Court rejects challenge to natural gas transmission network charges
Regime scheduled to be introduced in October 2014
Through the onshore transmission system, gas is supplied via a ring between the major centres of Dublin, Cork, Limerick and Galway with exit points and distrtibution spurs to other population centres. As of now, natural gas imported from otuside the State arrives at the ring main at two points north of Dublin while a small part of the total supply enters the system from the Kinsale head gas field.
Some 99 per cent of the total supply is imported from the UK through the two undersea interconnectors, running from Moffat in Scotalnd and coming ashore to join the main ring at the two main points at Loughshinny, Co Dublin, and Gormanstown, Co Meath. Another and new source of supply, from the Corrb gas field, is anticipated to become operational in 2015, the judge noted.
A central dispute in the action related to how the two inter-connectors were to be treated for tariff setting purposes and whether the gas delivered through them shoud be treated as entering the BGE systemn at Moffat, as the regulator argued, or at Loughshinny/Gormanstown, as the Shannon applicants contended.
The dispute related to the methodology proposed to be adopted for setting tarfiffs for access to and use of the interconnectors and the legality of treating them as an integral part of the BFE infrastructure rather than as a separate facility, the costs of which must be distinctly accounted for and recovered from those companies using them.
The anticipated effect of the two new sources of supply of natural gas — from the Shannon and Corrib operations — had led to the regulator undertaking a process of research, investigation and industry consultation which led to its June 2012 decision concluding reform of the current regulatory market for the regime was necessary.
Having analysed the evidence and law, the judge rejected arguments the regulator had acted, or proposed to act, unlawfully in the proposed alternations to the manner in which the BGE netowrk and interconnectors are treated for regulatory purposes and the basis upon which the tariffs for use of and access to the infrastructures are fixed.
The regulator was entitled to regard the interconnectors as an integral part of BGE’s transmission infrastructure and to charge a two part tariff for access to that system based on a Long Run Marginal Cost (LMRC) element and a “revenue shortfall” element and not upon actual costs incurred by BGE, he ruled.