Skip to main content

In this article, Dr. Hernández and Ms. Gandolfi examine the current debate on the costs and benefits of entry-exit tariffs within the context of the overall tariff design problem, which involves tariff objectives (i.e., efficiency, transparency, and cost recovery), the costs that tariffs reflect, and the way in which costs get allocated to network users. The authors argue that the adequacy of an entry-exit system versus alternative billing determinants, such as postal or distance based tariffs, is dependent upon the specific features of each gas transport system. They note that entry-exit tariffs based on marginal long-term costs have the main advantage of promoting an efficient network growth and the development of gas trades. However, the authors observe that the practical application of entry-exit tariffs can be very complex and often requires accounting for the specific details of each transport system.

This article was published in Gas Actual, No. 94, May 2005.