Gas Markets

This essay reviews the gas market in Switzerland and the pertinent laws regulating gas production, transportation and trading in Switzerland. With the Federal Council 2011 new long-term energy policy "Energy Strategy 2050" the role of natural gas in the Swiss energy mix will increase. The paper analyses the current situation, the different laws pertinent to the gas market and gives some hint about the future evolution. Markets have to be free and organized in a manner that is cost efficient, providing security of supply and the lowest possible price for the final users considering fair profit for the companies involved, sustainably and environmental concerns. This essay concludes that a liberalization of the market for retail users will not decrease prices or raise security, and therefore if done, would only be for political reasons (euro-compatibility).

The transition to a low carbon economy involves substantial changes along the entire gas value chain and requires a close and proper coordination between policy, regulation and industry in order to move towards decarbonisation in an economically-efficient way.
Historically, regulations on transmission sector and operators did not include any particular incentive in the field of innovation and R&D.
The TSO was therefore encouraged to control its R&D expenditure in the same way as other operating expenses.
The objective of transition regulations of gas networks should be the use of existing assets compatible with technology advances instead of rendering them stranded and attracts at the same time new necessary investments.
In recent years, energy regulators have recognised the need for promoting innovation and incorporated specific innovation mechanisms as part of the regulatory framework.
Regulators can apply different approaches to address stranded assets such as:
- depreciation policy,
- asset valuation,
- adjustment of cost of capital, or
- explicit compensation outside of network tariffs.
This presentation describes and assess the above-mentioned approaches.