Gas market on the Finnish-Baltic region has faced major changes in terms of gas importing routes, but also in terms of gas commodity price levels and quite uncertain operating environment. Also, new Floating LNG Terminal will be connected to the regional infrastructure increasing the entry capacity to serve the regional gas market participants and end consumers. Due to these factors, the operation environment of the market participants is changed.

Balticconnector interconnection point plays important role what comes to gas deliveries between Finland and Baltic States. Gasgrid Finland and Elering have made an assessment on the two possible capacity allocation mechanims which can be applied at Balticconnector – currently applicable Implicit Capacity Allocation (ICA) mechanism based on confirmed nominations and Auction mechanism according to the principles defIned by the EU Regulation (Commission Regulation (EU) 2017/459 of 16 March 2017 establishing a network code on capacity allocation mechanisms in gas transmission systems, ”Capacity Network Code, CAM NC”).

The assessment made by the TSOs can be found here.

The TSOs invite market participants to provide opinions which capacity allocation mechanism option is the preferred one from their operation point of view. The TSOs recommend to take a look on the assessment material prepared by the TSOs which may provide food for thoughts. The TSOs also add some questions to which the TSOs are requesting the market participants to touch upon in their opinions.

• What is the preferred option: Implicit Capacity Allocation mechansim or Auction mechansim, and why?
• How do the market participants, especially shippers and potential Floating LNG terminal users evaluate the risk of congestion at Balticconnector and its possible impacts on their decisions on utilizing the terminal?
• Which option is more cost-effective for the gas consumers: auction may lead to smaller risk premium than the ICA, but increased transmission charges and may lead to challenges for the operation of the common entry tariff zone where one of the fundamentals is that there are no tariffs at internal interconnection point. On the other hand, ICA may lead to increased risk premium, but smaller transmission costs?

Gasgrid Finland and Elering will be pleased to receive written opinions to the following e-mail addresses: customerservice@gasgrid.fi and erkki.sapp@elering.ee.

Parties providing comments must separately notify whether their comment or part of it is confidential information that may not be published on the websites of the TSOs. The TSOs have the right to send opinions given to the relevant national regulatory authories (NRAs). Please provide your written opinions in English.

The opinions shall be submitted by Tuesday 23rd of August at 23:59 EEST.

For further information, please contact:
Esa Hallivuori, Head of Gas Market Unit of Gasgrid Fnland Oy, esa.hallivuori@gasgrid.fi
Erkki Sapp, Head of Energy Market Department of Elering AS, erkki.sapp@elering.ee