Gas Industry Co has two main sources of funding to meet the total costs of delivering the Work Programme and other aspects of its role as the industry body – the levy and market fees.
Industry levy
The Gas Act provides for a Gas Levy on industry participants to fund Gas Industry Co activities. It is implemented through annual regulations following industry consultation.
The levy is based on a set of Levy Principles - economic efficiency, beneficiary pays, rationality, simplicity, equity, and revenue sufficiency. It has two components - wholesale (using wholesale levy volumes) and retail (using ICP market share) and is apportioned on a pro rata basis according to the cost allocated to specific work in the work programme. For example, in years when the work programme has a greater focus on retail issues, the retail levy rate will increase and the wholesale levy rate will decrease.
The amount received from the levy varies each month. Any excess levy recovered in a financial year is generally refunded to industry participants the following year.
Market fees
Section 43S of the Gas Act provides for industry governance regulations or rules to be funded by industry participants. Learn more about Gas Legislation.
Market fees are used to recover the costs directly associated with gas governance arrangements. They are set out in each of the regulations or rules to which they apply namely, Downstream Reconciliation Rules, Switching Arrangements and Critical Contingency Management Regulations and Gas Governance (Compliance) Regulations.
Market fees are estimated before the start of each financial year and recovered in equal monthly instalments. Once the actual costs have been determined after the end of each financial year, a wash-up is performed with fee payers credited or invoiced for their share of the difference between the estimated and actual costs.