February 14, 2020, Kyiv – Following the results of January 2020, the average weighted marginal price used by the Gas TSO of Ukraine to make payments for positive imbalances was 5791.5 UAH (per 1,000 cubic meters including VAT) and this price corresponds to the market price established in accordance with results of bidding at the energy exchange – 5763.8 UAH (per 1000 cubic meters including VAT).
The provisions of Gas Network Code define the procedure for calculation of marginal prices by the TSO: they should reflect the real cost of purchasing natural gas for each relevant day and take into account the actual cost of performing balancing by the Operator.
Based on the above-mentioned information, Gas TSO of Ukraine has performed optimization of its portfolio of agreements for the purchase of “blue fuel” and was able to achieve 20% reduction in the cost of natural gas that was purchased and used to meet balancing needs in January 2020.
So, actual costs of the TSO for balancing for each gas day in January 2020 were reduced. Therefore, in order to meet requirements of the legislation, it was necessary to take into account the updated amounts of costs when calculating marginal prices and when determining the final cost of daily imbalances for each market participant. As a result, the average weighted marginal price to be paid by the TSO for positive imbalances for January 2020 was automatically adjusted from 7277.4 UAH to 5791.5 UAH (per 1000 cubic meters including VAT).
It should be noted that, as of January 2020, Gas TSO of Ukraine has recorded significant amounts of imbalances in the portfolios of market participants. In particular, during the reporting period the total amount of negative imbalances allowed by customers of transmission services became 118 million m3 of gas. Moreover, the amount of positive imbalances has become a record since the introduction of daily balancing – over 280 million m3, which is several times higher than in previous months (December 2019 – 99 million m3, November 2019 – 91 million m3).
It is defined in the Law of Ukraine “On the Natural Gas Market” and the Gas Network Code that customers of transmission services should forecast their clients’ consumption and balance portfolios in order to minimize the needs of the TSO of Ukraine to regulate imbalances. At the moment, all necessary conditions and tools are created so the market participants would be able to balance portfolios on their own.
Therefore, Gas TSO of Ukraine kindly asks all market participants to continue following the principles of balancing and refrain from speculations with the marginal price.
The Gas TSO of Ukraine plans to contact NEURC with a request to check a number of companies suspected at artificially creating positive imbalances, as well as with proposals for changes to the methodology of determination of the marginal price that would take into account stock exchange prices for gas.