Northern Ireland Natural Gas Pass-through costs explained

GMO Northern Ireland

The Northern Ireland gas transmission network has operated a postalised charging regime since 2005. The regime (also known as a ‘postage stamp’ charging regime) is designed to ensure that the unit price for transporting gas along the transmission network is the same for each Supplier, irrespective of where the gas is off-taken for final use. There are four TSOs in Northern Ireland, each operating a distinct part of the NI transmission network assets. Premier Transmission Limited (PTL), Belfast Gas Transmission Limited (BGTL), West Transmission Limited (WTL) and GNI (UK) Limited. PTL, BGTL and WTL are all subsidiaries of Mutual Energy Limited. The four TSOs have implemented a contractual joint venture arrangement to operate the market facing commercial arrangements in Northern Ireland, known as the Gas Market Operator for Northern Ireland or GMO NI.  The administration of charging is performed by GMO NI on behalf of the TSOs

UK Transmission Capacity and Commodity

Capacity charges consist of charges for Entry, Exit and credits payable for constrained Liquefied Natural Gas (LNG).  The National Transportation System (NTS) is operated by National who hold the Grid Gas Transporter Licence.  NTS Transportation Charges are normally updated on 1 April and 1 October of each year.  Transportation charges are derived in relation to price control formulae which are set by Ofgem, the gas and electricity market regulator, for the transportation of gas.  These formulae determine the maximum revenue National Grid NTS can earn from the transportation of gas.

Annual Exit Capacity

Gas suppliers delivering gas in Northern Ireland are treated as utilising capacity in the Scotland to Northern Ireland Pipeline (SNIP), the Belfast Gas Transmission Ltd. pipeline (BGTL) and the GNI (UK) transmission pipeline systems. In relation to the utilisation by gas suppliers of Exit Capacity in these transmission pipeline systems, Postalised Exit Capacity charges occur in accordance with the terms of the Northern Ireland Network Gas Transmission Code (NINGTC).  For the purposes of recovering the Postalised Exit Capacity charge from gas suppliers, a commodity charge on gas suppliers on a monthly basis is made by the Distribution Network Operator (DNO). The DNO forecasts that commodity charge using the total volume forecast for the relevant Licence Area (Belfast, Ten Towns and Gas to the West) used to determine the NI Transmission Networks tariffs. This Postalised Exit Capacity charge is charged to gas suppliers on the basis of their monthly distribution commodity and is subject to an annual reconciliation using actual distribution volumes.

Natural Gas Conveyance

Phoenix Natural Gas Limited (PNG) operate the distribution network in the Greater Belfast and Larne areas. Firmus energy are licensed for the conveyance of gas within the towns along the route of North West and South North Pipelines. firmus Energy is committed to the construction of distribution networks in the towns of: Ballymena, Ballymoney, Coleraine, Londonderry, Limavady, Antrim, Armagh, Banbridge, Craigavon and Newry.  SGN Natural Gas are licensed to conveyance gas within the West distribution licensed area.

Shrinkage

Shrinkage refers to the gas which is lost from the transportation network .  A Shrinkage Factor is published annually by each DNO and is used to determine the shrinkage attributable to gas flows in the System on each Day in that Gas Year.