Gaz de France (1020848.FR) Friday said the French ministry responsible for energy published the new rates recommended by the French Energy Regulatory Commission (Commission de Regulation de l'Energie, or CRE) to be charged for third-party access to the natural gas distribution network (the ATRD 3 rates schedule), which should take place on Jul. 1.
This proposal was submitted for approval by the CRE to the French government, which has launched a consultation process with stakeholders. Gaz de France and GdF unit GrDF will express their own points of view during the consultation organized by the government.
The French authorities will announce their decision by Apr. 28 later this year.
The principal highlights of these proposals are as follows:
-Long-term rates adopted for a 4-year period running from Jul. 1, 2008 to Jun. 30, 2012.
-After an initial rate's increase of 5.6% on Jul. 1, rates will be reviewed each year on Jul. 1 in line with the rate of inflation (French consumer price index, excluding tobacco) reduced by 1.3%.
-The methods used to calculate the regulated assets base, which amounted to EUR13,174M on Jan. 1, will remain unchanged.
-Reduction in the rate of return from 7.25% to 6.75% (real rate, before tax).
-The structure of rates charged to users of the distribution network will remain unchanged.
-Creation of a Compte de Regularisation des Charges et Produits (CRCP, or "Income and Expense Equalization Account") designed to cover the following:
-Variances on volumes carried (differences between actual and forecast volumes will be fully offset)
-Variances on capital expenditure (differences between actual and forecast expenditure will be fully offset)
-Variances on the cost of gas lost on the network (differences between actual and forecast losses will be offset up to a maximum of 90%)
-Adoption of penalties and bonuses related to the quality of service.
-Adoption of penalties related to capacity overruns. The "Income and Expense Equalization Account" will be reconciled by complementary changes in rates up to a limit of + or - 2% on Jul. 1, 2010 and Jul. 1, 2011. All amounts that cannot be reconciled will be carried forward to the following year. At the end of the period running from 2008 to 2012, forty% of all gains in productivity above and beyond the productivity target included in the rates schedule will be retained by GrDF and the rest will be returned to the client for the subsequent rate period.