Implications ITC Ruling: No additional charge for Shippers

On 15 July, the Dutch Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven, CBb) issued a significant ruling, annulling the decision by the Netherlands Authority for Consumers and Markets (ACM) that had required BBL Company (BBLC) to pay an Inter Transmission System Operator Compensation (ITC) to Gasunie Transport Services (GTS).

Background

The dispute stems from the removal of the GTS interconnection point (IP) Julianadorp in 2018 to facilitate market integration between the Dutch TTF and UK NBP market areas. Since then, BBLC and GTS have operated as independent Transmission System Operators (TSOs) within a joint entry/exit system.

To address concerns raised by certain users of the GTS network regarding increased costs without direct benefits as a result of the removal of IP Julianadorp, a sector-wide agreement was reached in 2018. Under this agreement, BBLC agreed to provide a one-off contractual compensation to GTS for the removal of IP Julianadorp spread over a period five years, with the understanding that such payments would cease after 2024. 

The ACM subsequently imposed an ITC on BBLC to be paid to GTS. BBLC argued that the ACM is not authorized to impose such ITC. It also argued that upholding the ACM’s decision would have conflicted with the sector-wide agreement of 2018 and would undermine the legal certainty upon which the integration was based. The CBb agreed with BBLC that there is no legal basis to impose an ITC. It therefore annulled the ACM's decision.

Market integration benefits

The direct connection between the two market areas has enabled shippers to transport gas more easily and efficiently between the Dutch TTF and the UK NBP market areas. This facilitates responses to price differentials between the two hubs and enhances opportunities for arbitrage, contributing to reduced price volatility. Additionally, BBLC supports GTS in balancing the network by providing part of its buffer capacity, offering increased flexibility to shippers.

Implications of the ACM Decision

Had the ACM’s decision regarding the ITC obligation remained in effect, it would have introduced a volume-based surcharge, potentially undermining the benefits of market integration. This could have created a barrier to utilising BBLC for cross-border flows. As a result, BBLC would have been compelled to raise its variable tariffs from 1 October 2025. Such a development might have had adverse effects on cross-border gas flows, overall market balancing and the economic viability of BBLC.

Implications for Shippers

Following the decision by the CBb, BBLC will continue offering market-based and competitive pricing for cross-border transport between the UK and Continental Europe. Consequently, BBLC has informed Ofgem that it will remove the proposed additional ITC charge from the revised BBLC Charging Methodology that is currently under review by Ofgem.