In France, the distribution of natural gas is a local public service (SPL). As a result, in the past, some territorial communities and their public institutions have entrusted the construction, operation and development of natural gas distribution networks in their territory to a separate entity. Playing their role as grantor authority, the communities have signed "concession" contracts.
Numerous concession contracts are thus due to expire each year. Whether there is a call for competition launched by the grantor authority or not, negotiations between the grantor authority and the candidate(s) for takeover will obviously focus on the rates of network use by third parties, since these rates condition the future level of operating revenues.
However, since the tariffs for access to the natural gas distribution network are approved by the Energy Regulatory Commission, what room for manoeuvre do the grantor authority and the candidate(s) for takeover have in terms of negotiation and setting new network usage tariffs?
Admittedly, the regulations set out 5 key principles governing the new tariffs...
In case of renewal of the concession, the regulation specified five key principles governing the structure of usage tariffs:
- A reference tariff grid: the new tariffs take the form of a tariff grid that must be calibrated on that of GrDF in force the year of the call for competition;
- A unique multiplier coefficient: each candidate can propose a unique multiplier coefficient which will be applied to the GrDF tariff grid in force to obtain the new tariff grid;
- A composite indexing: the indexing formula, proposed by each candidate, must be based on the combination of indices, among those explicitly listed as representative by the regulation;
- An indexing on July 1st of each year: tariffs can only be evaluated during the contract on this date, but the delay between the date of entry into force of the new tariffs and the first annual tariff evolution cannot be less than one year.
The Energy Regulatory Commission is called upon, before the renewal of the concession, to deliberate on the compliance of the offer(s) of the candidate(s) with the relevant regulatory texts.
... but 3 parameters are left to the free negotiation of the parties
In the end, the candidate(s) for the takeover of a concession can freely propose three parameters:
- The unique multiplier coefficient which represents the first indexing suffered by the tariff grid in force before the call for competition;
- The nature of the indices chosen to compose the tariff indexing formula;
- The weighting coefficients of the indices entering into the composition of the indexing formula.
These three parameters are also those that the grantor authority can freely negotiate.
Our services
In case of renewal of natural gas distribution concessions, Zelya Energy assists you, whether you are a candidate for takeover or the grantor authority, in terms of:
- Assistance to the takeover candidate: financial valuation of the distribution network, construction (choice of indices and parameters) and simulation of a relevant tariff formula, drafting of the new concession contract, etc. ;
- Assistance to the grantor authority: verification of the legal basis of a potential call for competition, drafting of the specifications of the call for competition, selection and competition of candidates, comparative simulation of offers, assistance with negotiations, drafting of the new concession contract, etc.