DTe Approves Implementation Plan for Peak Supply by the GTS after Amendments

The Office of Energy Regulation (DTe) after consultation with market players, has approved the implementation plans submitted by Gas Transport Services (GTS) for the peak supply of gas for the next two winters (2004/2005 and 2005/2006). These implementation plans must ensure that consumers have the certainty that they will be supplied with gas even on days on which the outside temperature is below -9°C. A reliable energy supply is essential for society. By concentrating the organisation of peak supply with a single party, the Minister of Economic Affairs wishes to guarantee the security of the supply of gas during the coldest days of the year.

GTS has been given responsibility for peak supply pursuant to a Order-in-Council in relation to security of supply. In its implementation plans, GTS indicates how the company intends to fulfil this duty and what costs will be passed on to energy suppliers, and therefore indirectly to consumers, for this. In assessing the implementation plans, DTe assessed whether GTS has complied with the provisions of the Order-in-Council and whether this has been implemented in a reasonable manner. DTe has also taken into account the fact that GTS will not be able to purchase the necessary resources for peak supply (reserving of production capacity) for the next two winters through a public procurement procedure. DTe has approved GTS's implementation plans following a number of amendments:

· GTS has provided better substantiation for the various tariffs for production capacity. This clarifies which costs relate to peak supply;

· GTS must reimburse energy suppliers for any additional transmission turnover which may arise due to the centralised organisation of peak supply through GTS;

· GTS must consult with the regional gas transmission companies on their contribution to the implementation of peak supply.

DTe based its assessment on the present text of the Order-in-Council. For this reason the objections raised by market players to the contents of the Order-in Council as such were not considered. The Ministry of Economic Affairs has announced that it will evaluate the Order-in-Council at the end of 2006, so that the present Order-in-Council will still apply to the winter of 2006/2007. In a letter to the Minister, DTe urged the Minister to commence the valuation earlier, so that any amendments to the Order-in-Council can be implemented without transitional measures.