5 MJ/m3 

Contracted capacity b[m3/h] 
b<=10 
b<=10 
b<=10 
b<=10 

Annual quantity a[m3/year] 
a<=300 
300<a<=1200 
1200<a<=8000 
a>8000 

38 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



The charge for gas fuel offtake during the accounting period is calculated by multiplying the quantity of fuel 
metered by its tariff price.  

Regardless  of  the  length  of  the  accounting  cycle,  all  gas  fuel  users  are  also  obliged  to  pay  the  monthly 
subscription fee. However, exemptions are granted in the case of high-methane gas for motor vehicles. The 
subscription  fee  relates  to  the  provision  of  customer  services  (meter  readings,  invoicing,  computation  and 
collection  of  payments  for  the  gas,  inspection  of  measuring  equipment).  Subscription  fees  apply  to  all 
measuring systems.  

The fee for connection to a distribution network (pressure of up to 0.5 MPa) is a one-off payment, comprising 
a lump-sum payment for the construction of the required network segment for connections of up to 5 metres 
plus a charge for each metre over 5 metres. This charge is calculated according to the formula described in 
2.1 above (industrial consumers). 

For  the  distribution  grids,  rates  are  calculated  as  group  rates.  These  rates  comprise  a  fixed  rate  and  a 
variable rate based on the justified costs of supplying gas to customers in each tariff group. The total fee for 
distribution services (here: group rates for customers receiving high-methane gas up to 10 m³/h – W-1 to W-
4) is calculated using the following formula: 

where: 

Og = Szg*Q + Qsg 

Og – total fee for transmission services, expressed in PLN, 
Szg – variable group rate for transmitted gas, expressed in PLN/m3, 
Q – quantity of transmitted gas, expressed in m3, 
Qsg – fixed group rate, based on the accounting period, applied for a given tariff category and expressed in 
PLN/month. 

Rebates are granted to consumers if the gas supplied fails to match the quality standards. The rebates are 
calculated as follows: 

where: 

B = (1-Hsśr/Hsn)*I*C 

B – amount of rebate (PLN), 
Hsśr – gross calorific value of the gas actually supplied (MJ/m3), 
Hsn – standard gross calorific value (MJ/m3), 
I – quantity of consumed gas with sub-standard calorific value, 
C – price of gas in the appropriate tariff group (PLN/m3). 
Consumers also receive rebates for failures by the supplier to meet service quality standards. 

3. 

Taxes on gas 

The only tax charged on all components of gas payments is VAT, at a rate of 22%. 

39 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

1. 

General framework 

PORTUGAL 



The Portuguese market is in the middle of a significant process of liberalization. In September 2006, some 
relevant  infrastructures  belonging  to  Transgas  (high  pressure  network,  LNG  Terminal  and  most  of  the 
Underground  Storage)  were  transferred  to  REN  –  Redes  Energéticas  Nacionais,  which  already  was  the 
operator  of  the  Power  Transmission  System,  ,  to  assure  TPA  to  market  players.  REN  established  three 
wholly owned subsidiaries for the infrastructures operation: REN-Gasodutos (high pressure network), REN-
Atlântico  (LNG  Terminal  in  Sines),  and  REN-Armazenagem  (Underground  Storage  in  Salt  Caverns,  in 
Carriço). 

The  schedule  for  market  opening  establishes  that  the  Power  Production  is  opened  from  1st  January,  the 
from  1st  January  2008,  medium-sized  commercial  (above 
Industrial  consumers  (above  1 mcm/y) 
10.000 m3/y) from 1st January 2009, and the remaining market from 1st January 2010. 

The  dominant  player  in  the  gas  market  is  Galp  Energia,  through  its  subsidiaries,  Transgás  and  Gás  de 
Portugal Distribuição (GDPd).  
Transgás  is  the  supply  company,  selling  gas  to  the  existing  Power  Producers.  It  may  also  sell  gas  to 
customers in the liberalized market according to the market opening schedule. Both the regulated industrial 
market and the distribution market are performed under a Last Resort Supply Licenses, given to a subsidiary 
of Transgás, and to the already existing LDC’s. A wholly owned subsidiary of Transgás, will sell gas to the 
regulated  market:  industrial  consumers  exceeding  2 mcm/y,  and  also  to  the  LDC’s.  Transgás  was  also 
granted with a 40 years concession contract for gas storage (underground storage in salt caverns in Carriço-
Pombal), through its subsidiary Transgás Armazenagem. 

GDPd  runs  Galp’s  distribution  businesses.  It  has  a  stake  in  five  regional  distribution  companies,  namely: 
Lisboagás distributing natural gas in Lisbon area, Lusitaniagás in Aveiro, Coimbra and Leiria districts, Setgás 
in  Setúbal  area,  Tagusgás  in  Portalegre,  Santarém  and  Leiria  districts,  and  Beiragás  in  Castelo  Branco, 
Viseu  and  Guarda  disctricts.  A  sixth  LDCs  operates  in  the  Porto,  Braga  and  Viana  do  Castelo  districts  - 
Portgás (owned by EDP and GDF). 

In  addition,  GDPd,  has  set  up  four  autonomous  gas  distribution  units,  called  Unidades  Autónomas  de 
Distribuição (UADs), namely Duriensegás, Dianagás, Paxgás and Medigás companies. In the north interior 
an  independent  company  (Dourogás)  also  operates  its  UADs.  These  units  are  supplied  by  LNG  by  truck, 
coming from the LNG Sines Terminal. 

2. 

Pricing of gas  

2.1. 

Industrial consumers 

Presently, customers pay a variable term per unit of gas consumed and a monthly standing charge, which 
varies depending on the yearly consumption and respective modulation. 

For  the  industrial  sector,  there  are  different  prices  depending  on  the  type  of  final  use  of  gas  (industrial  or 
cogeneration).  The price formulas are based on energetic indexes and exchange rates. 

2.2. 

Domestic consumers 

Natural gas tariffs (Fixed Term and Variable Term) for the domestic sector are proposed every quarter by the 
regional  and local  distribution  companies,  for  the  approval  of  the DGGE -  Directorate-General  for  Geology 
and Energy.  

40 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

2.3. 

Regulated tariffs 



From  2008  the  tariffs  for  the  regulated  markets,  supplied  under  the  Last  Resort  Supply  Licenses,  will  be 
established by ERSE – Entidade Reguladora dos Serviços Energéticos, for both the access to the networks 
and gas prices for clients. 

3. 

Taxes on gas 

VAT at 5 % is applied to the price of gas and the monthly Fixed Term. 

1. 

General framework 

ROMANIA 

The  competent  authority  in  the  natural  gas  sector  is  the  National  Regulatory  Authority  in  the  Natural  Gas 
Sector (ANRGN), an autonomous public institution coordinated by the Prime Minister. In accordance with the 
provisions of Article 8(1) of Law No 351/2004 on gases, ANRGN draws up, endorses and applies criteria and 
methods  for  the  approval  of  regulated  prices  and  the  establishment  of  regulated  tariffs  in  the  natural  gas 
sector. 
In the course of 2003, ANRGN drew up a new methodology for the calculation of regulated prices and tariffs 
in  this  sector.  These  “Criteria  and  methods  for  the  approval  of  regulated  prices  and  the  establishment  of 
regulated tariffs in the natural gas sector” were endorsed by Decision No 1078 of the ANRGN President of 
18 December 2003,  published  in  the  Official  Journal  of  Romania,  Part  I,  No  40  of  19 January 2004,  with 
changes and additional explanations.  
The  mechanisms  for  calculating  regulated  prices  and  tariffs  are  of  the  revenue  cap  type  for  regulated 
underground storage and transport activities and of the price cap type for regulated distribution and supply 
activities. 

2. 

Natural gas prices  

Differentiation by distribution tariffs: 

•  by operators, taking into account the specific costs registered by each company; 
•  by  connection  systems  and  depending  on  consumption  (the  differentiation  depending  on  the  use  of 

natural gas having being dropped). There are 11 categories of consumers: 

A. Final consumers directly connected to the transport system: 
A.1. final consumers with an annual consumption of up to 124 000 m3; 
A.2. final consumers with an annual consumption between 124 000 m3 and 1 240 000 m3; 
A.3. final consumers with an annual consumption between 1 240 000 m3 and 12 400 000 m3; 
A.4. final consumers with an annual consumption between 12 400 000 m3 and 124 000 000 m3; 
A.5. final consumers with an annual consumption of over 124 000 000 m3. 

B. Final consumers connected to the distribution system: 
B.1. final consumers with an annual consumption of up to 2 400 m3; 
B.2. final consumers with an annual consumption between 2 400 m3 and 12 400 m3; 
B.3. final consumers with an annual consumption between 12 400 m3 and 124 000 m3; 
B.4. final consumers with an annual consumption between 124 000 m3 and 1 240 000 m3; 
B.5. final consumers with an annual consumption between 1 240 000 m3 and 12 400 000 m3; 
B.6. final consumers with an annual consumption of over 12 400 000 m3. 

New storage tariffs entered into force in April 2004. They have three components, namely a fixed component 
for  capacity  reservation,  a  variable  component  for  gas  injection  in  deposits,  and  a  variable  component  for 
natural gas extraction from deposits. 
At present, each operator has its own storage tariff. 

41 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



The final price is in turn the sum of the distribution tariffs, the supply margin and the purchase price of natural 
gas,  differentiated  for  each  operator  and  for  each  category  of  consumers  (A1-A5,  B1-B6).  The  purchase 
price  of  natural  gas  is  calculated  depending  on  the  price  of  domestic  production,  the  import  price  and  the 
transport costs. 
On  1  July  2004,  a  tariff  with  two  components  was  established  for  the  transport  activity,  namely  a  fixed 
component  for  capacity  reservation  in  the  NTS  (National  Transport  System)  and  a  variable  component  for 
gas circulation through the NTS. 

2.1. 

Industrial consumers 

The final price for captive industrial consumers differs depending on the connection system, i.e. for industrial 
consumers directly connected to the national transport system and for industrial consumers connected to the 
distribution system. In general, industrial consumers belong to the B4-B6 categories. 
The final price to be paid by captive industrial consumers includes: 

transport tariff; 

•  natural gas purchase price (domestic and imported gas combined); 
• 
•  storage tariff; 
•  distribution tariff (only for consumers connected to the distribution system) and supply margin. 

For  eligible  industrial  consumers,  ANRGN  has  no  competence  to  establish  the  final  purchase  price,  this 
being  freely  negotiated  between  the  parties.  However,  in  accordance  with  the  legal  provisions,  eligible 
consumers  are  bound  to  pay  the  tariffs  regulated  by  ANRGN  to  transport,  storage  and  distribution  service 
providers. 

2.2. 

Domestic consumers 

Household consumers are the consumers that purchase natural gas for their own household consumption. 
These consumers belong to the B1-B3 categories. 
The final price to be paid by household consumers includes: 

transport tariff; 

•  purchase price of natural gas (domestic and imported gas combined); 
• 
•  storage tariff; 
•  distribution tariff (only for consumers connected to the distribution system) and supply margin. 

3. 

Value Added Tax 

The prices calculated by ANRGN do not include VAT, which is applied at a rate of 19% in accordance with 
the regulations of the Ministry of Public Finance. 

4.  

Taxation 

Romania has established timetables for gradually increasing taxes in the period 2007-2010, in accordance 
with Annex 1, Title VII – Special Taxes of the Fiscal Code, as modified by Law No 343/2006. 

42 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

1. 

General framework 

SLOVENIA 



In  the  gas  market,  Slovenia  only  has  one  major  supplier  supplying  gas  to  industrial  consumers  on  the 
transmission  network  and  to  distribution  companies.  The  distribution  companies  supply  gas  to  industrial 
consumers on the distribution network and to households.  

In 2003, gas consumers with an annual gas consumption of more than 25 million Sm3 (standard cubic metre) 
and  electricity  producers  received  eligibility  status.  Under  Directive  2003/55/EC,  all  non-household 
consumers became eligible from 1 July 2004. The degree of market opening at the end of 2006 was 90%, 
but full opening is required under the Energy Act by July 2007.  

The Energy Agency was established in 2000. It is an independent organisation that carries out specific tasks 
under the Energy Act, with the purpose of ensuring the transparent and non-discriminatory operation of the 
electricity and natural gas markets in the interests of all participants. It is responsible for setting the prices for 
the use of electricity and natural gas networks, taking decisions in the case of disputes and granting licenses 
for performing energy-related activities.  

At the end of the 2006, there were 10 licence holders for the transmission of natural gas and the operation of 
transmission networks, but in reality only one company acts as the transmission operator and provider.  

At the end of the 2006, there were 33 licence holders for the distribution of natural gas and the operation of 
distribution networks, but only 17 companies had the status of distribution system operator. The distribution 
system operators provide the optional public service of operating individual distribution networks. There are 
distribution networks for natural gas in more than sixty Slovenian municipalities.  
The  operation  of  the  gas  distribution  system  and  the  supply  of  natural  gas  to  tariff  customers  are  optional 
local public services, which have to be regulated with a concession act between the concessionaire and the 
local  community  acting  as  the  awarding  authority  or  have  to  be  organised  through  a  public  company 
established  by  the  local  community.  In  2006,  49  local  communities  organised  these  activities  as  a 
concession  between  a  concessionaire  and  the  local  community,  while  in  13  local  communities  these 
activities were undertaken by public companies. In two local communities, these services were provided in a 
different way. I 

2. 

Pricing of gas  

2.1. 

Eligible consumers 

Eligible customers of natural gas are those customers that can freely choose their suppliers. In accordance 
with the Act Amending the Energy Act that came into force on 8 May 2004, eligible customers are, from 1 
July  2004  onwards,  all  the  customers  of  natural  gas  with  the  exception  of  households.  To  receive  natural 
gas, an eligible customer has to agree on the supply of gas with a supplier and on access to the natural gas 
network  with  the  system  operator.  Access  to  the  network  can  also  be  arranged  by  the  supplier.  For  this 
reason, the price for natural gas is separate from the price for the use of the gas networks. 
With  regard  to  eligible  customers,  the  price  for  natural  gas  is  set  by  the  market  and  is  the  subject  of 
negotiations or agreements between the natural gas suppliers and eligible customers.  

The price paid by the customer of natural gas for access to the network consists of the network charge and 
supplements to the network charge. The Energy Agency regulates the network charge by determining the 
methodologies for setting and calculating the network charge. The supplements that are part of the price for 
the use of the network are determined by the Government of the Republic of Slovenia. These supplements 
cover the operating costs of the Energy Agency, the release of long-term transmission capacities for natural 
gas, and the costs of suppliers relating to continuity of the energy supply. 

43 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



On the basis of the methodologies established by the Energy Agency, the operators of the transmission and 
distribution networks set the network charges and submit them to the Energy Agency for its approval. 

The network charge for the gas transmission network consists of the following elements: 

the price for the transmission of natural gas,  
the price for a company’s own use,  
the price for making measurements, 

and is set on the basis of the system operator’s eligible costs arising from the transmission of natural gas, 
own use and the making of measurements.  

The network charge for the gas transmission network for 2006 was published in the Official Gazette of the 
Republic  of  Slovenia.  The  customers  connected  to  the  gas  transmission  network  pay  this  charge  on  the 
basis of their capacity charge.  

The network charge for the distribution network consists of the following elements: 

the price for the distribution of natural gas  
the price of metering 

and  is  set  on  the  basis  of  the  eligible  costs  incurred  by  the  system  operator  for  natural  gas  distribution, 
metering and making connections.  

The  network  charge  is  calculated  on  the  basis  of  the  Act  Determining  the  Methodology  for  Setting  the 
Network Charge and the Criteria for Establishing Eligible Costs for the Gas Distribution Network, and the Act 
Determining  the  Methodology  for  Calculating  the  Network  Charge  for  the  Gas  Distribution  Network.  The 
network charges for individual local community areas are published in the acts of the system operators. 

The Act Determining the Methodology for Calculating the Network Charge for the Gas Distribution Network 
determines the mode of calculating the network charge and the classification of customers on the distribution 
network  into  different  customer  groups.  The  Act  Determining  the  Methodology  for  Setting  the  Network 
Charge  and  the  Criteria  for  Establishing  Eligible  Costs  for  the  Gas  Distribution  Network  determines  the 
mode, conditions and method for the calculation of the network charge as well as the criteria for establishing 
eligible costs.  

The  network  charge  for  the  gas  distribution  network  had  not  yet  been  defined  in  2006.  For  this  reason, 
eligible customers connected to the distribution network were in 2006 still tariff customers and were supplied 
under the regulated tariff in the same way as household customers.  

2.2. 

Household consumers 

In  2006,  natural  gas  distribution  companies  carried  out  the  tasks  of  the  system  operators  of  natural  gas 
distribution networks as an optional, local public service. 

The number of local distributors is 17. Some of the public companies are directly owned by the municipality 
that they supply. In 2006, the regulation of these distribution companies was still entirely the responsibility of 
the local authorities, which set the basic rules and obligations with concessionary acts. Therefore, not only 
the prices of natural gas but also the structure and elements of the tariff systems differed between suppliers.   

In 2006, the prices for the use of the gas distribution network were not yet presented separately. At the end 
of  2006,  18  acts  for  34  municipalities  were  published  in  the  Official  Gazette  of  the  Republic  of  Slovenia. 
These are valid from 1 January 2007. Other acts will be published at the beginning of 2007.  

Households,  i.e.  tariff  customers,  were  supplied  under  the  tariff  systems  of  the  distribution  suppliers.  They 
will remain tariff customers until 1 July 2007.  

Tariff/price components including rebates 
In  2006,  gas price  rebates  were  offered  by  gas  suppliers  to  their contracting  customers  on a  discretionary 
basis. 

44 

 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Gas price systems 2006 

3. 

Taxes on gas 



The natural gas price is subject to excise duty (only for gas used for heating and transport purposes), CO2 
tax (for customers not included in the emission trading system) and value added tax. The excise duty is 1.5 
SIT/Sm3  (0.6  cent/Sm3)  and  the  CO2  tax  is  5.7  SIT/Sm3  (2.3  cent/Sm3).  VAT  is  set  at  20%,  and  is 
recoverable for VAT-registered companies. 

1. 

General framework 

SLOVAKIA 

The  Regulatory  Office  for  Network  Industries  (RONI)  has  been  regulating  gas  prices  in  Slovakia  since  1 
January  2003.  The  resulting  prices  are  fair,  ensuring  a  justified  and  adequate  profit  from  regulated 
operations and eliminating cross-subsidies among the individual consumer groups. 

For the various entities involved, RONI issues decisions stipulating: 
1/ 

tariffs for access to the gas transmission network system and gas transmission 

2/ 

3/ 

a) tariffs for access to the distribution network system and gas distribution 
b) tariffs for the connection of end-users to the distribution network system 
tariffs for the supply of gas to households. 

2. 

Pricing of gas - 2006  

2.1. 

Distribution 

Consumers are divided into categories according to annual consumption: 

Mad  
Mbd 
Mcd 
Sd 
Vad 
Vbd 
Vcd 

up to 200 m3 
> 200 m3 to 1 700 m3 
> 1 700 m3 to 6 500 m3 
> 6 500 m3 to 60 000 m3 
> 60 000 m3 to 400 000 m3 
> 400 000 m3 to 2 mill. m3 
> 2 mill. m3 

Price components: 

Tariff 

Fixed charge/    
year 

Variable charge 
for real 
consumption/m3 

Performance 
charge for 1 m3 
of contractual 
day maximum/ 
m3 

Mad 

Mbd 

Mcd 

Mdd 

Sd 

Vad 

Vbd 

Vcd 

yes 

yes 

yes 

yes 

yes 

yes 

yes 

yes 

no 

no 

no 

no 

no 

yes 

yes 

yes 

yes 

yes 

yes 

yes 

yes 

yes 

yes 

yes 

45 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



The  normal  form  for  a  domestic  tariff  is  a  fixed  charge  and  a  variable  charge  for  real  consumption  (both 
according to volume of consumption) and is identical to the Mad - Mdd

 tariffs. 

2.2. 

Transmission 

Tariffs for transmission have been based on the entry-exit tariff system since 2005 and there is no difference 
with respect to domestic and foreign consumers. 

2.3. 

Supply 

The supply of gas to consumers other than households is not subject to regulation in compliance with the EU 
and national primary legislation. 

3. 

Taxes on gas 

Gas is subject to 19% VAT. 

1. 

General framework 

FINLAND 

In  the  year  2006,  the  size  of  the  Finnish  natural  gas  market  was  4.7  bcm,  which  was  all  imported  from 
Russia. The retail supply of natural gas covers about 5 per cent of the total amount of natural gas used in 
Finland. 

Finland has availed itself of the possibility of an exemption allowed by the Natural Gas Market Directive. The 
Directive  allows  Finland  to  deviate  from  the  regulations  concerning  the  deregulation  of  the  natural  gas 
market as long as the country has only one principal supplier of natural gas, because Finland has not been 
connected  to  the  natural  gas  network  of  any  other  EU  Member  State.  Due  to  this,  the  Finnish  natural  gas 
market  has  not  been  deregulated  in  the  literal  sense  of  the  word.  Only  the  so-called  secondary  market  in 
natural gas has been deregulated, and the deregulation concerns only users or retailers of natural gas, who 
purchase  over  five  million  cubic  metres  of  natural  gas  per  year.  The  amount  of  gas  sold  in  the  secondary 
market consists of about one percent of natural gas demand in Finland. 

Natural  gas  companies  set  the  tariffs  and  other  conditions  for  natural  gas  themselves.  Network  tariffs  and 
retail  tariffs  have  to  be  published.  The  Energy  Market  Authority  may  intervene  and  ensure  adjustments  to 
ensure compliance with the natural gas market legislation.  

According  to  the  amendment  to  the  Natural  Gas  Market  Act,  which  regulates  the  natural  gas  market,  and 
entered into force at the start of 2005, the regulator issue a decision confirming the methods that the network 
operator must follow when determining the level of return for network services and the connection charges in 
advance. Gasum Ltd – Finland’s gas wholesaler – has revised its pricing system accordingly. The new tariff, 
where transmission and sales of energy will be clearly unbundled, was introduced in 2006. 

2. 

Pricing of gas  

In Finland there are separate tariffs for gas network services and natural gas. There is only one importer and 
wholesaler of gas (Gasum Ltd). There was about 32 local distribution companies (LDC) at the beginning of 
the  year  2006.  Of  the  gas  supplied  on  the  market,  95%  is  supplied  directly  to  end-customers  based  on 
Gasum´s  tariffs  or  old  long-term  contracts.  Only  5%  is  supplied  through  LDCs.  Each  LDC  has  its  own 
distribution tariffs. 

46 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

Wholesale gas is sold based on bilateral contracts between importer/wholesaler and 

- final customers (95% of total sales) 
- LDCs (5% of total sales) 



New  wholesale  contracts  have  to  be  based  on  public  tariffs,  but  the  old  long-term  contracts  may  include 
negotiated prices. 

In the year 2006, the share of wholesale supply sold under public tariffs increased to some 70 per cent. 

2.1. 

Industrial consumers 

Gasum  Ltd’s  current  public  natural  gas  pricing  system  is  called  M2006,  and  is  applied  to  Gasum  Ltd's 
delivery contracts for natural gas in Finland 

Natural Gas Transmission and Pricing 

The General Tariff of natural gas transmission price comprises the following charges: 

•  Delivery point charge (EUR/month, delivery point) 
•  Transmission capacity charge (EUR/MW, month, delivery contract) 
•  Delivery point transmission charge (EUR/MWh, month, delivery point) 
  Summer season 1.4. - 31.10. 
  Winter season 1.11. - 31.3. 

For consumers using 50 GWh or less it is possible to choose Small Consumer Tariff: 

•  Delivery point charge (EUR/month, delivery point) 
•  Delivery point transmission charge (EUR,MWh, month, delivery point) 
  Summer season 1.4. - 31.10. 
  Winter season 1.11. - 31.3. 

The delivery point charge is a monthly charge, which covers the fixed maintenance and operating charges 
arising from maintenance, use, control and administration at the delivery points. It depends on the delivery 
point transmission capacity. 

The  transmission  capacity  charge  is  defined  on  contractual  level  and  is  a  monthly  charge.  It  covers  the 
capital costs of the natural gas transmission system and transmission operation, control, maintenance and 
investment costs. It is determined according to the annual transmission capacity. 

The delivery point transmission charges cover the capital costs of the natural gas transmission system and 
transmission operation, control, maintenance and investment costs. 

For small customers it is possible to have more simple transmission tariff excluding Transmission capacity 
charge. 

Additional transmission is needed if transmit volumes of gas exceed the delivery point annual transmission 
capacity. The additional transmission charge is applied in the General Tariff. In the Small Consumer Tariff all 
gas is transmitted in accordance with the transmission charge.  

Additional transmission charge (EUR/MWh) 

Natural Gas Energy Trade and Pricing: 

In the General Tariff the natural gas contract-specific energy price consists of the following charges: 

Energy trade capacity charge (EUR/MW) 
Energy charge (EUR/MWh) 

47 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

Small Consumer Tariff 

•  Energy charge (EUR/MWh) 



In the General Tariff the buyer reserves a monthly energy trade capacity (MW) for use of each contract and 
provides an estimate of monthly gas volume required (MWh). In the Small Consumer Tariff, the buyer only 
provides an estimate of the volume required. 

The  volume  of  gas  delivered  to  the  buyer's  delivery  point  that  exceeds  the  buyer's  energy  trade  capacity 
volume during the balancing is termed extra gas. It is applicable only in the General Tariff. 

•  Extra gas charge (EUR/MWh) 

2.2. 

Domestic consumers 

Domestic consumers in Finland use only a minor part of the gas supplied on the market. 

3. 

Taxes on gas 

The  excise  tax  for  natural  gas  is  1.82  cent/m3  (NCV).  There  is  also  a  Precautionary  Stock  Fee  of  0.084 
cent/m3 (NCV). 
Value  added  tax  on  gas  has  been  in  effect  in  Finland  since  August  1986.  The  current  rate  is  22%  and  is 
recoverable by industrial customers. 

1. 

General framework 

SWEDEN 

The Swedish natural gas market was reformed on 1 August 2000. Competition was introduced for the trading 
of natural gas. Eligible consumers were consumers producing electricity from combustion of natural gas, and 
other consumers consuming more than 25 million cubic meters of natural gas annually. Eligible consumers 
covered  approximately  47%  of  the  Swedish  market,  in  terms  of  volume.  The  law  was  changed  in  2003 
making those consumers, with an annual natural gas consumption over 15 million m3, eligible. Thus, for 2004 
the threshold for eligible consumers was 15 million m3. 

A new natural gas act was proposed by the Government in early 2005 allowing all non-household consumers 
to  choose  suppliers  from  1  July  2005.  By  1  July  2007  the  last  step  will  be  taken  in  the  reformation  of  the 
Swedish natural gas market. All consumers will then be eligible. 

The transportation tariffs are supervised ex-post by the Energy Markets Inspectorate. The price for transport 
of natural gas should be reasonable and based on facts. As of 1 July 2005, the Energy Markets Inspectorate 
will  approve  ex-ante  methodology  underlying  the  calculation  of  transportation  tariffs,  on  the  basis  of  a 
proposal by transmission and distribution companies. 

2. 

Pricing of gas  

2.1. 

Industrial consumers 

Trading  of  gas  is  settled  by  bilateral  contracts  or  by  tariffs  of  traders.  In  contracts  the  price  is  divided  into 
different  components  (e.g.  transmission/distribution  charge  and  energy  charge)  and  affected  by  different 
factors. 

The  price  of  natural  gas  for  industrial  consumers  is  divided  into  one  fixed  component  and  one  variable 
component depending on the amount of natural gas used. 

48 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

2.2. 

Domestic consumers 

Trading of gas is settled by tariffs of traders. 



The  price  of  natural  gas  for  domestic  consumers  is  divided  into  one  fixed  component  and  one  variable 
component depending on the amount of natural gas used. 

3. 

Taxes on gas 

In  2006,  industrial  consumers  paid  413  SEK/1 000  m3  in  CO2  tax  on  natural  gas  consumption.  Industry  is 
exempt  from  energy  tax  and  VAT.  Domestic  consumers  paid  239  SEK/1 000  m3  in  energy  tax,  1  965 
SEK/1 000 m3 in CO2 tax and VAT of 25%. 

1. 

General framework 

UNITED KINGDOM 

Structure of the market 
Gas supplies for the market in Great Britain (England, Wales and Scotland) come from indigenous (mainly 
offshore) production and from imports. The majority comes from the United Kingdom sector of the North Sea; 
net imports of gas accounted for 12.5 per cent of gas input into the transmission system.  

There  has  been  significant  new  import  infrastructure,  in  the  form  of  pipelines  and  LNG  facilities  and  new 
storage sites, The Bacton-Zeebrugge interconnector has had enhanced import flows available from October 
2006,  the  Langeled  pipeline  from  Norway  started  flowing  gas  on  1  October  2006,  the  BBL  (Bacton  – 
Balgzand) pipeline from the Netherlands was commissioned on 1 December 2006, and the Teesside LNG 
(Liquefied Natural Gas) importation project was commissioned in February 2007. 

The GB downstream gas market consists of Gas Transporters who operate the pipe-lines (eg National Grid, 
who  own/operate  the  high  pressure  national  transportation  system,  the  owners/operators  of  eight  regional 
gas distribution networks, plus some other companies); shippers (wholesalers), who buy gas from off-shore 
producers or international markets and arrange with the Gas Transporters for it to be conveyed through pipe-
lines;  and  the  suppliers,  who  market  it  to  final  consumers.  Transporters,  shippers  and  suppliers  must  be 
licensed by the Regulator (OFGEM), and a Gas Transporter is forbidden from holding a shipper or supplier 
licence in order to ensure access for all to the pipeline on a non-discriminatory basis. 

Regulation of the industry 
The Gas Act 1986 established a regulatory regime for the supply of gas through pipes. One of its principal 
features was the setting up of the Office of Gas Supply (OFGAS). OFGAS was an independent regulatory 
body headed by the Director General of Gas Supply who was appointed by the Secretary of State for Trade 
and  Industry.    Its  main  function  was  to  promote  competition.  OFGAS  merged  with  OFFER  (the  office  of 
electricity regulation) in 1999 to form the Office of Gas and Electricity Markets (OFGEM). 

In 2000 the Government transferred the functions of the individual Director-General of Gas Supply (and the 
functions of the Director-General of Electricity Supply) to the Gas and Electricity Markets Authority (GEMA). 
The  Authority  comprises  a  Chairman,  Chief  Executive  and  board  with  executive  and  non-executive 
members.  The  Utilities  Act  gave  GEMA  a  primary  responsibility  to  protect  the  interests  of  consumers, 
wherever  appropriate  by  promoting  effective  competition.  GEMA  operates  through  OFGEM,  which  is  its 
“public face”. 

49 

 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



Regulation of gas prices 
OFGEM  (ie  GEMA  operating  through  OFGEM)  regulates  the  level  and  structure  of  the  prices  charged  for 
using the monopoly networks and the quality of service provided by these networks. National Grid currently 
operates  the  high  pressure  National  Transmission  System  (NTS)  and  some  of  the  eight  lower  pressure 
distribution  networks  (DNs).  In  2005  National  Grid  sold  some  of  its  DNs  to  three  other  companies.  The 
separate  ownership  and  management  of  the  gas  distribution  networks  will  enable  Ofgem  to  apply 
“comparative  yardstick  regulation”  –  to  compare  and  contrast  the  performance  of  the  gas  distribution 
companies, and to take into account the standards set by the most efficient when setting future price controls 
for each of the separate DNs’ transportation charges, so enabling all gas consumers to benefit in future price 
control periods. The NTS transports gas from the beach terminals and interconnectors to the DNs and large 
industrial consumers connected directly to the NTS. The DNs distribute gas from the NTS to consumers and 
to Connected System Exit Points (points where one gas network is connected to another gas network). 

National Grid and the GDNs are subject to a regular price control review (typically once every five years) that 
determines  the  allowed  revenue  that  can  be  recovered  through  its  charges.  National  Grid  Gas  (formerly 
“Transco”) is currently subject to the following arrangements: an NTS transmission asset owner (TO) price 
control; NTS system operator (SO) incentives. There are also separate price controls (from April 2004) for 
each of the eight DNs; and a separate price control for metering and meter reading. 

In  April  2000  price  controls  were  lifted  for  British  Gas  Trading’s  domestic  customers  on  direct  debit  tariffs. 
This was followed in April 2001 by a removal of price controls for remaining customers, but a special licence 
condition was introduced ensuring that relative differentials between payment methods were not increased. 
In April 2002 all remaining price controls were lifted including this licence condition. Thus the prices charged 
by suppliers to domestic customers in Britain are determined by competition in the market, and are no longer 
subject to regulatory price control. 

Liberalisation 
The market is now 100% open, with all customers being able to choose a supplier since May 1998. To date, 
over 10 million customers have exercised their right to change supplier. 

2. 

Pricing of gas  

2.1. 

Industrial consumers 

Industrial consumers negotiate individual contracts with their suppliers for either a firm supply of gas or an 
interruptible  supply.  The  unit  price  for  both  supplies  will  include  an  element  for  the  energy  cost  and  the 
transmission and distribution costs. The cost of interruptible gas tends to be lower than for firm gas, however 
this depends on the level of consumption as large consumers tend to pay a lower unit cost. 

2.2. 

Domestic consumers 

Competition  was  introduced  for  domestic  and  smaller  industrial  and  commercial  customers,  i.e.  those 
consuming up to 73 200 kWh (2,500 therms) a year, over a two year period from April 1996. By May 1998, 
all  customers  were  able  to  choose  their  gas  supplier  from  a  list  of  suppliers  licensed  by  the  industry 
regulator,  OFGEM.  At  that  time,  British  Gas,  as  the  dominant  supplier,  were  still  bound  by  supply  price 
controls  set  by  OFGEM.  New  entrant  suppliers  in  the  gas  market  were  not  subject  to  price  controls;  the 
prices they charge to customers are a matter for individual companies to set.  

There  are  three  main  types  of  tariff:  the  credit  tariff  where  customers  receive  quarterly  bills  in  arrears;  the 
direct  debit  tariff,  where  payments  are  usually  made  on  a  monthly  basis,  direct  from  the  customer’s  bank 
account;  and  the  domestic  prepayment  tariff,  where  customers  pay  in  advance  via  a  meter.  In  April  2002, 
OFGEM lifted price controls for all remaining British Gas customers.  

Some companies still offer the traditional method of charging to customers, where a daily standing charge is 
charged separately from the unit charge for each kWh of gas consumed. Many companies have now moved 

50 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 



away  from  this  system  and  now  offer  a  two-rate  unit  charge  without  a  separate  daily  standing  charge. 
Effectively, a company will decide on the level at which the second unit rate will be applied. A customer will 
be charged one rate for the units used up to this level each quarter and will be charged the second unit price 
for all consumption over this level each quarter.  

Since the liberalisation of the gas and electricity markets, many companies offer Dual Fuel tariffs, whereby 
customers who receive both gas and electricity from the same supplier benefit from a discount. This discount 
is usually a fixed amount per quarter or year, and is in addition to any direct debit or prompt-pay discounts 
that the customer may be receiving. 

Over the last 2 years, many companies have introduced fixed or capped tariffs to help customers cope with 
increasing  gas  prices.  These  tariffs  fix  a  price,  or  fix  a  limit  that  the  price  will  not  rise  above,  for  a  certain 
period,  usually  2  years,  Some  suppliers  also  make  particular  tariff  offers  to  low-income  and  vulnerable 
customers. 

3. 

Taxes on gas 

The Climate Change Levy came into effect on 1 April 2001 and applies to the non-domestic use of energy.  
The levy is one of a number of measures in the UK's Climate Change Programme to tackle climate change 
by  encouraging  energy  efficiency  across  business  as  a  whole,  which  will  lead  to  lower  greenhouse  gas 
emissions.    Energy  intensive  industries  receive  an  80%  levy  discount  where  they  have  committed  to 
challenging energy saving targets in negotiated agreements with the Government. On average the Climate 
Change Levy increases the price of a unit of gas by 7%. 

VAT  is  paid  at  a  rate  of  17.5%  for  non-domestic  users  and  5%  for  domestic  users.  VAT  is  deductible  for 
industrial and commercial users subject to the general tax system. 

The UK Government's key mechanism for promoting renewable energy is the Renewables Obligation. This 
requires  electricity  suppliers  to  supply  an  increasing  proportion  of  their  electricity  from  renewable  sources. 
Suppliers  can  meet  their  obligation  by  presenting  Renewable  Obligation  Certificates  (ROCs);  by  paying  a 
buy-out fund contribution equivalent to GBP 30/MWh (in 2002 rising each year with RPI); or a combination of 
the two. ROCs are issued to renewable generators for each 1 MWh of electricity generated; these are then 
bought by supply companies.  Renewable electricity is exempt from the Climate Change Levy and along with 
the Renewables Obligation will provide £1bn of support to the renewables industry a year by 2010. The cost 
of the Obligation is expected to be equivalent to an increase of some 5% in electricity prices by 2010 over 
actual 1999 prices. 

1.  

General framework 

CROATIA 

In  the  gas  market,  Croatia  only  has  one  major  supplier  supplying  gas  to  industrial  consumers  on  the 
transmission  network  and  to  distribution  companies.  The  distribution  companies  supply  gas  to  industrial 
consumers  on  the  distribution  network  and  to  households.  In  2001,  gas  consumers  with  an  annual  gas 
consumption  of  more  than  100  million  Sm3  (Standard  cubic  metre)  and  all  electricity  and  heat  producers 
(electricity  generation  in  power  plants  or  in  CHP  plants)  received  eligibility  status.  Under  Directive 
2003/55/EC, all non-household consumers will be eligible from August 2007. The degree of market opening 
is 30%, but full opening is required under the Gas Act by August 2008. The Energy Agency was established 
in  2004.  It  is  an  independent  organisation  that  carries  out  specific  tasks  under  the  Energy  Act,  with  the 
purpose  of  ensuring  the  transparent  and  non-discriminatory  operation  of  the  electricity  and  natural  gas 
markets in the interests of all participants. It is responsible for setting the prices for the use of electricity and 
natural gas networks, taking decisions in the case of disputes and granting licenses for performing energy-
related  activities.  There  is  1  license  holder  for  the  transmission  of  natural  gas  and  the  operation  of 
transmission  networks,  and  39  license  holders  for  the  distribution  of  natural  gas  and  the  operation  of 
distribution networks. 

51 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas price systems 2006 

2.  

Pricing of gas 

2.1.  

Industrial consumers 



The tariff system for the supply of gas on the transmission network was adopted by the transmission system 
operator  and  approved  by  the  Government  of  the  Republic  of  Croatia  in  September  2002.  For  eligible 
consumers, the principle of negotiated third-party access and free choice of supplier will come into effect on 
1 August 2007, giving them the right to negotiate the gas and network price and enter into a contract with a 
supplier. In practice, however, eligible customers will still be using the tariff system in 2008 for paying gas 
prices  including  network  costs.  At  the  same  time,  a  methodology  has  been  adopted  for  calculating  the 
average  selling  price  for  tariff  consumers  on  the  transmission  network.  The  framework  of  prices  and 
conditions for the use of the transmission network was first published in September 2002, with government 
approval.  Under  the  amended  Energy  Act  of  December  2004,  and  in  line  with  Directive  2003/55/EC,  the 
Energy Agency has published a methodology for defining eligible costs and calculating network tariffs for the 
transmission  system.  Network  tariffs  for  2006  were  calculated  and  published  by  the  Energy  Agency  at  the 
beginning of 2006. The price elements defined by the methodology laid down by the Energy Agency in 2006 
for the use of the network in 2007 are: 
– price of transmission defined by contracted capacity based on maximum daily consumption, 
– price for the balancing of allowed daily consumed gas deviations (surplus/deficit), 
– price for the balancing of non-guaranteed daily consumed gas deviations (surplus/deficit), 
– price for exceeding contracted transmission capacity, 
– price for metering costs, 
– price for system losses of gas. 

The most important factor for setting the gas price is the maximum daily consumption (i.e. load factor). Under 
the network tariffs valid since 2005, the main price factor remains the daily capacity contracted and realised 
on a monthly basis. 

2.2.   Domestic consumers 

In  2002,  natural  gas  distribution  companies  carried  out  the  tasks  of  the  system  operators  of  natural  gas 
distribution networks as a local public service. The number of local distributors has been increasing recently 
(now 39). Some of the public companies are directly owned by the municipality that they supply. In 2005, the 
regulation  of  these  distribution  companies  was  still  entirely  the  responsibility  of  the  local  authorities,  which 
set the basic rules and obligations with concessionary acts. Therefore, not only the prices of natural gas but 
also the structure and elements of the tariff systems differed between suppliers. Prices for the use of the gas 
distribution  network  are  not  yet  presented  separately.  But  work  is  currently  underway  —  as  required  by 
Directive  2003/55/EC  and  led  by  the  Energy  Agency  —  to  produce  a  common  methodology  for  defining 
eligible costs and calculating network tariffs for distribution system operators by the middle of 2007. 

3.  

Taxes on gas 

The natural gas price is subject to value added tax and excise duty, but no CO2 tax is levied. VAT is set at 
22%,  and  is recoverable  for  VAT-registered  companies.  Only  one  distributor  (in  the city  of Zagreb)  has an 
excise  duty  for  network  development.  At  distribution  level,  companies  pay  a  concession  fee  to  local 
government under their concession agreements.  

52 

 
 
 
 
 
 
 
 
 
 
European Commission

Gas prices − Price systems 2006

Luxembourg: Office for Official Publications of the European Communities

2007 — 52 pp. — 21 x 29.7 cm

ISBN 978-92-79-07036-5
ISSN 1830-8732