ERSE – Energy Services Regulatory Entity considers that there is a “high risk in terms of sustainability” in the proposals for development and investment in natural gas distribution networks, between 2025 and 2029, and studied alternative scenarios.
In a statement released this Monday, the entity reported its “opinion on the proposals for development and investment plans in natural gas distribution networks, for the period 2025-2029 [PDIRD-G 2024]totaling 382.1 million euros for tariff purposes, presented by a group of 11 gas distribution network operators (ORD)”.
According to ERSE, this amount “is 35% higher than the investment approved in PDIRD-GN 2018 and which was implemented during the period from 2019 to 2023”.
Thus, and “based on the investment scenarios proposed by network operators, faced with different scenarios for the evolution of gas consumption, not only up to the horizon of PDIRD-G 2024 (2029), but also projecting consumption until 2040, ERSE considers there to be a high risk in terms of long-term sustainability in this proposed development strategy”.
Therefore, and in order to “guarantee the sustainability of the gas sector in a long-term perspective within the framework of energy policy scenarios and objectives”, ERSE studied “alternative investment scenarios for the purpose of sensitivity analysis, considering a superior scenario of investment, indicative of an optimistic vision of the future of the National Gas System (SNG), and a lower investment scenario, which allows some security regarding the future sustainability of the SNG”.
The two new scenarios identified by ERSE “assume lower values than those proposed by the ORD, corresponding to downward revisions of the total investment of -28% (273.3 million euros), a value in line with that of the last investment plan approved PDIRD-GN 2018, and -54% (R$ 174.9 million), respectively”.
The regulator considers that “the risk to the sustainability of the SNG could be mitigated, if a prudent position is taken at this stage, both in the ORD’s investment requests that should appear in the final versions of the PDIRD-G 2024 proposals that will be submitted to the approval of the grantor, as well as in the different final investment decisions that the latter may make”.
ERSE recalled that these investments “can always be revisited later, as there will be the possibility of reviewing these decisions further during the process of preparing the PDIRD-G 2026 proposals, which will take place within a period of two years”.
The entity considers that taking on the option now “of decision-making associated with an investment that may prove to be excessive in the future, will impose a risk and greater difficulty in remedying the situation since the assets, which have now been put into operation, will have to be amortized and remunerated over a long period, from 20 to 40 years, even if they prove not to be necessary”.
It is now up to operators to “consider the recommendations of ERSE’s opinion”, as well as the “opinion of the Directorate-General for Energy and Geology (DGEG) and the comments received during Public Consultation no. 121 of ERSE, in the final versions of the proposals of PDIRD-G 2024 that will have to be submitted to the grantor for approval”.
ERSE recalled that its opinion is sent to the ORD, with the knowledge of the DGEG, with the ORD having 60 days to send the final PDIRD-G 2024 proposals to the DGEG.
“The approval of PDIRD-G 2024 is the responsibility of the member of the Government responsible for the energy area, after discussion in the Assembly of the Republic”, he concluded.
