The cost of transporting gas through the Interconnector

Our current Charging Statement outlines the charges applicable to IAA shippers.

These charges are consistent with the principles outlined in IUK’s Charging Methodology (CM). The CM is approved by both Ofgem and CREG.

If you would like to be notified when IUK updates its charges, please click here to register.

IAA shippers pay for transportation services purchased by way of a monthly charge comprising: 

  • Capacity charges
  • Commodity charges
  • Fixed administration fee

Deducted from this will be any buy-back costs. In exceptional circumstances, imbalance charges may also apply.  

 

Commodity Charge

IUK uses natural gas and electricity within the IUK transportation system as fuel gas for compressors and heaters at Bacton, to replace gas lost though shrinkage and to power the compressors at Zeebrugge.

IUK sources the natural gas and electricity through regular competitive tenders and recovers the cost of consuming the energy by imposing a commodity charge on Shippers based on their entry allocations (see IAC Section F paragraph 9).

The relevant Charging Statement sets out the formulae for calculating the unit costs to apply in each month.

 

Commodity Unit Costs to apply in November:

  • Commodity Unit Cost (Bacton) = 0.007703 p/kWh (applies to flow from UK -> BE)
  • Commodity Unit Cost (Zeebrugge) = 0.049208 p/kWh (applies to flow from BE -> UK) 

 

Commodity Unit Costs to apply in December:

  • Commodity Unit Cost (Bacton) = 0.006913 p/kWh (applies to flow from UK -> BE)
  • Commodity Unit Cost (Zeebrugge) = 0.032570 p/kWh (applies to flow from BE -> UK) 

 

(Last Updated: 05/11/2018 16:30 UKT)

 

Purchasing capacity

Where a shipper has successfully bid for capacity in an auction, they will incur capacity charges.

IAA shippers purchase capacity through auctions on the PRISMA auction platform. PRISMA will apply the relevant auction mechanism, either ascending clock or uniform price, in accordance with the rules outlined in the Capacity Allocation Mechanisms network code. Shippers will be charged the clearing price unit cost of their successful bid multiplied by the number of units purchased, per auction.

Reserve price

The reserve price for these auctions will be set by IUK to ensure equitable and non-discriminatory treatment across all shippers, in accordance with its licence conditions.

Please refer to the relevant Charging Statement for reserve prices.

 

Balancing obligations

IAA shippers have an obligation to balance their system inputs and outputs on an hourly basis. In exceptional circumstances a small imbalance may arise. Should a shipper's imbalance position exceed the pre-agreed allowed tolerance, the imbalance will be cashed out by IUK. This means the imbalance will be reset to zero and charges or rebates applied, as appropriate.

Charges and rebates

Where the shipper has offtaken more gas at one point (either Bacton or Zeebrugge) than it has delivered at another, that shipper will owe IUK for the cost of replenishing the stocks of gas within the pipeline. When cashed out, they will be invoiced for the cost of this gas. This is known as a Negative Imbalance Charge.

Where the shipper has delivered more gas than it has offtaken, IUK will be holding an excess of gas within the pipeline. The cash-out will result in a Positive Imbalance Charge. This will always take the form of a rebate from IUK to the relevant shipper.

 

Various administrative and legal costs arise during the course of operations. In addition IUK incurs costs providing access to ISIS®, its gas management tool. Shippers are required to contribute towards these in the form of a monthly administration fee.

ISIS® is a web-based platform provided to IAA shippers to nominate their gas flow requirements. The system processes data received from shippers in line with the operational rules outlined in the IAA. It allows IUK to communicate with shippers and the operators of adjacent gas transportation systems to ensure that gas is transported as required by shippers.