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 plays a strategic role in the Polish economy. We are responsible for natural gas transmission and operate the most important gas pipelines in Poland. As part of the 2015-2025 investment programme, GAZ-SYSTEM plans to build over 2000 km of new gas pipelines in western, southern and eastern parts of Poland. Further development of the national transmission network, including the construction of new gas pipelines making part of the North-South Gas Corridor, as well as the construction of interconnections with the neighbouring countries, will strengthen Poland’s energy security and make an important contribution to the development of the European transmission system.

The Company is implementing one of the most important infrastructural projects in Poland – the Baltic Pipe project, which consists in the construction of a bidirectional offshore gas pipeline connecting Poland and Denmark and the expansion of the local transmission network.

GAZ-SYSTEM also owns Polskie LNG, the operator of the President Lech Kaczyński's LNG Terminal in Świnoujście.


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