In the context of a research project of the Florence School of Regulation, we investigated the current European cross-border gas transmission tariff methodology, the “entry-exit” model.
Our analysis highlighted that the current tariff system might:
- Distort the selection of gas sources
- Prevent desirable pooling of sources of flexibility available in different countries
- Be unsuitable to ensure network cost recovery
- Result in an unwanted wealth transfers between consumers located in different countries
Further, we assessed empirically the scope of potential distortions resulting from the current tariff system, based on data on physical gas flows, commercial transactions between EU countries and non-EU suppliers and capacity bookings.
Finally, we presented alternative tariff methodologies that might overcome the limits of the current system.
The results of the project are published in a working paper that can be downloaded here:
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