New Mechanism ensuring cost neutrality of balancing measures of GAZ-SYSTEM

The “Mechanism ensuring cost neutrality of balancing measures of Gas Transmission Operator  GAZ-SYSTEM S.A.” (“Mechanism”) was approved by decision of the President of the Energy Regulatory Office of 27 May 2020. The document sets out the calculation methods for neutrality charges for balancing.

Key amendments to the existing Mechanism concern credit risk management. The purpose of the new provisions is to reduce GAZ-SYSTEM’s risk exposure and to protect the interests of gas market players and customers against entities which do not guarantee an appropriate level of stability and financial credibility. These will also safeguard market players against costs of ensuring financial neutrality of balancing which are generated by entities with insufficient financial credibility. The provisions have been amended and elaborated on to reflect the accumulated experience of working with others in the market and takeaways from the market consultations carried out in March and April this year.

The principal amendments contained in the new Mechanism are:

• Forms and amount of financial security to be established by the Shipper, i.e. moving away from insurance guarantees and restricting the acceptable forms of security to bank guarantees, promissory notes and sureties;

• Minimum amount of security set at PLN 150,000 to be applicable starting from the new gas year, i.e. 1 October 2020 at 6:00 am;

• Conditions for satisfying the operator’s claims from financial security;

• Validity periods of financial securities;

• Rules for decreasing or increasing the level of required financial security (including, among other things, Section V.8 of the Mechanism setting out the amount of required financial security on resumption of transmission services following a period of suspension); and

• Change of the sending time of a request for supplementing financial security; a request will be sent to the Shipper by 3:00 pm instead of the current 1:00 pm.

Under the decision of the President of the Energy Regulatory Office, the approved “Mechanism ensuring cost neutrality of balancing measures of Gas Transmission Operator GAZ-SYSTEM S.A.” enters into force on 1 June 2020 at 6:00 am.

For the text of the Mechanism as approved by the President of the Energy Regulatory Office by decision No. DRR.WRG.745.1.2020.ŁWę we refer to the Customer zone.

GAZ-SYSTEM is a strategic company for the Polish economy. It is responsible for the transmission of natural gas, manages the most important gas pipelines in Poland and owns the President Lech Kaczyński LNG Terminal in Świnoujście.

As part of the 2015-2025 investment programme, GAZ-SYSTEM is constructing over 2000 km of new gas pipelines in the western, southern and eastern parts of Poland. Over a dozen new gas pipelines are under construction within the North-South Gas Corridor and the compressor station in Kędzierzyn Koźle, as well as interconnections with Lithuania and Slovakia. Onshore gas pipelines are planned to connect the planned FSRU floating terminal in the Gulf of Gdansk with the national transmission system. The LNG Terminal in Świnoujście is also being extended, as a result of which the regasification capacity of this facility will be increased by more than a half.

The company is also implementing one of the most important infrastructural projects in the country - the Baltic Pipe project which consists in the construction of a two-way offshore gas pipeline connecting Poland and Denmark, expansion of the local transmission network and three gas compressor stations.


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