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
  • Fuel gas and/or electricity charges or from 1 October 2018, commodity charges
  • Fixed administration fee

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

 

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.

 

Fuel Usage (applies before October 2018)

Fuel gas is used to power the gas turbine compressors at Bacton when gas is flowing from the UK to Belgium and to fire gas heaters at both terminals. Electricity is used to power the electric motor driven compressors at Zeebrugge when gas is flowing from Belgium to the UK. IAA shippers are allocated fuel gas or electricity depending on which direction their gas is being transported. 

A fuel charge, in Sterling, will be payable by any IAA shipper allocated fuel gas on a particular gas day. This will be calculated using the Negative Imbalance Daily Gas Price for that day. An electricity charge, in Euros, is payable by any IAA shipper allocated electricity. This is based on the unit cost of electricity to IUK.

Keeping costs down

We will always aim to manage physical flow to optimise fuel efficiency – and the fuel consumption rates quoted above will typically apply across a fairly wide range of "normal" operating conditions.  

 

Shrinkage (applies before October 2018)

IAA shippers must take system shrinkage into account when making nominations for quantities of natural gas they want transported through the pipeline. Shrinkage is allocated to IAA shippers based on a shrinkage factor applied to their entry allocations. IAA shippers must therefore add/subtract a quantity to/from their entry nominations using the published shrinkage factor to ensure that their intended inputs and outputs are balanced.

Shrinkage Factors

The current shrinkage factors are as follows:

Bacton Entry = +0.50%

Zeebrugge Entry = -0.74%

 

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.

 

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.

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

Commodity Charges to apply in October:

  • Commodity Charge (Bacton) = 0.006938 p/kWh (applies to flow from UK -> BE)
  • Commodity Charge (Zeebrugge) = 0.033826 p/kWh (applies to flow from BE -> UK) 

Commodity Charges 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) 

(Last Updated: 01/10/2018 16:00 UKT)