Natural gas network pricing and its influence on electricity and gas markets

The introduction of competition at the electricity generation and commercialization has been the main focus of many restructuring experiences around the world. The open access to the transmission network and a fair regulated tariff are the keystones of the development of the electricity market. The natural gas business has a great interaction with the electricity market in terms of fuel consumption and energy conversion. Given that the transmission and distribution monopolistic activities are very similar with the natural gas transportation through pipelines, economic regulation related to the natural gas network should be coherent with the transmission counterpart. This paper will show the main wheeling charge methods used at transmission and their application to the gas network. Linear stead-state equations are developed to adequate the various pricing methods. Some examples will clarify the results, in terms of investments for thermal generation plants and end consumers, when combined pricing methods are used to transmission and gas networks. The paper shows the synergies that should be adequately used, otherwise wrong economic signals are sent to the market players.