The Swedish Energy Market Inspectorate (Ei) has decided to keep the current reference price method for gas transmission, the Postage Stamp (PS) model, in favour of the proposed Capacity Weighted Distance (CWD) model.

Copenhagen Economics assisted the Swedish gas TSO, Swedegas, in quantifying cross-subsidisation between regions in the Swedish transmission grid. While distance can be an important cost-driver for gas transmission, we showed that distance is poor proxy for costs in the Swedish transmission grid.

Our approach was to disassemble costs for transmission and maintenance for each geographic entity of the transmission grid, showing that distance as a cost-driver would lead to unsustainable costs for customers further away from the entry-point. The analysis demonstrates that regular cost-drivers can be deceptive in network markets.

The Swedish Energy Market Inspectorate’s decision

For further information, please contact Karl Lundvalll