Tariff calculation method
The tariff for transmission services No 4 of the Gas Transmission Operator Gaz-System S.A. has been drawn up in compliance with the provisions of the Energy Law of 10 April 1997 and the Ordinance of the Minister of Economy concerning detailed principles of setting and calculating tariffs and the principles of settlement in trade in gas.
The tariff for transmission services No 4 of the Gas Transmission Operator Gaz-System S.A. has been designed in a manner that ensures:
- covering justified costs within the scope set out in Article 45 of the Energy Law;
- protecting the customer's interest against unreasonable price levels;
- elimination of cross-subsidizing.
The rates of transmission fees were calculated based on:
- justified costs, broken down into fixed and variable costs;
- contracted capacity for the tariff duration and planned gas transmission volumes.
The justified costs include the costs of transmission activity, including in particular:
- costs by category (within the meaning of the Accounting Act), i.e.:
- materials and energy (including gas purchased to meet the Operator's own consumption and imbalance deviations);
- external services (including: repairs and maintenance, lease of storage capacities for the Operator's needs);
- taxes and charges;
- payroll;
- employee benefits;
- depreciation;
- other;
- justified return on capital employed in the transmission activity.
The justified costs for calculation of prices and rates are planned by the Gas Transmission Operator Gaz-System S.A., and then validated by the Chairman of the Energy Regulatory Office at the tariff application approval stage.
Fixed, variable and subscription fee costs are determined by the Operator for individual tariff groups according to the cost allocation rules adopted by the Company (and approved by the Chairman of the Energy Regulatory Office),remaining unchanged for a given tariff period.
Justified return on capital employed in the transmission activity
The Tariff for Gas Transmission Services No. 4 Gas Transmission Operator GAZ-SYSTEM S.A. was established with the assumption of return on capital employed in transmission activity on a level of approx. 9% (nominally).
The return has been calculated on the basis of WACC (weighted average cost of capital).
The basic specifications harnessed in calculating the WACC that were adopted by the Decision of the President of the Energy Regulation Office are:
- Risk free rate of return Rf – 5.50%,
- Premium for shareholders equity (rm - rf) – 4.64%,
- Beta coefficient βE – 0.62 corresponding to asset beta on a level of 0.57
- Loan capital cost based on WIBOR 3M equal to 4,20%.
The Regulatory Asset Base in the meaning of the net value of fixed assets involved in transmission activity and the net working capital of the Gas Transmission Operator GAZ-SYSTEM S.A. was subject to compensation
The tariff structure
In accordance with the tariff for transmission services No 4, the Gas Transmission Operator Gaz-System S.A. imposes the following charges at the transmission system exit points:
- fixed charge (depending on the contracted capacity)
- variable charge (depending on the volume of gas transmitted);
- subscription fee.
The subscription fee has been determined on the basis of the justified cost of sale to the Customer, including in particular: the reading of metering systems; issuing invoices, calculating and charging payments due for the gas delivered, as well as activities related to inspection of metering systems, adhering to contractual terms and observing the correctness of settlement. Revenue from subscription fees makes up a relatively small part of the total revenue of the Company.
Since the Company was established, Gaz-System aims that the structure of justified costs recovered through the fixed and the variable charge would reflect the real ratio of fixed to variable costs incurred by the Company, which is more than 90/10. In accordance with the tariff for transmission services No. 4 the fixed and the variable charge is reflected by the ratio of 80/20. The adopted ratio has been determined by decision of the Chairman of the Energy Regulatory Office.