Market participants are almost universally opposed to Austrian energy regulator E-Control's planned gas tariff methodology changes, which would significantly increase import costs from Germany and Italy.
The changes that E-Control aims to introduce from 2025 would shift the reference price methodology to a capacity-weighted distance model from the existing virtual point-based system. This produces indicative 2025 tariffs that triple entry costs from Germany and more than quadruple those from Italy, while increasing entry costs at Baumgarten — where Russian gas enters Austria — by just 31pc.
E-Control received 19 replies to its consultation, of which some were joint responses from several companies. While the two Austrian system operators are in favour of the proposed changes, all other respondents are either mostly or entirely against them. Many suggested that E-Control retain the existing methodology, which they say has worked effectively for many years. Several respondents dispute the notion that Baumgarten would no longer be the dominant node of the Austrian system, arguing that moving away from the virtual point-based system is unnecessary.
A joint response from five storage operators was particularly critical of the capacity-weighted distance model. The resulting higher tariffs for exit to Austrian storage facilities — which would rise by 184-463pc — could endanger security of supply as "Austria may not be able to make use of its large storage capacities", they said. Further variation and unpredictability in storage tariffs will "lead to a massively negative impact on booking behaviour by storage customers and will endanger the ability to achieve the required filling level on market-based principles", they said.
Almost all respondents heavily criticised the significantly higher entry tariffs from Italy and Germany, with many noting that this would create trade barriers that discourage regional trade. Baumgarten will become by far the cheapest import route, running directly counter to Austria's goal to diversify away from Russian gas, respondents said.
Many market participants argue that this effect would be compounded by a proposed increase in multipliers for shorter-term products, which they say would strongly discourage trading of locational spreads on a prompt basis and would probably further reduce liquidity.
The change to a balanced 50:50 entry-exit revenue split, away from the existing 20:80 split, was also unpopular. This change would significantly increase costs for domestic users, while resulting in lower exit tariffs towards Italy and Germany for companies using Austria as a transit country, respondents said. The 163pc rise in the exit fee to the distribution area means that "the burden sharing is put on domestic household customers and industry while neighbouring countries profit", storage operators said.
Several respondents criticised E-Control for failing to review alternative methodologies. OMV made its own calculations for retaining the virtual points-based system, which suggests an 8-24pc increase in entry tariffs and a 41-109pc rise in exit tariffs. This would be more desirable as it would reduce the cost burden for importers and Austrian consumers, OMV said. It would avert an "impending price spiral at entry points" by eliminating the volume risk at Oberkappel, Arnoldstein and Uberackern as far as possible, the Austrian firm said. Other respondents called for a postage stamp methodology — in which uniform tariffs are applied to either entry or exit points — although most advocated for simply retaining the existing system.
Several respondents criticised E-Control's forecasts for bookings in the next reference period. These projections must have been based on the assumption of a complete stoppage of Russian imports through Baumgarten, which is in reality "very uncertain", OMV said.
There is potential for a downward spiral where falling utilisation of the Austrian system owing to high tariffs leads to the need for even higher tariffs, which then drives down utilisation even further, respondents warned. This could "drive the Austrian gas market into increasing isolation from diversified sources, jeopardising competitiveness, Austria as a business hub and security of supply", OMV said.
