THE RESOLUTION OF THE NATIONAL AGENCY ON REGULATION IN POWER INDUSTRY OF THE REPUBLIC OF MOLDOVA

of October 1, 2009 No. 352

About approval of Methodology of calculation, approval and application of rates for natural gas

For the purpose of reliable providing consumers with natural gas on the rates calculated proceeding from real, strictly necessary costs for acquisition on import, transportations, distributions and supply of gas to consumers, creations of equal conditions for activities of all participants of the natural gas market by establishment of single calculation procedure and application of rates and in pursuance of the Art. 6, by Art. 7 and Art. 34 of the Law on gas No. 136-XIV of 17.09.1998. (The official monitor of the Republic of Moldova, 1998, No. 111-113, the Art. 679) the Administrative board of the National agency on regulation in power DECIDES:

1. Approve Methodology of calculation, approvals and applications of rates for natural gas it (is applied).

2. Recognize invalid the Methodology of calculation, approval and application of rates for natural gas approved by the Resolution of Administrative board of the National agency on regulation in power No. 122 of 25.03.2004 (The official monitor of the Republic of Moldova, 2004, No. 53-55, the Art. 132).

Approved by the Resolution of the NARE Administrative board of October 1, 2009 No. 352

METHODOLOGY OF CALCULATION, APPROVAL AND APPLICATION OF RATES FOR NATURAL GAS

I. GENERAL PROVISIONS

1. The methodology of calculation, approval and application of rates for natural gas is developed according to provisions of the Law on gas No. 136-XIV of 17.09.1998. (The official monitor of the Republic of Moldova, 1998, No. 111-113 the Art. 679), the National Accounting Standards (NAS) approved by the Order of the Ministry of Finance No. 174 of 25.12.1997 (The official monitor of the Republic of Moldova, 1997, No. 88-91, the Art. 182) is also intended for establishment of single calculation procedure, approval and application of rates for transportation services, to distribution and supply of natural gas to consumers.

2. The methodology establishes:

1) Structure and procedure for determination of the regulated income and expenses.

2) Procedure of payments, approvals and applications of regulated rates.

3) the Procedure for refining of rates during Methodology effective period.

3. The mechanism used in case of determination and regulation of rates is based on compliance of rates to the following criteria:

a) reliable providing consumers with natural gas on the real costs strictly necessary for acquisition, transportations, distributions and leaves of gas to consumers;

b) cost recovery of the companies of natural gas necessary for the corresponding operation of production units, normal implementation of regulated activities, safety of industry of natural gas and environment protection;

c) implementation of natural gas of effective and profitable activities by the companies that will provide them possibility of compensation of the financial resources invested in development, upgrade and reconstruction of production capacities.

4. This Methodology regulates procedure of payments, approvals and applications of rates for natural gas for activities for transportation, distribution and supply of natural gas for the regulated rates. This Methodology provides establishment in industry of natural gas of the following regulated rates:

a) on transportation of natural gas;

b) on distribution of natural gas;

c) on supply of natural gas;

d) average rate for the natural gas released by JSC Moldovagaz from gas distribution stations;

e) on the natural gas released to final consumers.

5. In this Methodology the following concepts are used:

regulated costs - the expenses and costs of the owner of the license relating to one regulated year and acknowledged NARE, strictly necessary for implementation of the activities provided in the license;

regulated costs for the capital - the costs of the owner of the license concerning depreciation of fixed assets and depreciation of intangible assets which are directly used in regulated activities, and acknowledged NARE in the tariff purposes;

financial variations - the cost component of adjustment of the income of the owner of the license for the current year following from difference between the parameters planned when calculating rates and really registered in previous period of regulation. These variations are determined on the basis of the difference received in previous period of regulation as a result of real change of the following parameters in comparison with those which were included when calculating rates:

purchase price;

exchange rate of national currency; amount of the natural gas acquired, transported, distributed and released to consumers; amount and rates for transit of natural gas to other countries; change of the costs which are directly accepted by the company; indicators of refining of basic costs; the profit provided for implementation of the investment plan. Financial variations also join difference between the standard technological cost and losses of natural gas in transportation and distribution networks calculated at the beginning and at the end of the current year according to the approved methodologies of their calculation and taking into account the provisions provided in the Section II of this Methodology;

rate for transportation of natural gas - the cost of the services rendered by owners of licenses for transportation of natural gas in reservation of transport capacities, receipt of natural gas on Items of entrance to transport system, transportation, including to transit of natural gas on transport system, both gas transfer to internal and external suppliers of natural gas or consumers on exit Items from gas-transport system. The rate for transportation is established on 1000 m3 of natural gas, does not include the VAT and cost of the transported natural gas;

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