Fluxys Belgium Sa Class D · EURONEXT:FLUX
Fluxys Belgium Sa Class D — Investor Presentation (October 2018)
72 slides from Fluxys Belgium Sa Class D's investor presentation, Oct 24, 2018
Slide 1: Info Session 24 October 2018
INFO SESSION Wednesday 24 October 2018 | 14:00 – 17:00 1 Fluxys Belgium - document for information purposes only
Slide 2: Fluxys Belgium - document for information purposes only 24 October 2018
2 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 3: Online solutions for info sessions
ONLINE SOLUTIONS FOR INFO SESSIONS Welcome to our stakeholders joining on-line! • Individual invitations => connectivity test before the session • Presentation sharing • Room Audio sharing • Interactive chat-room with the moderator • Recording of whole online session 3 Fluxys Belgium - document for
Slide 4: Agenda
Agenda 1. Transmission tariffs for period 2020 – 2023 2. CREG consultation 3. Storage tariffs for period 2020 – 2023 Coffee Break 15.30 – 15.45 4. Changes in Access Code for Transmission 5. VIP update 6. Planning and closing remarks 4 Fluxys Belgium - document for information purposes only 24 Octobe
Slide 5: Opening address by Arno Büx
Opening address by Arno Büx Chief Commercial Officer - Fluxys Belgium 5 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 6: Agenda
Agenda 1. Transmission tariffs for period 2020 – 2023 2. CREG consultation 3. Storage tariffs for period 2020 – 2023 Coffee Break 4. Changes in Access Code for Transmission 5. VIP update 6. Planning and closing remarks 6 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 7: Disclaimer
DISCLAIMER This presentation has been prepared by Fluxys Belgium SA/NV solely within the framework of the ongoing consultation. It aims at providing information on possible future tendencies and on main expected evolutions. Numbers and parameters contained in this document are indicative best estima
Slide 8: Topics
TOPICS • CONTEXT & CONSULTATION PROCESS • NEW ELEMENT: TARIFF NETWORK CODE • TARIFF DESIGN 2020-2023 • INDICATIVE REFERENCE TARIFFS 8 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 9: Consultation till 7 Dec 2018
CONSULTATION till 7 Dec 2018 • In accordance with the TAR NC, Fluxys Belgium is organizing a consultation over the transmission tariffs for the next tariff period (2020-2023) • The consultation runs from 8 Oct 2018 until 7 Dec 2018 COB − Consultation document is available on our website: http://www.
Slide 10: General process timeline
GENERAL PROCESS TIMELINE Tariff methodology – CREG Public Final Tariff Formal Consultation Discussions with methodology discussions with by CREG CREG approval before CREG/Fluxys (19/04 – 17/05) end of June Jan/Feb 2018 Mar 2018 Apr/May 2018 June 2018 Approved on 28/06 Tariff design 2020-2023 & TAR N
Slide 11: Tariff methodology - CREG
TARIFF METHODOLOGY - CREG The tariff methodology sets the main parameters for determination of the allowed revenue for the upcoming 4 years tariff period: to be covered by tariffs Total “envelope” Fair Margin and cost of debt Input for Tariff Depreciations Design Operational Expenses - Utilization R
Slide 12: New EU regulation: Tariff Network Code
NEW EU REGULATION: TARIFF NETWORK CODE • EU regulation tariff network code (TAR NC): − Defines a methodology to derive tariffs (Capacity Weighted Distance) – not mandatory but must at minima serve as a reference to compare to − Lists the elements/justifications the consult on, simplified tariff mode
Slide 13: TAR NC consultation and other parallel consultations
TAR NC CONSULTATION AND OTHER PARALLEL CONSULTATIONS • TAR NC Art. 26 sets the modalities and publication requirements of the consultation to be organized prior to submitting the tariff proposal to CREG • Within one month following the end of the consultation, Fluxys Belgium will publish the consult
Slide 14: Topics
TOPICS • CONTEXT & CONSULTATION PROCESS • NEW ELEMENT: TARIFF NETWORK CODE • TARIFF DESIGN 2020-2023 • INDICATIVE REFERENCE TARIFFS 14 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 15: TAR NC - Reminder highlights: reference price
TAR NC - REMINDER HIGHLIGHTS Main principles Reference price • Reference Price Methodology (RPM) = method to calculate Reference price • Reference price = price for firm capacity product with duration of 1 year − Used to derive reserve prices − Applicable at both IP’s and non IP’s points • Reserve p
Slide 16: TAR NC - Reminder highlights
TAR NC – REMINDER HIGHLIGHTS Main principles Reference Price Methodology (RPM) TAR NC Methodology = Capacity Weighted Distance (CWD) If other method selected: comparison with the chosen methodology must be provided 2 types of tariffs Transmission tariffs Non-transmission tariffs must be capacity bas
Slide 17: TAR NC - Principles of CWD RPM
TAR NC - REMINDER HIGHLIGHTS Principles of CWD RPM CWD Method: share of the allowed revenue to be collected from each Entry or Exit points should be proportionate to its contribution to the cost of the system’s capacity and to the distance between it and all Exit points or all Entry points. 17 Fluxy
Slide 18: TAR NC - Discounts & Equalization
TAR NC - REMINDER HIGHLIGHTS Discounts & Equalization • TAR NC foresees possibility of ‘discounts’, some are mandatory: − At Entry-points-from/Exit-points-to storage facilities: the discounts apply to reference prices, and by default must be no less than 50%. − At Entry-points-from LNG facilities, a
Slide 19: TAR NC - Seasonal Factors
TAR NC - REMINDER HIGHLIGHTS Seasonal Factors Main principles Mandatory calculation method for Seasonal Factors, Multipliers and discouts on interruptible Mandatory caps & floors for Seasonal Factors (SF) and Multipliers (M) : 1 < SF x MM < 1,5 1 < SF x MD < 3 19 Fluxys Belgium - document for inform
Slide 20: TAR NC - Cross-subsidization index
TAR NC - REMINDER HIGHLIGHTS Cross-subsidization index Minimise cross-subzidiations in tariffs between intra-system and cross-system network uses • Cost allocation assessments • Test on capacity: compare revenues collected on capacity charges for intra-system and cross-system network uses, taking in
Slide 21: Topics
TOPICS • CONTEXT & CONSULTATION PROCESS • NEW ELEMENT: TARIFF NETWORK CODE • TARIFF DESIGN 2020-2023 • INDICATIVE REFERENCE TARIFFS 21 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 22: Tariff design: allowed revenue & regulatory account
TARIFF DESIGN ALLOWED REVENUE & REG. ACCOUNT • The definition of the total allowed revenue (composed of operating costs, depreciations, fair margin, cost of debt and use of the regulatory account) is set in accordance with CREG Methodology • Thanks to low interest rates, efficiency gains and sales e
Slide 23: Tariff design: allowed revenue
TARIFF DESIGN ALLOWED REVENUE => The allowed revenue is significantly decreasing mainly thanks to: − lower OPEX (thanks to efficiency efforts made and supplementary targets as set in CREG Methodology); − a maximum target level of the regulatory account at the end of the period of 100M€ (i.e. decreas
Slide 24: Tariff design: RPM
TARIFF DESIGN RPM • TAR NC defines two categories of services: Transmission and non transmission services − Non transmission: no changes in methodology => stable tariffs Share of Non Transmission services in Auth. Rev. − Transmission: RPM to be proposed • Proposed Reference Price Methodology (“RPM”)
Slide 25: Tariff design: E/E split, equalization and discounts
TARIFF DESIGN E/E split, Equalization and Discounts • The proposed CWD RPM is applied with an Entry/Exit split of 33/67; − Close to current E/E split: avoid unnecessary fluctuations of Entry Tariffs and related contractual step-out • Tariff profile within the period is based on indexation: tariffs o
Slide 26: Tariff design: forecasted contracted capacity
TARIFF DESIGN Forecasted Contracted Capacity • Forecasted contracted capacity at Entry and Exit points are showing a decreasing trend due to the gradual end of LT contracts and the partial replacement by ST bookings: • Estimation of forecasted contracted capacity is becoming more and more difficult
Slide 27: Topics
TOPICS • CONTEXT & CONSULTATION PROCESS • NEW ELEMENT: TARIFF NETWORK CODE • TARIFF DESIGN 2020-2023 • INDICATIVE REFERENCE TARIFFS 27 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 28: Indicative expected reference tariffs (2020) - Entry
INDICATIVE EXPECTED REFERENCE TARIFFS (2020) - ENTRY • CWD Method with an E/E split of 33/67 leads to a small increase of the Entry capacity tariffs (expected for Loenhout): Discount on Entry storage: 50%, no discount on Entry LNG Tariffs for 2019 are a forecast based on an indexation of 1,60%. Last
Slide 29: Indicative expected reference tariffs (2020) - Exit IPs
INDICATIVE EXPECTED REFERENCE TARIFFS (2020) - EXIT IPs • … and a decrease of the Exit capacity tariffs at IPs: 29 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 30: Indicative expected reference tariffs (2020) - Domestic Exit
INDICATIVE EXPECTED REFERENCE TARIFFS (2020) – Domestic EXIT • … and a slight decrease of tariffs for HP Domestic Exits: • Meaning for end-customers directly connected to Fluxys Belgium’s network a very limited increase when combining Entry and Exit tariffs − after a ~20% decrease when compared to t
Slide 31: Indicative 2020 domestic tariffs benefitting from past reductions
Indicative 2020 Domestic Tariffs are still benefitting of the successive tariff reductions of the past €/kWh/h/year 70% Entry + Exit HP tariffs 2,2 -4,5% 2,0 -5,0% -7,0% inflated 1,8 -20% -19% 1,6 +0,6%+ infl 1,4 1,2 1,0 0,8 0,6 0,4 0,2 0,0 2012 2013 2014 2015 2016 2017 2018 2019 2020 31 Fluxys Belg
Slide 32: Commodity tariff
COMMODITY TARIFF • Fluxys Belgium applies a commodity fee (the so-called Energy In Cash) which will still be charged to reflect the limited variable costs related to gas transmission. • This fee is kept unchanged compared to the currently applicable tariff, i.e. 0,08% of the allocated quantities at
Slide 33: Cost allocation assessment
COST ALLOCATION ASSESSMENT • As requested by Article 5 of TAR NC, the TSO must perform a Cost Allocation Assessment (“CAA”) relating to the transmission services revenue to be recovered by capacity-based transmission tariffs (based on the cost drivers of the chosen methodology); • The CAA indicates
Slide 34: Indicative expected tariffs non-transmission services
INDICATIVE EXPECTED TARIFFS NON-TRANSMISSION SERVICES • The indicative tariffs for non-transmission services are expected to remain stable (less than 1% increase compared to 2019 tariffs indexed): • Medium Pressure Service (“MP”) and Dedicated Pressure Reduction Service (“DPRS”) merged into one sing
Slide 35: Share of Fluxys Belgium's tariffs in the final customer invoice
SHARE OF FLUXYS BELGIUM’s TARIFFS IN THE FINAL CUSTOMER INVOICE (source CREG 2018) • The share of the Fluxys Belgium transmission costs in the gas invoice of the industrial end users directly connected to the network represent about 2 to 3% of the amount on the total invoice. • The part of the trans
Slide 36: Wrap-up
Wrap-up • TAR NC entered into force • Thanks to efforts made (efficiency, sales, …) and low interest rates, − Total Authorized revenue is decreasing, − 240M€ can be given back to tariffs for the next period » 100M€ remaining for next period to contribute to, at least partly, dampen the effect on fut
Slide 37: Agenda
Agenda 1. Transmission tariffs for period 2020 – 2023 2. CREG consultation 3. Storage tariffs for period 2020 – 2023 Coffee Break 4. Changes in Access Code for Transmission 5. VIP update 6. Planning and closing remarks 41 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 38: Consultation on discounts, multipliers and seasonal factors
Consultation on discounts, multipliers and seasonal factors BRUSSELS, FLUXYS BELGIUM Tom Maes 24 October 2018 Fluxys Belgium - document for information purposes only 42
Slide 39: Table of content
Table of content 1. Legal basis 2. Multipliers and seasonal factors for non-yearly products 3. Discounts for interruptible capacity products 4. Timing 43
Slide 40: Legal basis = Article 28 of TAR NC
Legal basis = Article 28 of TAR NC Who? National regulatory authority’s responsibility Whom? Consultation with NRAs of all directly connected Member States and the relevant stakeholders What? Multipliers, seasonal factors and discounts When? At the same time as the final consultation of art. 26(1) H
Slide 41: Multipliers and seasonal factors
Multipliers and seasonal factors Multiplier = 1,45 for non-annual products J F M A M J J A S O N D Month / Day / Within-day 1,75 1,55 1,30 0,95 0,65 0,50 0,50 0,50 0,65 1,05 1,40 1,60 Quarterly Q1 = 1,53 Q2 = 0,70 Q3 = 0,55 Q4 = 1,35 Average over the year = 1,48 (< limit TAR NC) 45
Slide 42: Discounts
Discounts 10% discount for interruptible capacity No discounts in application of art. 9(2) 46
Slide 43: Timing
Timing May 2019 January 2019 CREG publishes tariffs 2020-2023 7 December 2018 Fluxys Belgium submits tariff Consultation ends proposal to CREG https://www.creg.be/fr/consultations-publiques/projet-de-decision-sur-les-rabais-multiplicateurs-et-facteurs-saisonniers 47
Slide 44: CREG
CREG 7 Pa = qd fl lo Commission for Electricity and Gas Regulation
Slide 45: Agenda
Agenda 1. Transmission tariffs for period 2020 – 2023 2. CREG consultation 3. Storage tariffs for period 2020 – 2023 Coffee Break 4. Changes in Access Code for Transmission 5. VIP update 6. Planning and closing remarks 49 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 46: Consultation on storage tariffs for 2020-2023
CONSULTATION ON STORAGE TARIFFS FOR 2020-2023 • Storage tariffs for tariff period 2020-2023 CONSULTATION • From 23rd October to 22nd November 2018 • All information on Fluxys Belgium website TARIFF TARGET • Stable tariffs - Tariffs 2020-2023 = Tariffs 2019 indexed • Lower allowed revenue • Lower ope
Slide 47: Fluxys Belgium - document for information purposes only 24 October 2018
51 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 48: Agenda
Agenda 1. Transmission tariffs for period 2020 – 2023 2. CREG consultation 3. Storage tariffs for period 2020 – 2023 Coffee Break 4. Changes in Access Code for Transmission ➢ Simplification of services ➢ Substitution services ➢ Domestic entry services ➢ Technical adjustments 5. VIP update 6. Plannin
Slide 49: Simplification of services
SIMPLIFICATION OF SERVICES Aim of our SIMPLIFY project is to: • Streamline channels along which products & services are sold • Enable more short term bookings • Simplify booking processes for shippers Realized so far Proposal ongoing consultations (#30 & 31) PRISMA becomes our most important sales 1
Slide 50: OCUC and Wheeling subscription through PRISMA
OCUC and Wheeling subscription1 through PRISMA Transfer to PRISMA comes with 2 improvements: • It will be possible to convert entry and exit services into OCUCs or Wheelings on a day-ahead basis • Services newly acquired in the last 15 days will be eligible Implementation of those improvements alrea
Slide 51: Extend offer at PRISMA
1 Extend offer at PRISMA Allocation Sales channel SERVICES Duration method Blaregnies L Eynatten 1 Eynatten 2 Hilvarenbeek L Y, Q, M, Auction IZT DA, WD 's Gravenvoeren Entry and Exit Services on IPs, Virtualys VIPs & LNG Terminals Zandvliet H Zelzate 1 PRISMA Zeebrugge Zelzate 2 ZPT Any duration Ze
Slide 52: Extend offer at PRISMA
1 Extend offer at PRISMA QCS LH QCS LH • Year and multi-year products: subscription • No longer subscription window window (written) • FCFS bookings for min 1 gas day • After subscription window: min 1 gas day (EBS • PRISMA1 and written) Allocation Sales channel SERVICES Duration method PRISMA FCF
Slide 53: Enable more short term bookings
2 Enable more short term bookings Enlarge window for IR sales through overnomination AS IS TO BE • Day ahead IR capacity offered through auctions during one • “Overnomination” principle allows to sell IR after the IR auction single IR auction (17h30-18h) • Difference between • No WD auctions for int
Slide 54: Modifications in regulated documents
MODIFICATIONS IN REGULATED DOCUMENTS Document Art Proposal 3.1 Entry and Exit Services • MP and DPRS Reduced Pressure Service as from 1/1/2020 ACT Att A 3.2 Short haul Services • Regrouping of Short haul Services (Wheeling, OCUC, Zee Platform) • Includes also Services which were implicitly allocat
Slide 55: Agenda
Agenda 1. Transmission tariffs for period 2020 – 2023 2. CREG consultation 3. Storage tariffs for period 2020 – 2023 Coffee Break 4. Changes in Access Code for Transmission ➢ Simplification of services ➢ Substitution services ➢ Domestic entry services ➢ Technical adjustments 5. VIP update 6. Plannin
Slide 56: Substitution services
SUBSITUTION SERVICES • Reshuffling service • Reshuffling service was aimed at being offered only once in 2018 service removed from offer • Diversion service • Following the feedback received from the market since the introduction of the service, we propose to adjust the service as follows : - Remo
Slide 57: Modifications in regulated documents
MODIFICATIONS IN REGULATED DOCUMENTS Document Art Proposal • Contracts substituted cannot be converted to OCUC • Reshuffling Service is removed 3.6 Substitution ACT Att A • Diversion Service is reviewed (surrender obligation removed, Services extended to OCUC) • L/H Capacity Switch : alignment on ga
Slide 58: Agenda
Agenda 1. Transmission tariffs for period 2020 – 2023 2. CREG consultation 3. Storage tariffs for period 2020 – 2023 Coffee Break 4. Changes in Access Code for Transmission ➢ Simplification of services ➢ Substitution services ➢ Domestic entry services ➢ Technical adjustments 5. VIP update 6. Plannin
Slide 59: Three connection types for injection
THREE CONNECTION TYPES FOR INJECTION 1. Direct injection TSO Upgrader Compression TSO Metering grid − Similar to end user connected to Fluxys network Biogas Quality but for injection digester 2. Virtual Backhaul DSO − Production plant connected to DSO grid Biogas Digester DSO TSO TSO grid − Local DS
Slide 60: New definitions
NEW DEFINITIONS • “Natural gas”: not limited “from underground origin” as today in STA/ACT Compatible ≈ Natural gas • “Compatible Gas” gas − Gasses compliant with the quality requirements of Natural Gas (att.C4) before injection or after mixing Renewable Decarbonized Other gas gas gasses on the netw
Slide 61: Entry service on domestic points
ENTRY SERVICE ON DOMESTIC POINTS In order to further facilitate several types of injection of all sorts of compatible gasses for the coming years, we have to introduce : • Entry Transmission Services on Domestic Points. Domestic Entry Transmission Services Exit Transmission Services Zone Points Firm
Slide 62: Modifications in regulated documents
MODIFICATIONS IN REGULATED DOCUMENTS Document Art Proposal 3.1.1. Entry Service on • introduction of service (capacity type, rate type) for End-user and Distribution ACT Att A Domestic Points Domestic Points 3.1 Capacity subscription of • FCFS via Prisma, on yearly basis Entry Service on End User •
Slide 63: Agenda
Agenda 1. Transmission tariffs for period 2020 – 2023 2. CREG consultation 3. Storage tariffs for period 2020 – 2023 Coffee Break 4. Changes in Access Code for Transmission ➢ Simplification of services ➢ Substitution services ➢ Domestic entry services ➢ Technical adjustments 5. VIP update 6. Plannin
Slide 64: Alignment with Tariff Proposal 2020-2023
Alignment with Tariff Proposal 2020-2023 Proposal Document Art As from 01/01/2020 • Monthly Capacity Fee calculated on an hourly basis instead of a daily basis. A within-day booking will now have a payable price that is the daily tariff pro rata the service runtime. Nh,y represents the number of hou
Slide 65: Technical changes
Technical changes • Recap - Both Plan A and Plan C documents are consulted • Technical changes − Alignment of definitions with EU NCs − Upgrade of document structure to ease the readability and improved product descriptions − Remove all references to volume contracts − STA for Plan A > clauses adjus
Slide 66: Agenda
Agenda 1. Transmission tariffs for period 2020 – 2023 2. CREG consultation 3. Storage tariffs for period 2020 – 2023 Coffee Break 4. Changes in Access Code for Transmission 5. VIP update 6. Planning and closing remarks 71 Fluxys Belgium - document for information purposes only 24 October 2018
Slide 67: Update on VIPs
UPDATE ON VIPs • No changes in concept compared to what was consulted in 2017 Zelzate 1 • Implementation of VIP-only model – similar to Virtualys • Including Zelzate 1, Zandvliet H and ‘s Gravenvoeren; Zandvliet H ZTP TTF VIP ZTP-TTF Hilvarenbeek L out of scope • No impact on tariffs due to VIP ‘s G
Slide 68: Agenda > Content of Market Consultation #30-31
Agenda > Content of Market Consultation #30-31 1. Transmission tariffs for period 2020 – 2023 2. CREG consultation 3. Storage tariffs for period 2020 – 2023 Coffee Break 4. Changes in Access Code for Transmission 5. VIP update 6. Planning and closing remarks 73 Fluxys Belgium - document for informat
Slide 69: Timeline - Market consultation
TIMELINE – MARKET CONSULTATION 2018 2019 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Compliance Program ACER ACER still processing BSYS request to approve the Compl. Program > transition postponed until further notice Bal. Agreement / STA Contract Signature Start Phase 2 Negative neutrality
Slide 70: Consultation answers
Consultation answers • For transmission tariffs − By 8/12 COB − Non-confidential version of the response to be foreseen for publication • For ACT − By 8/12 COB − Confidential or not • For storage tariffs − By 22/11 COB − Confidential or not marketing@fluxys.com Don’t hesitate to request additional i
Slide 71: Subscription windows for year end
SUBSCRIPTION WINDOWS FOR YEAR END • Fix-Flex window for year 2019 − Choose the fix/flex rate type for Industrials and Power Plants for next cal. year − Will open on 26/11 and will close on 14/12 COB • Storage services for next season − For SBUs starting on 15/4/19 & Add. services on yearly basis − W
Slide 72: Thank you for your attention!
THANK YOU FOR YOUR ATTENTION! 77 Fluxys Belgium - document for information purposes only 24 October 2018
Fluxys Belgium — Investor Presentation (October 2018) on 6ix