EFET slams European gas storage levies

Levies introduced on cross-border gas flows in Europe "create uncertainty, fragment markets, increase price spreads between countries and go against the spirit of energy solidarity", according to the European Federation of Energy Traders (EFET).

EFET has called on the EU and national authorities to ensure any plans to charge additional levies on gas flows between member states are abandoned.

The association criticised existing and proposed levies designed to cover the cost to buy gas to fill storage sites in summer 2022. A German levy has been in place since October. Italian regulator Arera's consultation on imposing a similar levy closed today, while Austrian regulator E-Control has proposed higher entry tariffs on points connecting the country to Germany and Italy. Austrian market area manager AGGM had criticised Germany's levy, claiming it was "against union law" because it hinders cross-border trade.

Levies of this kind increase the price spreads needed to incentivise cross-border flows and contribute to the delinking of prices at neighbouring hubs, EFET said. They could reduce the use of cross-border capacity and cut future capacity bookings, thereby reducing revenue for gas grid operators, the association said.

Levies could also hinder EU efforts to reduce imports of Russian gas. Levies in Germany, Italy and Austria increase the cost for central and eastern European countries to import gas from the west by layering multiple levies on top of one another, as well as making Ukrainian storage sites more expensive, EFET said.

The association notes that EU regulations prohibit levies of this kind to cover the costs of meeting storage filling targets, but that these apply only to regulated facilities. It said the European Commission should clarify regulations to make explicit that more costs should be covered internally.

Countries should consider selling gas they hold in store to reduce costs, EFET said. But an auction last week in Germany did not sell any gas, as all bids were below the minimum price set by market area manager THE. That said, withdrawals from individual storage sites last month may indicate that THE has sold some of its roughly 37.5TWh of stock.

By Rhys Talbot