Balance management

Imbalance price calculation methodology

According to the natural gas act §16 (1) 41, system operator on the basis of data relating to balance determination and other relevant data, submits invoices to the balance provider for each calculation period regarding the charges payable for the balancing gas purchased by the balance provider and any other charges payable to the system operator by virtue of legislation or contract.

Elering AS and AS „Conexus Baltic Grid’s“ Common Regulations for the Natural Gas Balancing of Transmission System, approved by Estonian Competition Authority with decision nr 7-10/2019-007 30.09.2019, which include the imbalance gas price and neutrality charge calculation methodology to be applied in the Common Balancing Zone of Estonia and Latvia.

The marginal sell price (MSP) for gas day D shall be equal to the lower of:

• the lowest price of any sales of title products in which a TSO was involved at relevant trading platforms in respect of gas day D;
• the weighted average price of all trades in title products at relevant trading platforms in respect of gas day D, multiplied by the MSP incentive factor;

The marginal buy price (MBP) for gas day D shall be equal to the greater of:

• the highest price of any purchases of title products in which a TSO was involved at relevant trading platforms in respect of gas day D;
• weighted average price of all trades in title products at relevant trading platforms in respect of gas day D, multiplied by the MBP incentive factor;

From 01.12.2021 the MBP incentive factor shall be 1,10 and the MSP incentive factor shall be 0,95 (Both factors may be re-adjusted by the TSO during the year, with a minimum notice time of three calendar days before the first gas day, for which the adjusted MBP and MSP incentive factors shall come into effect)

According to the Common Regulations of the Common Balancing Zone and to ensure the financial neutrality of system operators, from 2020 a separate neutrality charge component shall be applied taking into account the following costs and revenues:

• costs and revenues of TSO arising from daily imbalance charges;
• costs and revenues of TSO arising from the balancing actions;
• administrative costs of TSO arising from the balancing actions;
• other costs and revenues of TSO related to the balancing activities undertaken by the TSO.

Neutrality charge shall be applied to network users portfolio based on the sum of network users offtakes (including domestic exit, cross-border exit and VTP).

More detailed description of the methodology can be found in Section 8 of the Common Regulations.

Imbalance gas prices can be found: https://dashboard.elering.ee/et/gas-balance/prices

Imbalance gas prices and methods for the determination of the price of balancing gas approved by the Competition Authority with their decision No 5.1-25/08-001 of 20.03.2008 (in Estonian) and applicable until 2020 are available in the attachment.