The balancing neutrality fee has been postponed for one year

During the today’s meeting, the NERC has decided to postpone payment for balancing neutrality on the natural gas market until October 1, 2021, as well as improved the method used for its calculation.

It shall be recalled that according to GTS Code, the neutrality fee is already charged to gas producing companies as well as other consumers of transportation services just of informative nature since March 2020. However, the payments received by market participants were unreasonably high and increased each month. The Association of Gas Producers of Ukraine in joint efforts with American Chamber of Commerce in Ukraine, the European Business Association, the Association of Gas Traders of Ukraine, the Association of Subsoil Users of Ukraine appealed to the Regulator to postpone for a year period the introduction of mandatory payments of neutrality balancing fees. At the same time, alongside with GTSOU, customers and relevant Associations improve methods of its calculation and ways of assessments of this fee.

AGPU considers, that in accordance with the requirements of Commission Regulation (EU) №312/2014 and for the full development of the liquidity of the natural gas market in Ukraine it is necessary to launch market of short-term standardized products on the trading platform, as well as to solve the problem of non-payments for imbalances. As soon as Verkhovna Rada adopt the draft laws №3176 ‘On Amendments to the Law of Ukraine ‘On Public Procurement’ on Natural Gas Procurement’ and №3800 ‘On Amendments to the Law of Ukraine ‘On Natural Gas Markets’ to ensure financial stability in the natural gas market’, announced problems can be solved.

Relying on above information and fully analyzed situation, the NERC has resumed the first stage of implementation of the balancing neutrality fee for one year, hence, in the 2020-2021 gas year this fee will be exclusively informative nature and will not be charged to market participants.

The first calculations related to mandatory balancing neutrality payment are required to be performed by January 1, 2023 for the gas year of 2021-2022.

We express our appreciation to the Regulator and GTSOU for the support of the gas production industry and constructive position regards postpone of the introduction of the payments of neutrality balancing fees.