If capacity at a point is fully contracted but a trend develops of primary FT shippers not using the full capacity, then the TSO may offer additional capacity (more than the point’s physical capacity counting on the low utilisation) as interruptible transportation (IT) in a short-term auction. The original primary shippers are still obliged to pay the TSO their reservation charge for that capacity and, unlike in the United States, may interrupt the secondary shipper at any time they choose to utilise the capacity again.

Congestion Management – Use it or lose it

TSOs have congestion management mechanisms such as use-it-or-lose-it (UIOLI) rules to optimise its pipeline network utilisation and avoid capacity hoarding.

Short-term UIOLI – If a point is contractually congested and a shipper initially nominates between 20% and 80% of its total capacity, then a renomination within the day of flow can only be increased up to 90% of the shipper’s total capacity or reduced down to 10% of the shipper’s total capacity. This rule exists to allow the TSO to sell 10% of the shipper's capacity as firm capacity on the day before flow and to count on at least 10% of the gas for managing the physical flows within the system. This mechanism is commonly used.

Long-term UIOLI – If a shipper is systematically reducing their nomination within the day or not using their capacity at a congested point, the TSO can offer the unused capacity as firm capacity, after proper notification to the shipper and haven given time for the shipper to respond. This mechanism is not common practice due to potential legal disputes that may arise, but it exists to prevent systematic hoarding.

Although these mechanisms exist, they are no longer utilised as TSOs prefer to enforce congestion management through auctions and IT.

Depending on the national regulator’s incentive regulations, which vary by country, the TSOs may either be able to keep the additional revenue generated through offering unused contracted capacity as IT or from implementing UIOLI rules as a bonus to their regulated return, or they may have to include this additional revenue in the tariff determination for the following year.

Shippers are obliged to pay reservation charges for capacity regardless of whether they use the capacity. Purchasing capacity to hold and release during peak demand periods to make profits is likely not economic over the contract duration.

Storage

Storage facilities are required because heating and power generation demand varies with weather but production remains relatively flat all year. Local distribution companies and large consumers put natural gas in storage to ensure reliable service to their customers during peak demand in winter months.

In the United States, most of the storage facilities were developed more than 25 years ago and are now predominately owned by pipeline companies and utilised by local distribution companies. In the European Union, most storage facilities were developed before the gas market liberalisation by the former national gas supply and distribution companies.

Rules for the ownership, usage, development, and tariff setting are similar to those for transmission systems in the United States. Member states in the European Union are allowed to choose how they organise third-party access to gas storage facilities and can either implement

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