Alternative options of the introduction of the 'entry-exit' transport tariff model in Ukraine

Yukhymets R. Podolets R.

Economy and Forecasting, 2019, issue 1, 86-108

Abstract: Compliance to the principles of free access to gas networks on a market basis, objectivity reflection of the system's cost, transparency and predictability of market participants requires changes to the tariff setting rules for transportation services. The introduction of the "entry-exit" tariff model is intended to ensure the achieve-ment of new market requirements and the establishment of common European rules for conducting economic activities. Changing the internal model of gas trans-portation also results in a change in the pricing principles for services provided by the TSO. Henceforth, the charge for transportation services should be taken not for the transport distance, but for the capacity of the entrance and exit points which should be sold publicly and independently. It allows for a more objective consider-ation of the operating costs of servicing the system and providing greater commer-cial variability in ordering system services by business entities. However, European legislation does not define a single standard for the "entry-exit" model. Depending on the technical features of the network and the priorities of the national policy, each country determines the best option for itself. In this paper we used a set of mathematical models to evaluate the implications of the in-troduction of three alternative variants of the tariff model in two variants of work-load GTS (optimistic and pessimistic scenarios): full "entry-exit" model, two market zones, and "entry-exit" model with a long-term reservation. The results of the calculations were compared with the baselane scenario, which does not involve a change in the market model and gas transit is carried out in accordance with the terms of long-term contracts of 2009. In general, changing the model for providing transport services in the gas market should lead to fundamental institutional transformations of contractual relations between all market actors and the principles of market functioning.

Date: 2019
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