The new Gas Year is fast approaching along with the associated gas sales contract awards and renewals. This year will be more complicated than normal for the UK following Ofgem's announcement on 28th May 2020 of the introduction of the long awaited ' Postage Stamp' NTS transportation charging regime effective from 1st October 2020. Parties will be looking to include the impact of this in new gas sales contracts or in the amending of existing contracts. In addition, the optional commodity charge ( 'Short-haul Tariff') is no longer available to NTS users and this will have a detrimental impact on premiums offered by gas buyers at UK gas terminals and in particular Bacton & Teesside terminals.
The new entry capacity regime will see National Grid ('Grid') recovering NTS operating costs more directly via a capacity charge rather than the current method of recovery via the commodity charge process. This will result in a greater emphasis on producers ensuring they have sufficient capacity available to meet its expected production levels. The Capacity Reserve price published for October 2020 to March 2021 has been set at 2.1p/therm and the additional Non-Transmission Charge levied will add a further 0.375p/therm to the transportation costs. Users will no longer be able to benefit from free interruptible capacity with the discount on such capacity limited to only 10%.