# C_2010339EN.01004901.xml

| 14.12.2010 | EN | Official Journal of the European Union | C 339/49 |
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14.12.2010

EN

Official Journal of the European Union

C 339/49

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Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council concerning measures to safeguard security of gas supply and repealing Directive 2004/67/EC’

COM (2009) 363 final — 2009/0108 (COD)

(2010/C 339/11)

Rapporteur: Mr SANTILLÁN CABEZA

Mr SANTILLÁN CABEZA

On 4 September 2009, the European Council decided to consult the European Economic and Social Committee, under Article 95 of the Treaty establishing the European Community, on the

Proposal for a Regulation of the European Parliament and of the Council concerning measures to safeguard security of gas supply and repealing Directive 2004/67/EC

Proposal for a Regulation of the European Parliament and of the Council concerning measures to safeguard security of gas supply and repealing Directive 2004/67/EC

COM(2009) 363 final.

On 29 September 2009, the Bureau of the European Economic and Social Committee instructed the Section for Transport, Energy, Infrastructure and the Information Society to prepare the Committee's work on the subject.

Given the urgent nature of the work, the European Economic and Social Committee appointed Mr Santillán Cabeza as rapporteur-general at its 459th plenary session, held on 20 and 21 January 2010 (meeting of 20 January), and adopted the following opinion by 173 votes with four abstentions.

1.   Conclusions and recommendations

1.1   The replacement of the current legislation to safeguard supply of natural gas is one element in a package of urgent measures being adopted in view of the severe consequences of disruptions in supply.

1.2   The EESC endorses the proposal for a regulation safeguarding the supply of natural gas in the EU.

1.3   The choice of legal instrument to replace Directive 2004/67EC concerning measures to safeguard security of natural gas supply (1) is appropriate, as it enables faster and more uniform application. The urgency and seriousness of the matter are such that decision-makers must act as quickly as possible to implement measures to prevent disruptions of supply.

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1.4   The EESC particularly welcomes the specification of actions which the responsible parties must undertake (infrastructure, preventive measures and emergency plans for crisis situations), reducing the margin of discretion that exists under the 2004 Directive.

1.5   Since responsibilities are not allocated explicitly enough in the Commission's proposal, the Committee suggests that a clear distinction should be made between those falling to the public authorities (Commission and national Competent Authorities) and to private organisations and companies.

1.6   The EESC wishes to draw attention to consumers’ rights, which are insufficiently addressed by the draft regulation, in areas such as: the repercussions of the cost of the measures on tariffs, clarification of the ‘domestic customer’ and ‘protected customer’ concepts, the right of information in the case of an emergency, etc.

1.7   As argued in point 5.3, penalties need to be established for Member States that do not comply with their security of supply obligations.

1.8   The EESC calls for special protection for household customers and small-scale consumers of gas in the event of an emergency.

1.9   The EESC believes that all service suppliers should bear the same level of responsibility for supply in accordance with their capacity, without exception.

1.10   Plans for alternative pipelines (such as Nord Stream and Nabucco) will provide durable solutions in the medium to long term but, until the measures set out in the draft Regulation are fully in force, precautionary steps must be adopted to avoid a repeat of the January 2009 crisis.

1.11   The EESC draws attention to the importance of implementing some of the measures contained in the Third Energy Package as soon as possible, including the establishment of National Action Plans to tackle energy poverty, ensuring the independence of regulatory bodies, and protecting vulnerable users.

1.12   The EESC feels that there should be a debate on energy market liberalisation, which has up to now been a central policy of the EU, because it has failed to achieve the objective of diversifying sources and ensuring supply. Moreover, liberalisation has triggered major losses of qualified jobs.

1.13   It needs to be pointed out that the effectiveness of the draft Regulation, like the other measures approved, depends essentially on solidarity between the EU Member States and their willingness to cooperate.

1.14   It is also important that the Commission's powers to coordinate measures in emergencies be strengthened, avoiding unilateral decisions that would weaken the EU's position vis-à-vis third countries.

2.   Reason for the proposal for a regulation

2.1   One quarter of all energy consumed in the EU is gas, 58 % of which is imported. Of this, 42 % comes from Russia, and around 80 % of EU imports of gas from Russia pass via Ukraine (300-350 million cubic metres per day). Among the eight new eastern European Member States, dependence on Russian imports averages 77 % (Commission Staff Working Document SEC(2009) 977 final). Given its heavy dependence on external sources, the EU has for some years been concerned about security of gas supply, as reflected in the 2004 Directive (1). In 2006, a dispute between Gazprom (Russia) and Naftogaz (Ukraine) led to supply being briefly disrupted.

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2.2   On 13 November 2008, the Commission published a Communication (COM(2008) 769) on the implementation of the 2004 Directive, pointing to the need for amendments.

2.3   On 1 January 2009 – in the middle of winter – Gazprom again cut off the supply of gas through Ukraine, creating a very serious situation in 18 European countries. Although it was in principle a commercial dispute over gas prices, its impact and the fact that it affected so many EU Member States meant that the European Commission had to intervene directly. The dispute was resolved by an agreement signed by the companies (on 19 January 2009), but its prolonged nature, the serious damage caused and Europe's heavy dependence on Russian gas set the alarm bells ringing.

2.4   Coming in the wake of the ‘Gas Summit’ (Natural Gas for Europe: Security and Cooperation, Sofia, April 2009), which brought together representatives of countries from the Caspian Sea, Central Asia, the Black Sea and the Balkans, as well as Russia and the EU, the proposal for a regulation examined in the present opinion seeks to offer solutions to the problems identified, such as the lack of coordination between Member States, or the inadequate definition of the obligations of the various responsible parties. The Commission has therefore rightly opted to fully replace the 2004 Directive rather than to introduce partial amendments.

Natural Gas for Europe: Security and

3.   Content of the proposal for a Regulation

3.1   Responsibility for security of supply

3.1.1   Within their respective areas of responsibility, the natural gas undertakings, the Competent Authorities of the Member States, industrial gas customers, and the Commission are responsible (Article 3(1)). There must be a high degree of cooperation among them all.

3.1.2   Within twelve months of the regulation entering into force, the Competent Authority of each Member State is – after consulting with the stakeholders and exchanging information with the other national authorities and the Commission – to establish a Preventive Action Plan and an Emergency Plan. After consultation of the European Network of Transmission System Operators for Gas (ENTSO-G) and the Agency for the Cooperation of Energy Regulators (ACER), the Commission may also recommend the establishment of a joint plan at regional level.

3.1.3   The measures to ensure the security of supply are to be clearly defined, transparent, proportionate, non-discriminatory, verifiable, and should not unduly distort competition or the effective functioning of the internal market (Article 3(5)).

3.2   Preventive Action Plan

3.2.1   The Preventive Action Plan must include the necessary infrastructure measures, risk assessment arrangements, measures to address the risks identified and information on the relevant Public Service Obligations. It is to be updated every two years (Article 5).

3.2.2   Supply infrastructure. It must be ensured that in the event of disruption of the largest gas supply structure, the remaining infrastructure has the capacity to deliver the necessary volume of gas to satisfy total gas demand of the calculated area during a period of sixty days of exceptionally high gas demand during the coldest period statistically occurring in recent years (Article 6(1)). The N-1 indicator describes the ability of the gas infrastructure's capacity to supply the gas for maximal demand in the calculated area in case of disruption of the largest infrastructure (Annex I of the proposal).

3.2.3   Measures to ensure gas supply. The Competent Authority must ensure that State-protected clients (household customers, schools, hospitals, etc.) are supplied, avoiding both discrimination and an undue burden on market entrants and small undertakings (Article 7).

3.2.4   Risk assessment. This will be compulsory for the authorities, in keeping with certain criteria (Article 8).

3.3   Emergency Plan and Crisis Levels

3.3.1   The content of the plan is detailed in the proposal (among other aspects, it includes a definition of the role of each of the relevant parties, the procedures to be followed in the event of a crisis, inter-State cooperation mechanisms, etc.). It is to be based on three crisis levels, depending on the seriousness of the threat: Early Warning, Alert and Emergency (Article 9(1) and (2).

3.3.2   The Commission is equipped with broad powers, as it can verify ‘whether the declaration of an Emergency is justified and whether it does not impose an undue burden on the natural gas undertakings and on the functioning of the internal market’. Moreover, it can ask the Competent Authority to modify or even lift the measure in the event that it imposes an undue burden or is unjustified (Article 9(6)).

3.3.3   The Commission may declare a Community emergency at the request of one Competent Authority (among other circumstances), specifying the geographical scope of the measure. Its primary task is to coordinate the actions of the Competent Authorities, in which it is to be assisted by the Gas Coordination Group (Article 10(1)).

3.4   Gas Coordination Group (GCG)

3.4.1   Set up by the 2004 Directive, the GCG is to be made up of representatives of the Competent Authorities, ACER, ENTSO-G, ‘representative bodies of the industry ... and relevant customers’. The Commission will decide on the composition of the GCG and will chair it (Article 11).

3.4.2   The GCG's functions are to assist the Commission in implementing the measures contained in the Regulation.

3.5   Information exchange

3.5.1   In the event of a national emergency, the Competent Authority must have information available on a daily basis on aspects such as the hourly flow of gas at all cross-border entry and exit points; in the case of a Community emergency, the Commission is entitled to request information from the Competent Authority on a series of aspects, including whatever information this authority has available (Article 12(1) to 12(5)).

3.5.2   The Commission must also be informed of intergovernmental agreements and commercial supply contracts concluded with third countries (Article 12(6). It is further stipulated that an annual report is to be published (Article 13).

4.   General comments

4.1   The replacement of the 2004 Directive forms part of a raft of measures adopted with a view to guaranteeing security of supply, including Directive 2009/73/EC of the European Parliament and of the Council concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC, Regulation (EC) No 713/2009 of the European Parliament and of the Council establishing an Agency for the Cooperation of Energy Regulators, and the ‘Third Energy Package’ on the internal energy market (2). Scrupulous and timely implementation of all these measures is vital.

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4.2   The EESC welcomes the proposal for a regulation: given the past events outlined above, this is vital. It regards a regulation to be the appropriate legal form on account of its rapid entry into force and uniform application.

4.3   The EESC is pleased that the proposal significantly increases coordination of emergency responses, curtailing the current room for discretion. The proposal strengthens the Commission's powers, which is a good thing.

4.4   The Committee also takes a very positive view of the detailed establishment of plans and measures for various critical situations, while pointing out that implementing them will require very substantial efforts in terms of human and material resources on the part of the various parties responsible.

4.5   Another positive aspect is the definition of the obligations of the various responsible parties, taking a specific threat (N-1 principle) as the reference point. At the same time, the high cost for some Member States entailed by the infrastructure they will have to build in order to comply with the regulation needs to be pointed out.

5.   Specific comments

5.1   The Committee considers that the responsibilities and tasks of the public authorities set out in Article 3(1) must be distinguished from those of companies or private bodies, and therefore suggests a new wording making it clear that:

| — | security of gas supply is a task of the Member State Competent Authorities and the Commission, within their respective fields of responsibility; |
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security of gas supply is a task of the Member State Competent Authorities and the Commission, within their respective fields of responsibility;

| — | natural gas companies and industrial gas consumers must cooperate and implement the measures decided by the relevant authorities. |
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natural gas companies and industrial gas consumers must cooperate and implement the measures decided by the relevant authorities.

5.2   The EESC considers that the draft Regulation (and, if relevant, its application in each Member State) should place greater emphasis on consumers’ rights in at least some of the following areas:

| (a) | Tariffs. Since the cost of these measures could fall in whole or in part to consumers via tariffs, it should be borne in mind that in democratic societies, the authorities must take account of users’ economic and social conditions when taking the relevant decisions. |
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(a)

Tariffs. Since the cost of these measures could fall in whole or in part to consumers via tariffs, it should be borne in mind that in democratic societies, the authorities must take account of users’ economic and social conditions when taking the relevant decisions.

| (b) | Clarification of the ‘domestic customer’ and ‘protected customer’ concepts, which are only described in general terms in the draft (Recital 18, which mentions ‘schools’ and ‘hospitals’). A more detailed, even if not exhaustive, list must be included. |
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(b)

Clarification of the ‘domestic customer’ and ‘protected customer’ concepts, which are only described in general terms in the draft (Recital 18, which mentions ‘schools’ and ‘hospitals’). A more detailed, even if not exhaustive, list must be included.

| (c) | Right of information. Consumers must receive precise information on the measures adopted by the authorities, forecasts of how the situation will develop, the bodies to which they should address themselves, etc. These aspects are not mentioned in the draft. |
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(c)

Right of information. Consumers must receive precise information on the measures adopted by the authorities, forecasts of how the situation will develop, the bodies to which they should address themselves, etc. These aspects are not mentioned in the draft.

5.3   The EESC considers it necessary to ensure that, as indicated in the draft Regulation, all Member States are capable of guaranteeing supply to final customers up to 2014. To this end, they must plan for or set up an N-1 network, or provide for the corresponding storage facilities. The Member States are to report in 2011 and 2014 on the measures they have taken to meet this indicator. If a Member State should fail to meet it, the other Member States should be exempted from the obligation to provide gas supplies in the event of a shortage of supply.

5.4   In the EESC's opinion, household customers and small-scale consumers must receive special protection in the event of supply disruptions. All the Member States must therefore undertake to guarantee the supply of gas and heating in accordance with the current standards.

5.5   The EESC considers that, in cases of shortage of supply, all suppliers of gas services must be equally obliged to take the necessary emergency measures. This is the only way of ensuring fair, non-discriminatory competition over the long term in the EU gas market. The exceptions that the European Commission's proposal makes for market entrants and small undertakings (Article 7(3)) should be removed.

5.6   Alternative pipeline projects to provide durable solutions in the medium to long term are under way. On 5 November 2009, the Swedish and Finnish governments authorised (as the Danish government had done earlier) the construction of Nord Stream, two parallel pipelines to convey gas from Russia to Germany via the Baltic Sea. It is expected to begin operating in 2011-2012. The purpose of the Nabucco project, headed by the Austrian OMV consortium with EU and US support, is to bring gas to Europe from the Caspian Sea, Central Asia and the Near and Middle East without passing through Russia. It is in competition with South Stream (Gazprom – ENI), supplying Russian gas to Bulgaria and other parts of Europe. However, since the measures laid down in the draft Regulation will not come into force until 2011, there is room for concern about the security of gas supplies in the immediate future, especially during the winter. The EESC trusts that the European and national authorities will be proactive in preventing a repeat of crises like that of January 2009. One option that might be considered would be to set up a crisis unit, able to take measures urgently.

5.7   Regarding the objective of the proposal, the EESC highlights the importance of the EU-Russia agreement on an early warning system in the event of supply problems, signed in Moscow on 16 November 2009, together with the willingness of both sides to cooperate on energy issues, as expressed at the Stockholm summit of 18 November 2009.

5.8   The measures contained in the Third Package for the internal energy market are complementary to those under the proposal for a Regulation and so it is important that they be put into practice. They include drawing up National Energy Action Plans to tackle energy poverty, ensuring the independence of regulatory bodies, and protecting vulnerable users, with a ban on disconnection during critical periods.

5.9   The EESC considers that the relevant EU political bodies must reconsider the gas market liberalisation policy, insofar as it works against security of supply. By the same token, Evert Faber van der Meulen (EU Studies Coordinator, Leiden University), is critical of the Commission's ‘liberal inclination’, arguing that liberalisation should be seen only as a ‘long-term’ goal. See Gas Supply and EU–Russia Relations. As experience has shown on a number of occasions, market deregulation has not produced greater investment in clean energies, or boosted diversification of supply. See, for example, the case of the United Kingdom: ‘The call for a U-turn on two decades of government policy that has created one of the most liberal energy markets came as the Committee on Climate Change, chaired by Lord Turner, concluded that deregulated markets did not produce the needed investment in low carbon energy and a diversity of supply’ (U-turn urged on UK energy policy, Financial Times, 12 October 2009). The process of liberalising and privatising the energy sector has also produced large-scale job losses. It has been estimated that liberalisation of the electricity market has resulted in the loss of 34 % of jobs in EU-15 (examples of losses in Member States: Germany 34 %, Italy 40 %, Netherlands 39 %, Spain 34 %, Sweden 33 %), while for gas, a loss of 12 % occurred over just four years in 12 Member States (CZ, DK, DE, ES, IT, LV, LT, HU, AT, PT, SI, FI). (Hermann, C and R. Atzmüller (2008), Liberalisation and Pvivatisation of Public Services and the Impact on Employment, Working Conditions and Labour Relations, Transfer, Summer 2008, Volume 14, Number 2, p. 303).

Gas Supply and EU–Russia Relations

U-turn urged on UK energy policy

Liberalisation and Pvivatisation of Public Services and the Impact on Employment, Working Conditions and Labour Relations

5.10   The EESC points out that the highly complex nature of the subject, and its strategic importance, mean that fundamental decisions on security of supply, complementary to those in the proposal, such as those concerning transmission networks, renewable energies and energy saving, fall within the remit of the Member States. Ultimately, the 2009 crisis highlighted the need for greater solidarity and cooperation within the EU in response to emergency situations. The regulation represents a major step in this direction, but its effectiveness depends on scrupulous application within the deadline set.

Brussels, 20 January 2010

The President of the European Economic and Social Committee

Mario SEPI

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(1)  OJ L 127, 29.4.2004, p. 92.

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(2)  OJ L 211, 14.8.2009, p. 94 and OJ L 211, 14.8.2009, p. 1.

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