Network price regulation - natural gas
The Swedish Energy Markets Inspectorate (Ei) examines the natural gas grid operator's monopoly position.
We do this to ensure that you, as gas customer, shall not pay too much and so that the gas grid operator does not exploit its position. Building several parallel gas pipeline systems would not be a financially or environmentally justifiable alternative. The distribution of gas is therefore a regulated monopoly market.
Natural gas network and network price regulation
The natural gas market is divided into trade in natural gas and transmission and distribution of the natural gas. Natural gas trade takes place in a competitive market where you, as the gas customer, can choose a natural gas supplier. The transmission and distribution of gas, however, takes place in a natural monopoly, since there is only one grid operator that manages each pipeline system.
Ei regulates network fees
The operators themselves decide how they shall structure their fees for gas supply. But it is Ei, in accordance with the Natural Gas Act, that approves the natural gas operator's methods for the structure of fees.
Revenue caps are determined in advance for a period of four years. The revenue caps sets an upper limit for the total revenues companies may have from their natural gas operations.
How Ei examines fees
The purpose of the regulation is that the owners of natural gas pipeline systems and plants should not exploit their monopoly position by extracting excessive monopoly profits.
The grid operators revenues from the natural gas operation will be checked against the revenue cap after the four-year period has ended. The revenue cap for the next period will be adjusted if revenues are higher or lower than the revenue cap. As part of this work, we at Ei also examine all annual reports for every gas grid operator. A gas grid operator can have several types of operations. Each operation is accounted for separately.
The annual reports consist of a financial report that shall be examined by an auditor.
Application regarding concession for natural gas pipeline
Any entity that wishes to construct or operate a natural gas pipeline, natural gas storage facility, gasification plant or other associated installation, shall apply for a permit or concession. The application shall be sent to the Swedish Energy Markets Inspectorate. After we have examined the application, we forward it, together with our opinion, to the Government which makes the final decision in accordance with the Natural Gas Act.