Report on Gas Distribution Network Tariffs

The current regulatory framework in Bosnia and Herzegovina and its entities is based on the Energy Community Treaty, which requires the country to align its energy policies with those of the European Union. In this context, the USAID Energy Investment Activity Project (EIA) conducted a study to develop recommendations for gas distribution network tariff methodologies to be adopted in Bosnia and Herzegovina. The study aimed to take into account the specific situation of the natural gas sector and the gas distribution networks in Bosnia and Herzegovina, as well as the current legal and regulatory framework in the country and its entities. The project also considered the legal framework on the EU level relevant for Bosnia and Herzegovina and practical experience with gas distribution tariff methodologies and structures in other European countries. The study evaluated various gas distribution tariff methodologies, including capacity, commodity, and fixed charges. The evaluation criteria included cost causation, incentives for network users, transparency and simplicity, practicability/administrative burden, distributional impact, and interdependencies and trade-offs. The study also examined the structure of gas network costs, pricing principles, and evaluation criteria. The study found that the current gas distribution tariff methodology in Bosnia and Herzegovina is based on a flat rate, which does not reflect the actual costs of gas distribution. The study recommended a more sophisticated tariff structure that takes into account the actual costs of gas distribution, including capacity, commodity, and fixed charges. The study also recommended the introduction of locational differentiation of network tariffs, which would allow for different tariffs to be applied in different regions of the country. The study also examined the gas distribution tariff structures in other European countries, including Germany, France, Croatia, and Serbia. The study found that these countries have implemented more sophisticated tariff structures that take into account the actual costs of gas distribution. The study recommended that Bosnia and Herzegovina adopt a similar approach to gas distribution tariff structures. The study concluded that the development of gas distribution network tariffs in Bosnia and Herzegovina is a critical component of the country's energy sector. The study recommended that the regulatory authorities and gas sector stakeholders in Bosnia and Herzegovina adopt a more sophisticated tariff structure that takes into account the actual costs of gas distribution. The study also recommended the introduction of locational differentiation of network tariffs and the adoption of a more transparent and simple tariff structure. The study also identified several key variables that should be taken into account when developing gas distribution tariff methodologies, including the cost of gas distribution, the capacity of the gas distribution network, and the commodity charge. The study recommended that these variables be used to develop a more sophisticated tariff structure that takes into account the actual costs of gas distribution. The study also examined the gas distribution tariffs in several European countries, including Westnetz, GRDF, and BROD-PLIN Ltd. The study found that these countries have implemented more sophisticated tariff structures that take into account the actual costs of gas distribution. The study recommended that Bosnia and Herzegovina adopt a similar approach to gas distribution tariff structures. The study identified several key areas for further research and development, including the development of a more sophisticated tariff structure that takes into account the actual costs of gas distribution, the introduction of locational differentiation of network tariffs, and the adoption of a more transparent and simple tariff structure. The study recommended that the regulatory authorities and gas sector stakeholders in Bosnia and Herzegovina work together to develop a more sophisticated tariff structure that takes into account the actual costs of gas distribution.