ACM Report: Grid losses gas distribution network 2021

Regional gas transport networks: compensation costs

The Dutch regulator ACM (Autoriteit Consument & Markt) requested a report about the costs of grid losses for the gas distribution network in 2021.

The role of the ACM is to calculate yearly the total income for the Dutch gas distribution companies. The ACM uses them to set the tariffs gas distribution companies may charge.

For ACM, we have made an estimation of these losses for the gas distribution companies. It includes the costs associated with having to buy these on the gas market. And in addition, an estimation of the fee to compensate the network administrator. For the full report, we refer to our report on the website of ACM (report in Dutch): ACM calculation grid losses gas distribution network

Components costs gas delivery

To calculate the total of the costs associated with gas delivery, we have looked at the following components:

• Commodity costs: related to having to buy the losses on the TTF market, while taking summer-winter spread into account
• Flexibility costs: are necessary to balance hourly intra-day variations
• Transport costs: costs incurred to buy capacity at Gasunie Transport Services (GTS), the national transport network
• Other costs, e.g. for administration, execution, mark up for profit

Gas prices were historically low in 2020 as a result of lower demand due to COVID-19, and in addition to oversupply of LNG.  Using our KySim Monte Carlo price simulator, we have estimated the costs for local gas distribution companies for 2021, whilst allowing for historical price sensitivities and the current market prices. As a result, we expect these commodity costs to be 14,57 €/MWh. With a confidence of 95%, we expect that these costs will not be more than 18,88 €/MWh.