Common Position (EC) No 6/2003 of 3 February 2003 adopted by the Council, acting in accordance with the procedure referred to in Article 251 of the Treaty establishing the European Community, with a view to adopting a Directive of the European Parliament and of the Council concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC
Date: 2003-02-03
Institutions: Council of the European Union
Subjects: approximation of laws, energy distribution, energy grid, energy storage, energy supply, energy transport, market access, natural gas, single market

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COMMON POSITION (EC) No 6/2003

adopted by the Council on 3 February 2003

with a view to the adoption of the Directive 2003/. . ./EC of the European Parliament and of the
Council of . . . concerning common rules for the internal market in natural gas and repealing
Directive 98/30/EC

(2003/C 50 E/03)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 47(2), Article 55 and
Article 95 thereof,

Having regard to the proposals from the Commission (1),

Having regard to the Opinion of the European Economic and
Social Committee (2),

Having consulted the Committee of the Regions,

Acting in accordance with the procedure laid down in Article
251 of the Treaty (3),

Whereas:

The European Parliament, in its Resolution of 6 July 2000
on the Commission's second report on the state of liberali-
sation of energy markets, requested the Commission to
adopt
achievement of
accurately defined objectives with a view to gradually
but completely liberalising the energy market.

a detailed timetable

the

for

(4) The freedoms which the Treaty guarantees European
citizens — free movement of goods, freedom to provide
services and freedom of establishment — are only possible
in a fully open market, which enables all consumers freely
to choose their suppliers and all suppliers freely to deliver
to their customers.

(5) In view of

the anticipated increase in dependency as
regards natural gas consumption, consideration should
be given to initiatives
to encourage
to third-country
arrangements
reciprocal
networks and market integration.

and measures
access
for

(1) Directive 98/30/EC of the European Parliament and of the
Council of 22 June 1998 concerning common rules for
the internal market in natural gas (4) has made significant
contributions towards the creation of an internal market
for gas.

(6) The main obstacles in arriving at a fully operational and
relate to, amongst other
competitive internal market
things, issues of access to the network, access to storage,
tarification issues,
interoperability between systems and
different degrees of market opening between Member
States.

service

(2) Experience in implementing this Directive shows

the
benefits that may result from the internal market in gas,
in terms of efficiency gains, price reductions, higher
standards of
and increased competitiveness.
However, significant shortcomings and possibilities for
improving the functioning of the market remain, notably
in ensuring a level playing field in addressing the risks of
predatory behaviour, ensuring non-discriminatory trans-
mission and distribution tariffs,
through access to the
network on the basis of tariffs published prior to their
entry into force, and ensuring that the rights of small
and vulnerable customers are protected.

(3) At its meeting in Lisbon on 23 and 24 March 2000, the
European Council called for rapid work to be undertaken
to complete the internal market in both electricity and gas
sectors and to speed up liberalisation in these sectors with
internal market.
a view to achieving a fully operational

(1) OJ C 240 E, 28.8.2001, p. 60 and OJ C 227 E, 24.9.2002, p. 393.
(2) OJ C 36, 8.2.2002, p. 10.
(3) Opinion of the European Parliament of 13 March 2002 (OJ C 47 E,
27.2.2003, p. 367), Council Common Position of 3 February 2003
and Decision of the European Parliament of . . . (not yet published
in the Official Journal).
(4) OJ L 204, 21.7.1998, p. 1.

(7) For competition to function, network access must be

non-discriminatory, transparent and fairly priced.

(8) In order to complete the internal gas market, non-discrimi-
natory access to the network of
the transmission and
distribution system operators is of paramount importance.
A transmission or distribution system operator may
consist of one or more undertakings.

storage or

(9) In case of a gas undertaking performing transmission,
(LNG)
distribution,
activities and which is separate in its legal
form from
those undertakings performing production and/or supply
activities,
the designated system operators may be the
same undertaking owning the infrastructure.

liquefied natural gas

(10) In order

efficient

to ensure

and non-discriminatory
network access it
the transmission
is appropriate that
and distribution systems are operated through legally
separate entities where vertically integrated undertakings
exist. The Commission should assess measures of
equivalent effect, developed by Member States to achieve
the aim of
this requirement, and, where appropriate,
submit proposals to amend this Directive.

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It is also appropriate that the transmission and distribution
system operators have effective decision-making rights
with respect to assets necessary to maintain and operate
and develop networks when the assets in question are
owned and operated by vertically integrated undertakings.

prevents

It is important however to distinguish between such legal
separation and ownership unbundling. Legal separation
implies neither a change of ownership of assets and
nothing
employment
conditions applying throughout the whole of the vertically
integrated undertakings. However, a non-discriminatory
ensured through
decision-making process
organisational measures regarding the independence of
the decision-makers responsible.

should be

identical

similar

or

provided to balance in-put and off-take of gas and not
to endanger the system.

(15) National regulatory authorities should be able to fix or
approve tariffs, or the methodologies underlying the calcu-
lation of the tariffs, on the basis of a proposal by the
transmission system operator or distribution system
operator(s) or LNG system operator, or on the basis of a
proposal agreed between these operator(s) and the users of
the network. In carrying out these tasks, national regu-
transmission and
latory authorities should ensure that
distribution tariffs
and cost-
the long-term,
reflective, and should take account of
marginal,
from demand-side
management measures.

avoided network costs

are non-discriminatory

(11) To avoid imposing a disproportionate financial and admin-
istrative burden on small distribution companies, Member
States should be able, where necessary, to exempt such
unbundling
legal
companies
requirements.

distribution

from the

(16) The benefits resulting from the internal market should be
available to all Community industry and commerce,
including small and medium-sized enterprises, and to all
Community citizens as quickly as possible, for reasons of
create
fairness,
employment as a result of the efficiency gains that will
be enjoyed by enterprises.

competitiveness,

indirectly,

and

to

(12) In order to facilitate the conclusion of contracts by a gas
undertaking established in a Member State for the supply
of gas to eligible customers in another Member State,
Member States and, where appropriate, national regulatory
should work towards more homogenous
authorities
conditions and the same degree of eligibility for the
whole of the internal market.

(17) Gas customers should be able to choose their supplier
freely. Nonetheless a phased approach should be taken
to completing the internal market for gas, coupled with
a specific deadline, to enable industry to adjust and ensure
that adequate measures and systems are in place to protect
the interests of customers and ensure they have a real and
effective right to choose their supplier.

the

States

specify

(13) The existence of effective regulation, carried out by one or
more national
is an important
regulatory authorities,
factor in guaranteeing non-discriminatory access to the
network. Member
functions,
competences and administrative powers of the regulatory
authorities. It is important that the regulatory authorities
in all Member States share the same minimum set of
competences.
the
authorities
competence to fix or approve the tariffs, or at least, the
methodologies underlying the calculation of transmission
and distribution tariffs and tariffs for access to liquefied
natural gas (LNG) facilities. In order to avoid uncertainty
and costly and time consuming disputes,
these tariffs
should be published prior to their entry into force.

should

Those

have

(14) In order to ensure effective market access for all market
players including new entrants, non discriminatory and
cost-reflective balancing mechanisms are necessary. As
soon as the gas market is sufficiently liquid, this should
be achieved through the
transparent
market-based mechanisms for the supply and purchase
of gas needed in the framework of balancing requirements.
In the absence of such a liquid market, national regulatory
authorities should play an active role to ensure that
balancing tariffs are non-discriminatory and cost-reflective.
should be
At

the same time, appropriate incentives

setting up of

(18) Progressive opening of markets towards full competition
should as soon as possible remove differences between
Member
in the
implementation of this Directive should be ensured.

States. Transparency

and certainty

(19) Directive 98/30/EC contributes to access to storage as part
of the gas system. In the light of the experience gained in
implementing the internal market, additional measures
should be taken to clarify the provisions for access to
storage and ancillary services.

(20) Storage facilities are essential means, amongst other things
of implementing public service obligations such as security
of
lead to distortion of
competition or discrimination in the access to storage.

supply. This

should not

(21) Further measures should be taken in order to ensure trans-
parent and non-discriminatory tariffs for access to trans-
portation. Those tariffs should be applicable to all users on
a non-discriminatory basis. Where a storage facility,
linepack or ancillary service operates in a sufficiently
competitive market, access could be allowed on the basis
of transparent and non-discriminatory market-based mech-
anisms.

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(22) In the interest of security of supply, the supply/demand
balance in individual Member States should be monitored,
and monitoring should be followed by a report on the
situation at Community level, taking account of intercon-
nection capacity between areas. Such monitoring should
be carried out sufficiently early to enable appropriate
measures to be taken if security of supply is compromised.
the necessary
The construction and maintenance of
network
interconnection
capacity, should contribute to ensuring a stable gas supply.

infrastructure,

including

(23) Member States should ensure that, taking into account the
necessary quality requirements, biogas and gas from biomass
or other types of gas are granted non-discriminatory access
to the gas system, provided such access is permanently
compatible with the relevant technical rules and safety
standards. These rules and standards should ensure, that
these gases can technically and safely be injected into, and
transported through the natural gas system and should also
address the chemical characteristics of these gases.

(24) Long-term contracts will continue to be an important part
of the gas supply of Member States and should be main-
tained as an option for gas supply undertakings in so far
as they do not undermine the objectives of this Directive
and are compatible with the Treaty, including competition
rules. It is therefore necessary to take them into account in
the planning of supply and transportation capacity of gas
undertakings.

(25) In order to ensure the maintenance of high standards of
public service in the Community, all measures taken by
Member States to achieve the objectives of this Directive
should be regularly notified to the Commission. The
Commission should regularly publish a report analysing
measures taken at national level to achieve public service
objectives and comparing their effectiveness, with a view
to making recommendations as regards measures to be
taken at national
to achieve high public service
standards.

level

should ensure

Member States
that when they are
connected to the gas system customers are informed
about their rights to be supplied with natural gas of a
specified quality at reasonable prices. Measures taken by
final customers may differ
Member States to protect
according to households and small and medium-sized
enterprises.

national circumstances and subject to the observance of
Community law.

(27) Measures implemented by Member States to achieve the
objectives of social and economic cohesion may include,
in particular,
economic
incentives, using, where appropriate, all existing national
and Community tools. These tools may include liability
mechanisms to guarantee the necessary investment.

the provision of

adequate

(28) To the extent to which measures taken by Member States
to fulfil public service obligations constitute State aid
under Article 87(1) of the Treaty, there is an obligation
according to Article 88(3) of the Treaty to notify them to
the Commission

internal gas market,

(29) Since the objective of the proposed action, namely the
creation of a fully operational
in
which fair competition prevails, cannot be sufficiently
achieved by the Member States and can therefore, by
reason of the scale and effects of the action, be better
achieved at Community level, the Community may adopt
measures in accordance with the principle of subsidiarity
and proportionality as set out in Article 5 of the Treaty. In
accordance with the principle of proportionality, as set out
in that Article, this Directive does not go beyond what is
necessary in order to achieve that objective.

(30) In the light of the experience gained with the operation of
Council Directive 91/296/EEC of 31 May 1991 on the
transit of natural gas through grids (1), measures should
be taken to ensure homogeneous and non-discriminatory
including cross-border
access regimes for transmission,
flows of gas between Member States. To ensure homo-
geneity in the treatment of access to the gas networks,
also in the case of
that Directive should be
repealed, without prejudice to the continuity of contracts
concluded under the said Directive.

transit,

(31) Given the scope of the amendments that are being made
to Directive 98/30/EC, it is desirable, for reasons of clarity
and rationalisation, that the provisions in question should
be recast.

(32) This Directive

and
the
observes the principles, recognised in particular by the
Charter of Fundamental Rights of the European Union.

fundamental

respects

rights,

common minimum standards,

(26) The respect of the public service requirements is a funda-
mental requirement of this Directive, and it is important
that
respected by all
Member States, are specified in this Directive, which take
the objectives of consumer protection,
into account
security
and
supply,
equivalent levels of competition in all Member States. It
is important that the public service requirements can be
taking into account
interpreted on a national basis,

environmental

protection

of

(33) The measures necessary for the implementation of this
Directive should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down the
procedures
implementing powers
the exercise of
conferred on the Commission (2),

for

(1) OJ L 147, 12.6.1991, p. 37. Directive as

last amended by

Commission Directive 95/49/EC (OJ L 233, 30.9.1995, p. 86).

(2) OJ L 184, 17.7.1999, p. 23.

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HAVE ADOPTED THIS DIRECTIVE:

CHAPTER I

SCOPE AND DEFINITIONS

Article 1

Scope

This Directive establishes common rules for the trans-
1.
mission, distribution, supply and storage of natural gas.
It
lays down the rules relating to the organisation and func-
tioning of the natural gas sector, access to the market, the
criteria and procedures applicable to the granting of authoris-
ations for transmission, distribution, supply and storage of
natural gas and the operation of systems.

2.
The rules established by this Directive for natural gas,
including liquefied natural gas (LNG), shall also apply to
biogas and gas from biomass or other types of gas in so far
as such gases can technically and safely be injected into, and
transported through, the natural gas system.

Article 2

Definitions

For the purposes of this Directive:

1.

2.

least one of

‘natural gas undertaking’ means any natural or legal person
the following functions:
carrying out at
transmission, distribution, supply, purchase
production,
including LNG, which is
or
storage of natural gas,
responsible for the commercial,
technical and/or main-
tenance tasks related to those functions, but shall not
include final customers;

‘upstream pipeline network’ means
any pipeline or
network of pipelines operated and/or constructed as part
of an oil or gas production project, or used to convey
to a
natural gas
processing plant or
landing
terminal;

from one or more such projects

final coastal

terminal or

other systems, and for ensuring the long-term ability of the
system to meet reasonable demands for the transportation
of gas;

5.

‘distribution’ means the transport of natural gas through
local or regional pipeline networks with a view to its
delivery to customers, but not including supply;

6.

7.

‘distribution system operator’ means a natural or legal
person who carries out the function of distribution and
is responsible for operating, ensuring the maintenance of,
and, if necessary, developing the distribution system in a
given area and, where applicable, its interconnections with
other systems, and for ensuring the long-term ability of the
system to meet reasonable demands for the distribution of
gas;

‘supply’ means the sale,
including LNG, to customers;

including resale, of natural gas,

8.

‘supply undertaking’ means any natural or legal person
who carries out the function of supply;

9.

‘storage facility’ means a facility used for the stocking of
natural gas and owned and/or operated by a natural gas
undertaking, including the part of LNG facilities used for
storage but excluding the portion used for production
operations, and excluding facilities reserved exclusively
for transmission system operators in carrying out their
functions;

10.

‘storage system operator’ means a natural or legal person
who carries out the function of storage and is responsible
for operating a storage facility;

11.

‘LNG facility’ means a terminal which is used for the lique-
faction of natural gas or the importation, offloading, and
re-gasification of LNG, and shall include ancillary services
and temporary storage necessary for the re-gasification
process and subsequent delivery to the transmission
system, but shall not include any part of LNG terminals
used for storage;

3.

‘transmission’ means the transport of natural gas through a
high-pressure pipeline network other than an upstream
pipeline network with a view to its delivery to customers,
but not including supply;

12.

‘LNG system operator’ means a natural or legal person
who carries out the function of liquefaction of natural
gas, or the importation, offloading, and re-gasification of
LNG and is responsible for operating a LNG facility;

4.

‘transmission system operator’ means a natural or legal
person who carries out the function of transmission and
is responsible for operating, ensuring the maintenance of,
and, if necessary, developing the transmission system in a
given area and, where applicable, its interconnections with

13.

‘system’ means any transmission networks, distribution
networks, LNG facilities and/or storage facilities owned
and/or operated by a natural gas undertaking,
including
linepack and its facilities supplying ancillary services and
those of
related undertakings necessary for providing
access to transmission, distribution and LNG;

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14.

‘ancillary services’ means all services necessary for access to
and the operation of
transmission and/or distribution
networks and/or LNG facilities and/or storage facilities
including load balancing and blending, but excluding
transmission system
facilities
operators carrying out their functions;

reserved exclusively for

23.

24.

‘system users’ means
supplying to, or being supplied by, the system;

any natural or

legal persons

‘customers’ means wholesale and final customers of natural
gas and natural gas undertakings which purchase natural
gas;

15.

‘linepack’ means the storage of gas by compression in gas
excluding
transmission and distribution systems, but
facilities
transmission system operators
carrying out their functions;

reserved for

16.

‘interconnected system’ means a number of systems which
are linked with each other;

25.

‘household customers’ means customers purchasing natural
gas for their own household consumption;

26.

‘non-household customers’ means customers purchasing
natural gas which is not for their own household use;

27.

‘final customers’ means customers purchasing natural gas
for their own use;

17.

‘interconnector’ means a transmission line which crosses
or spans a border between Member States for the sole
purpose of connecting the national transmission systems
of these Member States;

28.

‘eligible customers’ means customers who are free to
purchase gas from the supplier of their choice, within
the meaning of Article 23 of this Directive;

18.

‘direct line’ means a natural gas pipeline complementary to
the interconnected system;

19.

‘integrated natural gas undertaking’ means a vertically or
horizontally integrated undertaking;

20.

‘vertically integrated undertaking’ means a natural gas
undertaking or a group of undertakings whose mutual
relationships are defined in Article 3(3) of Council Regu-
lation (EEC) No 4064/89 of 21 December 1989 on the
control of concentrations between undertakings (1) and
where the undertaking/group concerned is performing at
least one of the functions of transmission, distribution,
LNG or storage, and at
the functions of
production or supply of natural gas;

least one of

21.

‘horizontally integrated undertaking’ means an undertaking
performing at least one of the functions of production,
transmission, distribution, supply or storage of natural
gas, and a non-gas activity;

22.

‘related undertakings’ means affiliated undertakings, within
the meaning of Article 41 of the Seventh Council Directive
83/349/EEC of 13 June 1983 based on the Article
the Treaty on consolidated accounts (2),
44(2)(g) (*) of
and/or associated undertakings, within the meaning of
Article 33(1) thereof, and/or undertakings which belong
to the same shareholders;

(1) OJ L 395, 30.12.1989, p. 1. Regulation as last amended by Regu-

lation (EC) No 1310/97 (OJ L 180, 9.7.1997, p. 1).

(*) The title of Directive 83/349/EEC has been adjusted to take account
of the renumbering of the Articles of the Treaty establishing the
European Community in accordance with Article 12 of the Treaty
of Amsterdam; the original reference was to Article 54(3)(g).
(2) OJ L 193, 18.7.1983, p. 1. Directive as last amended by Directive
2001/65/EC of the European Parliament and of the Council (OJ L
283, 27.10.2001, p. 28).

29.

30.

‘wholesale customers’ means any natural or legal persons
other than transmission system operators and distribution
system operators who purchase natural gas
the
purpose of resale inside or outside the system where
they are established;

for

‘long-term planning’ means the planning of supply and
transportation capacity of natural gas undertakings on a
long-term basis with a view to meeting the demand for
natural gas of the system, diversification of sources and
securing supplies to customers;

31.

‘emergent market’ means a Member State in which the first
commercial supply of its first long-term natural gas supply
contract was made not more than 10 years earlier;

32.

‘security’ means both security of supply of natural gas and
technical safety;

33.

‘new infrastructure’ means an infrastructure not completed
by the entry into force of this Directive.

CHAPTER II

GENERAL RULES FOR THE ORGANISATION OF THE
SECTOR

Article 3

Public service obligations and customer protection

1. Member States shall ensure, on the basis of their institu-
tional organisation and with due regard to the principle of
subsidiarity, that, without prejudice to paragraph 2, natural
gas undertakings are operated in accordance with the principles
of this Directive with a view to achieving a competitive and
sustainable market in natural gas, and shall not discriminate
between these undertakings as regards either rights or obli-
gations.

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Having full regard to the relevant provisions of

the
2.
Treaty,
in particular Article 86 thereof, Member States may
impose on natural gas undertakings, in the general economic
interest, public service obligations which may relate to security,
including security of supply, regularity, quality and price of
supplies, and environmental protection, including energy effi-
ciency and climate protection. Such obligations shall be clearly
defined,
In
relation to security of supply, and the fulfilment of environ-
mental goals, including energy efficiency, Member States may
introduce the implementation of long-term planning, taking
into account the possibility of third parties seeking access to
the system.

transparent, non-discriminatory and verifiable.

protect

vulnerable

in particular, ensure that
to

3. Member States shall take appropriate measures to protect
final customers and to ensure high levels of consumer
protection, and shall,
there are
customers,
safeguards
adequate
including appropriate measures to help them avoid discon-
nection. In this context, they may take appropriate measures
to protect customers in remote areas who are connected to the
gas system. Member States may appoint a supplier of last resort
for customers connected to the gas network. They shall ensure
high levels of consumer protection, particularly with respect to
transparency
and
general
conditions, general information and dispute settlement mech-
anisms. Member States shall ensure that the eligible customer is
effectively able to switch to a new supplier. As regards at least
household customers these measures shall include those set out
in Annex A.

contractual

regarding

terms

4. Member States shall implement appropriate measures to
social and economic cohesion,
achieve the objectives of
to
environmental protection, which may include means
supply. Such
combat
climate
measures may
the provision of
adequate economic incentives, using, where appropriate, all
existing national and Community tools, for the maintenance
and construction of necessary network infrastructure, including
interconnection capacity.

and security of
in particular,

change,
include,

as

to distribution insofar

5. Member States may decide not to apply the provisions of
Article 4 with respect
their
application would obstruct, in law or in fact, the performance
of the obligations imposed on natural gas undertakings in the
general economic interest and insofar as the development of
trade would not be affected to such an extent as would be
contrary to the interests of the Community. The interests of
the Community include, inter alia, competition with regard to
eligible customers in accordance with this Directive and Article
86 of the Treaty.

shall, upon implementation of

6. Member States
this
Directive, inform the Commission of all measures adopted to
including consumer and
fulfil public service obligations,
environmental protection,
effect on
national and international competition, whether or not such
measures require a derogation from the provisions of
this
Directive. They shall notify the Commission subsequently

and their possible

every two years of any changes to such measures, whether or
not they require a derogation from this Directive.

Article 4

Authorisation procedure

In circumstances where an authorisation (e.g.

licence,
1.
is required for
permission, concession, consent or approval)
the construction or operation of natural-gas facilities,
the
Member States or any competent authority they designate
shall grant authorisations to build and/or operate such facilities,
in
pipelines and associated equipment on their
accordance with paragraphs 2 to 4. Member States or any
competent authority they designate may also grant authoris-
ations on the same basis for the supply of natural gas and for
wholesale customers.

territory,

2. Where Member States have a system of authorisation,
they shall lay down objective and non-discriminatory criteria
which shall be met by an undertaking applying for an author-
isation to build and/or operate natural-gas facilities or applying
for an authorisation to supply natural gas. The non-discrimi-
natory criteria and procedures for the granting of authoris-
ations shall be made public.

to

an

grant

the reasons for any
3. Member States shall ensure that
refusal
and
objective
are
authorisation
non-discriminatory and are given to the applicant. Reasons
for such refusals shall be forwarded to the Commission for
information. Member States
establish a procedure
enabling the applicant to appeal against such refusals.

shall

4.
For the development of newly supplied areas and efficient
operation generally, and without prejudice to Article 24,
Member States may decline to grant a further authorisation
to build and operate distribution pipeline systems in any
particular area once such pipeline systems have been or are
proposed to be built in that area and if existing or proposed
capacity is not saturated.

Article 5

Monitoring of security of supply

additional

Member States shall ensure the monitoring of security of
supply issues. Where Member States consider it appropriate,
they may delegate this task to the regulatory authorities
referred to in Article 25(1). This monitoring shall, in particular,
cover the supply/demand balance on the national market, the
level of expected future demand and available supplies,
envisaged
being planned or under
construction, and the quality and level of maintenance of the
networks, as well as measures to cover peak demand and to
deal with shortfalls of one or more suppliers. The competent
authorities shall publish, by 31 July each year at the latest a
report outlining the findings resulting from the monitoring of
these issues, as well as any measures taken or envisaged to
address them and shall forward this report to the Commission
forthwith.

capacity

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Article 6

Technical rules

for

requirements

design and operational

Member States shall ensure that technical safety criteria are
technical rules establishing the minimum
defined and that
technical
the
connection to the system of LNG facilities, storage facilities,
other transmission or distribution systems, and direct lines,
are developed and made public. These technical rules shall
ensure the interoperability of systems and shall be objective
and non-discriminatory. They
shall be notified to the
Commission in accordance with Article 8 of Directive
98/34/EC of the European Parliament and of the Council of
22 June 1998 laying down a procedure for the provision of
information in the field of technical standards and regulations
and of rules on Information Society Services (1).

CHAPTER III

TRANSMISSION, STORAGE AND LNG

Article 7

Designation of system operators

Member States shall designate or shall require natural gas
undertakings which own transmission, storage or LNG facilities
to designate, for a period of time to be determined by Member
States having regard to considerations of efficiency and
economic balance, one or more system operators. Member
States shall take the measures necessary to ensure that trans-
mission, storage and LNG system operators act in accordance
with Articles 8 to 10.

Article 8

Tasks of system operators

Each transmission, storage and/or LNG system operator

1.
shall:

(a) operate, maintain and develop under economic conditions
secure, reliable and efficient transmission, storage and/or
LNG facilities, with due regard to the environment;

(b) refrain from discriminating between system users or classes
of system users, particularly in favour of its related under-
takings;

any

(c) provide any other transmission system operator, any other
storage system operator, any other LNG system operator
and/or
sufficient
information to ensure that the transport and storage of
natural gas may take place in a manner compatible with
the secure and efficient operation of the interconnected
system;

system operator,

distribution

(1) OJ L 204, 21.7.1998, p. 37. Directive as amended by Directive

98/48/EC (OJ L 217, 5.8.1998, p. 18).

(d) provide system users with the information they need for

efficient access to the system.

2.
for
Rules adopted by transmission system operators
balancing the gas transmission system shall be objective, trans-
parent and non-discriminatory, including rules for the charging
of system users of their networks for energy imbalance. Terms
and conditions, including rules and tariffs, for the provision of
such services by transmission system operators shall be estab-
lished pursuant
to a methodology compatible with Article
25(2)
in a non-discriminatory and cost-reflective way and
shall be published.

States may

3. Member
system
operators to comply with minimum requirements for the main-
tenance and development of the transmission system, including
interconnection capacity.

transmission

require

4.
Transmission system operators shall procure the energy
they use for the carrying out of their functions according to
transparent, non-discriminatory and market based procedures.

Article 9

Unbundling of transmission system operators

in terms of

1. Where the transmission system operator is part of a
it shall be independent at
vertically integrated undertaking,
least
form, organisation and decision
making from other activities not relating to transmission.
This requirement shall not imply or result in the requirement
to separate the ownership of assets of the transmission network
from the vertically integrated undertaking.

its legal

In order to ensure the independence of the transmission
the following

2.
system operator referred to in paragraph 1,
minimum criteria shall apply:

(a) those persons responsible for the management of the trans-
mission system operator may not participate in company
integrated natural gas undertaking
structures of
the day-to-day
for
responsible, directly or
operation of the production, distribution and supply of
natural gas;

indirectly,

the

(b) appropriate measures must be taken to ensure that the
the
professional
management of
the transmission system operator are
taken into account in a manner that ensures that they
are capable of acting independently;

interests of persons

responsible

for

(c)

shall have effective
the transmission system operator
decision-making rights,
from the integrated
independent
natural gas undertaking, with respect to assets necessary
to operate, maintain or develop the network. This should
not prevent
the existence of appropriate coordination
mechanisms to ensure that the economic and management
supervision rights of the parent company in respect of
return on assets in a subsidiary are protected;

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(d) the

shall

transmission system operator

establish a
compliance programme, which sets out measures taken
to ensure that discriminatory conduct
is excluded, and
ensure that observance of it is adequately monitored. The
specific obligations of
programme
employees
report,
setting out the measures taken, shall be submitted by the
person or body responsible for monitoring the compliance
programme to the regulatory authority referred to in
Article 25(1) and shall be published.

this objective. An annual

shall
to meet

set out

the

Article 10

Confidentiality for transmission system operators

1. Without prejudice to Article 16 or any other legal duty to
disclose information, each transmission, storage and/or LNG
of
preserve
system operator
commercially sensitive information obtained in the course of
carrying out its business, and shall prevent information about
its own activities which may be commercially advantageous
from being disclosed in a discriminatory manner.

confidentiality

shall

the

2.
Transmission system operators shall not, in the context of
sales or purchases of natural gas by related undertakings, abuse
commercially sensitive information obtained from third parties
in the context of providing or negotiating access to the system.

CHAPTER IV

DISTRIBUTION AND SUPPLY

Article 11

Designation of distribution system operators

Member States shall designate, or shall require undertakings
which own or are responsible for distribution systems to
designate, for a period of time to be determined by Member
States, having regard to considerations of efficiency and
economic balance, one or more distribution system operators
and shall ensure that those operators act in accordance with
Articles 12 and 14.

Article 12

Tasks of distribution system operators

1.
Each distribution system operator shall operate, maintain
and develop under economic conditions a secure, reliable and
efficient system, with due regard for the environment.

2.
In any event, the distribution system operator shall not
discriminate between system users or classes of system users,
particularly in favour of its related undertakings.

3.
Each distribution system operator shall provide any other
distribution system operator, and/or any transmission, and/or

information to ensure

LNG system operator, and/or storage system operator with
sufficient
transport and
storage of natural gas takes place in a manner compatible
with the secure and efficient operation of the interconnected
system.

that

the

4.
Each distribution system operator shall provide system
users with the information they need for efficient access to
the system.

shall
including rules

5. Where distribution system operators are responsible for
balancing the gas distribution system, rules adopted by them
and
for
that purpose
non-discriminatory,
charging of
system users for energy imbalance. Terms and conditions,
including rules and tariffs, for the provision of such services
to a
by system operators
methodology compatible with Article 25(2) in a non-discrimi-
natory and cost-reflective way and shall be published.

shall be established pursuant

be objective,
for

transparent
the

Article 13

Unbundling of distribution system operators

in terms of

1. Where the distribution system operator is part of a
it shall be independent at
vertically integrated undertaking,
least
form, organisation and decision
making from other activities not relating to distribution. This
requirement shall not imply or result in the requirement to
separate the ownership of assets of the distribution network
from the vertically integrated undertaking.

its legal

In order to ensure the independence of the distribution
2.
system operator referred to in paragraph 1 the following
minimum criteria shall apply:

the
(a) those persons responsible for the management of
distribution system operator may not participate
in
company structures of the integrated natural gas under-
taking responsible, directly or indirectly, for the day-to-day
operation of the production, transmission and supply of
natural gas;

(b) appropriate measures must be taken to ensure that the
the
professional
management of
the distribution system operator are
taken into account in a manner that ensures that they
are capable of acting independently;

interests of persons

responsible

for

(c)

independent

shall have
effective
the distribution system operator
decision-making rights,
from the integrated
natural gas undertaking, with respect to assets necessary
to operate, maintain or develop the network. This should
not preclude the existence of appropriate coordination
mechanisms to ensure that the economic and management
supervision rights of the parent company in respect of
return on assets in a subsidiary are protected;

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(d) the

shall

establish

distribution

a
system operator
compliance programme, which sets out measures taken
to ensure that discriminatory conduct
is excluded, and
ensure that observance of it is adequately monitored. The
specific obligations of
programme
employees
report,
setting out the measures taken, shall be submitted by the
person or body responsible for monitoring the compliance
programme to the regulatory authority referred to in
Article 25(1) and shall be published.

this objective. An annual

shall
to meet

set out

the

Member States may decide not to apply paragraphs 1 and 2 to
integrated natural gas undertakings serving less than 100 000
connected customers.

Article 14

Confidentiality for distribution system operators

the

1. Without prejudice to Article 16 or any other legal duty to
disclose information, each distribution system operator shall
sensitive
preserve
information obtained in the course of carrying out
its
business, and shall prevent information about its own activities
which may be commercially advantageous from being disclosed
in a discriminatory manner.

confidentiality

commercially

of

2.
Distribution system operators shall not, in the context of
sales or purchases of natural gas by related undertakings, abuse
commercially sensitive information obtained from third parties
in the context of providing or negotiating access to the system.

Article 15

Combined operator

The rules in Articles 9(1) and Article 13(1) shall not prevent
the operation of a combined transmission, LNG, storage and
distribution system operator, which is independent in terms of
its legal form, organisation and decision making from other
activities not
storage and
relating to transmission LNG,
distribution system operations and which meets the following
requirements:

(a) those persons responsible for

the management of
system operator may not participate

the
in
combined
company structures of the integrated natural gas under-
taking responsible, directly or indirectly, for the day-to-day
operation of the production and supply of natural gas;

(b) appropriate measures must be taken to ensure that the
professional
the
management of the combined system operator are taken

interests of persons

responsible

for

into account in a manner that ensures that they are capable
of acting independently;

(c)

the combined system operator shall have effective decision-
making rights, independent from the integrated natural gas
undertaking, with respect to assets necessary to operate,
maintain or develop the system. This should not preclude
the existence of appropriate coordination mechanisms to
the economic and management supervision
ensure that
rights of
the parent company in respect of return on
assets in a subsidiary are protected;

is

excluded,

(d) the combined system operator shall establish a compliance
programme, which sets out measures taken to ensure that
discriminatory conduct
that
observance of it is adequately monitored. The programme
shall set out the specific obligations of employees to meet
this objective. An annual report, setting out the measures
taken, shall be submitted by the person or body responsible
for monitoring the compliance programme to the regu-
latory authority referred to in Article 25(1) and shall be
published.

and ensure

CHAPTER V

UNBUNDLING AND TRANSPARENCY OF ACCOUNTS

Article 16

Right of access to accounts

1.
Member States or any competent authority they designate,
including the regulatory authorities
referred to in Article
25(1) and the dispute settlement authorities referred to in
Article 20(3), shall,
insofar as necessary to carry out their
functions, have right of access to the accounts of natural gas
undertakings as set out in Article 17.

2. Member States and any designated competent authority,
including the regulatory authorities referred to in Article 25(1)
and the dispute settlement authorities, shall preserve the confi-
dentiality of commercially sensitive information. Member States
may provide for the disclosure of such information where this
is necessary in order for the competent authorities to carry out
their functions.

Article 17

Unbundling of accounts

1. Member States shall take the necessary steps to ensure
that
in
the accounts of natural gas undertakings are kept
accordance with paragraphs 2 to 5. Where undertakings
benefit from a derogation from this provision on the basis of
Article 28(2) and (4), they shall at least keep their internal
accounts in accordance with this Article.

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their

Natural gas undertakings, whatever

system of
2.
ownership or legal form, shall draw up, submit to audit and
publish their annual accounts in accordance with the rules of
national law concerning the annual accounts of limited liability
companies adopted pursuant to the Fourth Council Directive
78/660/EEC of 25 July 1978 based on Article 44(2)(g) (*) of
the Treaty on the annual accounts of certain types of
companies (1). Undertakings which are not legally obliged to
publish their annual accounts shall keep a copy of these at the
disposal of the public at their head office.

gas

and

shall,

Natural

in their

undertakings

cross-subsidisation

3.
internal
accounting, keep separate accounts for each of their trans-
mission, distribution, LNG and storage activities as
they
would be required to do if the activities in question were
carried out by separate undertakings, with a view to avoiding
of
discrimination,
competition. They shall also keep accounts, which may be
consolidated,
for other gas activities not relating to trans-
mission, distribution, LNG and storage. Until 1 July 2007,
they shall keep separate accounts for supply activities for
for non-eligible
and supply activities
eligible
customers. Revenue from ownership of
the transmission/
distribution network shall be specified in the accounts.
Where appropriate, they shall keep consolidated accounts for
other, non-gas activities. The internal accounts shall include a
balance sheet and a profit and loss account for each activity.

customers

distortion

Undertakings shall specify in their internal accounting the
4.
rules for the allocation of assets and liabilities, expenditure and
income as well as for depreciation, without prejudice to
nationally applicable accounting rules, which they follow in
drawing up the separate accounts referred to in paragraph 3.
These internal rules may be amended only in exceptional cases.
Such amendments shall be mentioned and duly substantiated.

The annual accounts shall

indicate in notes any trans-
5.
action of a certain size conducted with related undertakings.

CHAPTER VI

ORGANISATION OF ACCESS TO THE SYSTEM

Article 18

Third party access

1. Member States shall ensure the implementation of a
system of
transmission and
distribution system, and LNG facilities based on published

third party access

to the

(*) The title of Directive 78/660/EEC has been adjusted to take account
of the renumbering of the Articles of the Treaty establishing the
European Community in accordance with Article 12 of the Treaty
of Amsterdam; the original reference was to Article 54(3)(g).
(1) OJ L 222, 14.8.1978, p. 11. Directive as last amended by Directive
2001/65/EC of the European Parliament and of the Council (OJ L
283, 27.10.2001, p. 28).

including supply
tariffs, applicable to all eligible customers,
undertakings, and applied objectively and without discrimi-
nation between system users. Member States shall ensure that
these tariffs, or the methodologies underlying their calculation
shall be approved prior to their entry into force by a regulatory
authority referred to in Article 25(1) and that these tariffs —
and the methodologies, where only methodologies
are
approved — are published prior to their entry into force.

2.
Transmission system operators shall, if necessary for the
purpose of carrying out their functions including in relation to
cross-border transmission, have access to the network of other
transmission system operators.

The provisions of this Directive shall not prevent the
3.
conclusion of long-term contracts in so far as they comply
with Community competition rules.

Article 19

Access to storage

1.
For the organisation of access to storage facilities and
linepack when technically and/or economically necessary for
providing efficient access to the system for the supply of
customers, as well as
to
ancillary services, Member States may choose either or both
of the procedures referred to in paragraphs 3 and 4. These
procedures shall operate in accordance with objective, trans-
parent and non-discriminatory criteria.

the organisation of access

for

2.
The provisions of paragraph 1 shall not apply to ancillary
services and temporary storage that are related to LNG facilities
and are necessary for the re-gasification process and subsequent
delivery to the transmission system.

either

customers

inside or outside

In the case of negotiated access, Member States shall take
3.
for natural gas undertakings and
the necessary measures
eligible
territory
covered by the interconnected system to be able to negotiate
access to storage and linepack, when technically and/or econ-
omically necessary for providing efficient access to the system,
as well as for the organisation of access to other ancillary
services. The parties shall be obliged to negotiate access to
storage, linepack and other ancillary services in good faith.

the

Contracts for access to storage,
linepack and other ancillary
services shall be negotiated with the relevant storage system
operator or natural gas undertakings. Member States shall
require storage system operators and natural gas undertakings
to publish their main commercial conditions for the use of
storage,
linepack and other ancillary services within the first
six months following implementation of this Directive and on
an annual basis every year thereafter.

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In the case of regulated access Member States shall take
4.
the necessary measures to give natural gas undertakings and
eligible customers either inside or outside the territory covered
by the interconnected system a right
to access to storage,
ancillary services, on the basis of
linepack and other
published tariffs and/or other terms and obligations for use
of that storage and linepack, when technically and/or econ-
omically necessary for providing efficient access
to the
system, as well as for the organisation of access to other
ancillary services. This right of access for eligible customers
may be given by enabling them to enter
into supply
contracts with competing natural gas undertakings other than
the owner and/or operator of the system or a related under-
taking.

Article 20

Access to upstream pipeline networks

they are located, are able to obtain access

1. Member States shall
take the necessary measures to
ensure that natural gas undertakings and eligible customers,
to
wherever
upstream pipeline networks,
supplying
technical services incidental
in accordance
with this Article, except for the parts of such networks and
facilities which are used for local production operations at the
site of a field where the gas is produced. The measures shall be
notified to the Commission in accordance with the provisions
of Article 33.

including facilities

to such access,

2.
The access referred to in paragraph 1 shall be provided in
a manner determined by the Member State in accordance with
the relevant legal instruments. Member States shall apply the
objectives of fair and open access, achieving a competitive
market in natural gas and avoiding any abuse of a dominant
position,
security and regularity of
supplies, capacity which is or can reasonably be made
available, and environmental protection. The following may
be taken into account:

taking into account

(a) the need to refuse access where there is an incompatibility
technical specifications which cannot be reasonably

of
overcome;

(b) the need to avoid difficulties which cannot be reasonably
overcome and could prejudice the efficient, current and
planned future production of hydrocarbons,
including
that from fields of marginal economic viability;

(c) the need to respect the duly substantiated reasonable needs
of the owner or operator of the upstream pipeline network
for the transport and processing of gas and the interests of
all other users of the upstream pipeline network or relevant
processing or handling facilities who may be affected; and

they have in place
3. Member States shall ensure that
dispute-settlement arrangements, including an authority inde-
pendent of the parties with access to all relevant information,
to enable disputes relating to access to upstream pipeline
networks to be settled expeditiously, taking into account the
criteria in paragraph 2 and the number of parties which may
be involved in negotiating access to such networks.

In the event of cross-border disputes,

the dispute-
4.
settlement arrangements for the Member State having juris-
diction over the upstream pipeline network which refuses
access shall be applied. Where, in cross-border disputes, more
than one Member State covers the network concerned, the
Member States concerned shall consult with a view to
ensuring that
this Directive are applied
consistently.

the provisions of

Article 21

Refusal of access

them from carrying out

1.
Natural gas undertakings may refuse access to the system
on the basis of lack of capacity or where the access to the
system would prevent
the public-
referred to in Article 3(2) which are
service obligations
assigned to them or on the basis of serious economic and
financial difficulties with take-or-pay contracts having regard
to the criteria and procedures set out in Article 27 and the
alternative chosen by the Member State in accordance with
paragraph 1 of that Article. Duly substantiated reasons shall
be given for such a refusal.

2. Member States may take the measures necessary to
ensure that the natural gas undertaking refusing access to the
system on the basis of lack of capacity or a lack of connection
makes the necessary enhancements as far as it is economic to
do so or when a potential customer is willing to pay for them.
In circumstances where Member States apply Article 4(4),
Member States shall take such measures.

Article 22

New infrastructure

infrastructures,

interconnectors
1. Major new gas
between Member States, LNG and storage facilities, may,
upon request, be exempted from the provisions of Articles
18, 19, 20, and 25(2),
the following
conditions:

(3) and (4) under

i.e.

(a) the investment must enhance competition in gas supply

and enhance security of supply;

(d) the need to apply their laws and administrative procedures,
in conformity with Community law, for the grant of auth-
orisation for production or upstream development.

(b) the level of risk attached to the investment is such that the
investment would not take place unless an exemption was
granted;

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(c) the infrastructure must be owned by a natural or legal
person which is separate at
its legal
form from the system operators in whose systems that
infrastructure will be built;

in terms of

least

(d) charges are levied on users of that infrastructure;

(e) the exemption is not detrimental to competition or the
effective functioning of the internal gas market, or the
efficient functioning of the regulated system to which the
infrastructure is connected.

Paragraph 1 shall apply also to significant increases of
2.
capacity in existing infrastructures and to modifications of such
infrastructures which enable the development of new sources
of gas supply.

3. (a) The regulatory authority referred to in Article 25 may,
on a case-by-case basis, decide on the exemption
referred to in paragraphs 1 and 2. However, Member
States may provide that the regulatory authorities shall
submit, for formal decision, to the relevant body in the
Member State its opinion on the request
for an
exemption. This opinion shall be published together
with the decision.

(b)

(i) The

exemption may

all or parts of,
respectively,
the existing
the new infrastructure,
infrastructure with significantly increased capacity
or the modification of the existing infrastructure.

cover

(ii) In deciding to grant an exemption consideration
shall be given, on a case-by-case basis, to the need
to impose conditions regarding the duration of the
exemption and non-discriminatory access to the
interconnector.

(iii) When

on

deciding

conditions

this
the
subparagraph account shall, in particular, be taken
of the duration of contracts, additional capacity to
be built or the modification of existing capacity, the
time horizon of the project and national circum-
stances.

in

(c) When granting an exemption the relevant authority may
decide upon the rules and mechanisms for management
and allocation of capacity insofar as this does not
prevent the implementation of long term contracts.

(d) The

exemption decision,

including any conditions
referred to in (b), shall be duly reasoned and published.

form, enabling the Commission to reach a well-founded
decision.

In particular, the information shall contain:

(a) the detailed reasons on the basis of which the regulatory
authority, or Member State, granted the
exemption,
including the financial information justifying the need for
the exemption;

(b) the analysis undertaken of the effect on competition and
internal gas market

the
functioning of
resulting from the grant of the exemption;

effective

the

(c)

the reasons for the time period and the share of the total
capacity of the gas infrastructure in question for which the
exemption is granted;

(d) in case the exemption relates to an interconnector, the
consultation with the Member States

result of
concerned or regulatory authorities;

the

(e)

the contribution of the infrastructure to the diversification
of gas supply.

after

receiving

Within two months
the
Commission may request that the regulatory authority or the
Member State concerned amend or withdraw the decision to
grant an exemption. The two-month period may be extended
by one additional month where additional
information is
sought by the Commission.

a notification,

If the regulatory authority or Member State concerned does not
comply with the request within a period of four weeks, a final
decision shall be taken in accordance with the procedure
referred to in Article 30(2).

The Commission shall preserve
commercially sensitive information.

the

confidentiality

of

Article 23

Market opening and reciprocity

1. Member States shall ensure that the eligible customers
are:

(a) until 1 July 2004, the eligible customers as specified in
Article 18 of Directive 98/30/EC. Member States shall
publish by 31 January each year the criteria for the defi-
nition of these eligible customers;

(b) from 1 July 2004, at

the latest, all non-household

customers;

(e) In the case of an interconnector any exemption decision
shall be taken after consultation with the other Member
States or regulatory authorities concerned.

(c)

from 1 July 2007, all customers.

4.
The exemption decision shall be notified, without delay,
by the competent authority to the Commission, together with
all the relevant information with respect to the decision. This
information may be submitted to the Commission in aggregate

(a) contracts for the supply with an eligible customer in the
system of another Member State shall not be prohibited if
the customer is eligible in both systems involved;

2.

To avoid imbalance in the opening of gas markets:

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two systems,

(b) in cases where transactions as described in point (a) are
refused because the customer is eligible in only one of
the
taking into
the Commission may,
account
the situation in the market and the common
interest, oblige the refusing party to execute the requested
supply, at the request of one of the Member States of the
two systems.

Article 24

Direct lines

1. Member States shall
enable:

take the necessary measures to

(a) natural gas undertakings established within their territory
to supply the eligible customers through a direct line;

(b) any such eligible customer within their territory to be
supplied through a direct line by natural gas undertakings.

In circumstances where an authorisation (e.g.

licence,
2.
is required for
permission, concession, consent or approval)
the Member
the construction or operation of direct
States or any competent authority they designate shall
lay
down the criteria for the grant of authorisations for the
construction or operation of such lines in their territory.
These criteria shall be objective, transparent and non-discrimi-
natory.

lines,

3. Member States may make authorisations to construct a
direct line subject either to the refusal of system access on the
basis of Article 21 or to the opening of a dispute-settlement
procedure under Article 25.

Article 25

Regulatory authorities

1. Member States shall designate one or more competent
bodies with the function of regulatory authorities. These auth-
orities shall be wholly independent of the interests of the gas
least be responsible for ensuring
industry. They shall at
non-discrimination, effective competition and the efficient
functioning of the market, by at least monitoring in particular:

(a) the rules on the management and allocation of intercon-
regulatory
those Member States with

in conjunction with the

nection capacity,
authority or authorities of
which interconnection exists;

account
parties,
non-aggregated information as commercially confidential;

taking

need

into

the

to

treat

(e)

the effective unbundling of accounts as referred to in
Article 17, to ensure there are no cross-subsidies between
transmission, distribution,
LNG and supply
activities;

storage,

(f)

the access conditions to storage,
ancillary services as provided for in Article 19.

linepack and to other

2.
The regulatory authorities shall be responsible for fixing
or approving prior to their entry into force, at least the metho-
dologies used to calculate or establish the terms and conditions
for:

(a) connection and access to national networks,

including
transmission and distribution tariffs, and terms, conditions
and tariffs for access to LNG facilities;

(b) the provision of balancing services.

the regulatory authorities

Notwithstanding paragraph 2, Member States may
3.
provide that
for
formal decision, to the relevant body in the Member State
the tariffs or at least the methodologies referred to in that
paragraph as well
referred to in
paragraph 4.

the modifications

submit,

shall

as

These tariffs or the methodologies or modifications thereto
shall be published together with the decision on formal
adoption.

Regulatory authorities shall have the authority to require
4.
if
transmission, LNG and distribution system operators,
necessary,
including
to modify the terms and conditions,
tariffs and methodologies referred to in paragraphs 1, 2 and
3, to ensure that they are proportionate and applied in a
non-discriminatory manner.

Any party having a complaint against a transmission,
5.
LNG or distribution system operator with respect
to the
issues mentioned in paragraphs 1, 2 and 4 and in Article 19
may refer the complaint to the regulatory authority which,
issue a decision
acting as dispute settlement authority, shall
within two months after
the complaint. This
period may be extended by two months where additional
sought by the regulatory authorities. This
information is
period may be
the
complainant. Such a decision shall have binding effect unless
and until overruled on appeal.

extended with the

agreement of

receipt of

(b) any mechanisms to deal with congested capacity within the

national gas system;

(c) the time taken by transmission and distribution system

operators to make connections and repairs;

(d) the publication of appropriate information by transmission
and distribution system operators concerning intercon-
nectors, grid usage and capacity allocation to interested

Any party who is affected and who has a right

to
6.
complain concerning a decision on methodologies
taken
pursuant to paragraphs 2, 3 or 4 or, where the regulatory
authority has a duty to consult, concerning the proposed
methodologies, may, at the latest within two months, or a
shorter time period as provided by Member States, following
publication of the decision or proposal for a decision, submit a
complaint
shall not have
review. Such a complaint
suspensive effect.

for

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7. Member States shall take measures to ensure that regu-
latory authorities are able to carry out their duties referred to
in paragraphs 1 to 5 in an efficient and expeditious manner.

8. Member States shall create appropriate and efficient
mechanisms for regulation, control and transparency so as to
avoid any abuse of a dominant position, in particular to the
detriment of consumers, and any predatory behaviour. These
mechanisms shall take account of the provisions of the Treaty,
and in particular Article 82 thereof.

taken,

including

9. Member States shall ensure that the appropriate measures
criminal
administrative
are
proceedings in conformity with their national
law, against
the natural or legal persons responsible where confidentiality
rules imposed by this Directive have not been respected.

action or

10.
In the event of cross-border disputes, the deciding regu-
latory authority shall be the regulatory authority which has
jurisdiction in respect of the system operator, which refuses
use of, or access to, the system.

11.
Complaints referred to in paragraphs 5 and 6 shall be
without prejudice to the exercise of rights of appeal under
Community and national law.

more gas-purchase contracts, an application for a temporary
derogation from Article 18 may be sent to the Member State
concerned or the designated competent authority. Applications
shall, according to the choice of Member States, be presented
on a case-by-case basis either before or after refusal of access to
the system. Member States may also give the natural gas under-
taking the choice of presenting an application either before or
after refusal of access to the system. Where a natural gas
undertaking has
the application shall be
presented without delay. The applications shall be accompanied
by all relevant information on the nature and extent of the
problem and on the efforts undertaken by the natural gas
undertaking to solve the problem.

refused access,

If alternative solutions are not reasonably available, and taking
into account the provisions of paragraph 3, the Member State
or the designated competent authority may decide to grant a
derogation.

State, or

The Member

2.
the designated competent
authority, shall notify the Commission without delay of its
decision to grant a derogation, together with all the relevant
information with respect to the derogation. This information
may be submitted to the Commission in an aggregated form,
enabling the Commission to reach a well-founded decision.
the
Within eight weeks of
the
Commission may request
designated
or
withdraw the decision to grant a derogation.

this notification,
the Member State or
amend

that
authority

its receipt of

competent

concerned

CHAPTER VII

FINAL PROVISIONS

Article 26

Safeguard measures

1.
In the event of a sudden crisis in the energy market or
where the physical safety or security of persons, apparatus or
installations or system integrity is threatened, a Member State
may temporarily take the necessary safeguard measures.

2.
Such measures shall cause the least possible disturbance
to the functioning of the internal market and shall not be wider
in scope than is strictly necessary to remedy the sudden
difficulties which have arisen.

If the Member State or the designated competent authority
concerned does not comply with this request within a period
of four weeks, a final decision shall be taken expeditiously in
accordance with the procedure referred to in Article 30(2).

The Commission shall preserve
commercially sensitive information.

the

confidentiality

of

referred to in
3. When deciding on the derogations
paragraph 1, the Member State, or the designated competent
authority, and the Commission shall
in
particular, the following criteria:

take into account,

(a)

the objective of achieving a competitive gas market;

The Member State concerned shall without delay notify
3.
to the other Member States, and to the
these measures
the Member State
that
Commission, which may decide
concerned must amend or abolish such measures,
insofar as
they distort competition and adversely affect trade in a manner
which is at variance with the common interest.

(b) the need to fulfil public-service obligations and to ensure

security of supply;

(c)

the position of the natural gas undertaking in the gas
market and the actual state of competition in this market;

Article 27

Derogations in relation to take-or-pay commitments

(d) the seriousness of the economic and financial difficulties
encountered by natural gas undertakings and transmission
undertakings or eligible customers;

1.
If a natural gas undertaking encounters, or considers it
would encounter, serious economic and financial difficulties
because of its take-or-pay commitments accepted in one or

(e)

the dates of signature and terms of
the contract or
contracts in question, including the extent to which they
allow for market changes;

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(f)

the efforts made to find a solution to the problem;

(g) the extent

to which, when accepting the take-or-pay
could
commitments
reasonably have foreseen, having regard to the provisions
of this Directive, that serious difficulties were likely to arise;

undertaking

question,

the

in

(h) the level of connection of the system with other systems
and the degree of interoperability of these systems; and

(i)

the effects the granting of a derogation would have on the
correct application of this Directive as regards the smooth
functioning of the internal natural gas market.

lead to a situation in which it

A decision on a request for a derogation concerning take-
or-pay contracts concluded before the entry into force of this
Directive should not
is
impossible to find economically viable alternative outlets.
in any case be deemed not to exist
Serious difficulties shall
when the sales of natural gas do not fall below the level of
minimum offtake guarantees contained in gas-purchase take-
or-pay contracts or in so far as the relevant gas-purchase take-
or-pay contract can be adapted or the natural gas undertaking
is able to find alternative outlets.

4.
Natural gas undertakings which have not been granted a
derogation as referred to in paragraph 1 shall not refuse, or
shall no longer refuse, access to the system because of take-
or-pay commitments accepted in a gas purchase contract.
Member States shall ensure that
the relevant provisions of
Chapter VI namely Articles 18 to 25 are complied with.

5.
Any derogation granted under the above provisions shall
be duly substantiated. The Commission shall publish the
decision in the Official Journal of the European Communities.

A Member State, qualifying as an emergent market,
2.
which because of the implementation of this Directive would
experience substantial problems may derogate from Articles 4,
7, 8(1) and (2), 9, 11, 12(5), 13, 17, 18, 23(1) and/or 24 of
this Directive. This derogation shall automatically expire from
the moment when the Member State no longer qualifies as an
emergent market. Any such derogation shall be notified to the
Commission.

3.
On the date at which the derogation referred to in
paragraph 2 expires, the definition of eligible customers shall
result in an opening of the market equal to at least 33 % of the
total annual gas consumption of the national gas market. Two
years thereafter, Art 23(1)(b) shall apply, and three years
thereafter, Article 23(1)(c). Until Article 23(1)(b) applies the
Member State referred to in paragraph 2 may decide not to
apply Article 18 as far as ancillary services and temporary
the re-gasification process and its subsequent
storage for
delivery to the transmission system are concerned.

4. Where implementation of
this Directive would cause
substantial problems in a geographically limited area of a
Member State,
in particular concerning the development of
the transmission and major distribution infrastructure, and
with a view to encouraging investments, the Member State
may apply to the Commission for a temporary derogation
from Article 4, Article 7, Article 8(1) and (2), Article 9,
Article 11, Article 12(5), Article 13, Article 17, Article 18,
Article 23(1) and/or Article 24 for developments within this
area.

5.
The Commission may grant the derogation referred to in
paragraph 4, taking into account, in particular, the following
criteria:

— the need for infrastructure investments, which would not
competitive market

to operate

in a

be
economic
environment,

this Directive,

The Commission shall, within five years of the entry into
6.
submit a review report on the
force of
experience gained from the application of this Article, so as
to allow the European Parliament and the Council to consider,
in due course, the need to adjust it.

— the level and pay-back prospects of investments required,

— the size and maturity of

the gas system in the area

concerned,

Article 28

Emergent and isolated markets

1. Member States not directly connected to the intercon-
nected system of any other Member State and having only
one main external supplier may derogate from Articles 4, 9,
23 and/or 24 of this Directive. A supply undertaking having a
market share of more than 75 % shall be considered to be a
main supplier. This derogation shall automatically expire from
the moment when at least one of these conditions no longer
applies. Any such derogation shall be notified to the
Commission.

— the prospects for the gas market concerned,

— the geographical size and characteristics of the area or
region concerned, and socio-economic and demographic
factors.

(a) For gas infrastructure other than distribution infrastructure
a derogation may be granted only if no gas infrastructure
has been established in this area, or has been so established
for less than 10 years. The temporary derogation may not
exceed 10 years from the time gas is first supplied in the
area.

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(b) For distribution infrastructure a derogation may be granted
for a time period which may not exceed 20 years for the
distribution infrastructure from the time gas
first
supplied through the said system in the area.

is

2. Where reference is made to this paragraph, Articles 3 and
7 of Decision 1999/468/EC shall apply, having regard to the
provisions of Article 8 thereof.

6.
Luxembourg may benefit from a derogation from Articles
8(3) and 9 for a period of five years from 1 July 2004. Such a
derogation shall be reviewed before the end of the five-year
period and any decision to renew the derogation for another
five years shall be taken in accordance with the procedure
referred to in Article 30(2). Any such derogation shall be
notified to the Commission.

The Commission shall

inform the Member States of
7.
applications made under paragraph 4 prior
to taking a
decision pursuant to paragraph 5, taking into account respect
for confidentiality. This decision, as well as the derogations
referred to in paragraphs 1 and 2, shall be published in the
Official Journal of the European Union.

8.
Greece may derogate from Articles 4, 11, 12, 13, 18, 23
and/or 24 of this Directive for the geographical areas and time
periods specified in the licences issued by it, prior to 15 March
2002 and in accordance with Directive 98/30/EC,
for the
development
distribution
exclusive
networks in certain geographical areas.

exploitation of

and

Article 29

Review Procedure

In the event that the report referred to in Article 31(3) reaches
the conclusion whereby, given the effective manner in which
network access has been carried out in a Member State —
which gives rise to fully effective, non-discriminatory and
unhindered network access —,
the Commission concludes
that certain obligations imposed by this Directive on under-
takings (including those with respect to legal unbundling for
distribution system operators) are not proportionate to the
objective pursued, the Member State in question may submit
a request
exemption from the
requirement in question.

to the Commission for

The request shall be notified, without delay, by the Member
the relevant
State to the Commission,
information necessary to demonstrate that
the conclusion
reached in the report on effective network access being
ensured will be maintained.

together with all

its receipt of a notification,

the
Within three months of
Commission shall adopt an opinion with respect
to the
request by the Member State concerned, and where appro-
priate, submit proposals to the European Parliament and to
the Council to amend the relevant provisions of the Directive
or provide for other appropriate means.

Article 30

Committee

3.

The Committee shall adopt its rules of procedure.

Article 31

Reporting

shall monitor

The Commission

1.
review the
application of this Directive and submit an overall progress
report
to the European Parliament and the Council before
the end of the first year following the entry into force of
this Directive, and thereafter on an annual basis. The report
shall cover at least:

and

(a) the experience gained and progress made in creating a
complete and fully operational internal market in natural
gas and the obstacles that remain in this respect including
aspects of market dominance, concentration in the market,
predatory or anti-competitive behaviour;

(b) the derogations granted under this Directive,

including
implementation of the derogation provided for in Article
13(2) with a view to a possible revision of the threshold;

(c)

to which the unbundling and tarification
the extent
contained in this Directive have been
requirements
successful
in ensuring fair and non-discriminatory access
to the Community's gas system and equivalent levels of
competition, as well as the economic, environmental and
social consequences of the opening of the gas market for
customers;

(d) an examination of issues relating to system capacity levels
and security of supply of natural gas in the Community,
the existing and projected balance
and in particular
between demand and supply,
the
physical capacity for exchanges between areas and the
development of storage (including the question of
the
proportionality of market regulation in this field);

taking into account

(e) special attention will be given to the measures taken in
Member States to cover peak demand and to deal with
shortfalls of one or more suppliers;

(f) a general assessment of the progress achieved with regard
to bilateral relations with third countries which produce
and export or transport natural gas, including progress in
market integration, trade and access to the networks of
such third countries;

(g) the need for possible harmonisation requirements which

are not linked to the provisions of this Directive.

1.

The Commission shall be assisted by a Committee.

Where appropriate, this report may include recommendations.

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Every two years, the report referred to in paragraph 1
2.
shall also cover an analysis of the different measures taken in
Member States to meet public service obligations, together with
an examination of the effectiveness of those measures, and in
particular their effects on competition in the gas market.
Where appropriate, the report may include recommendations
as to the measures to be taken at national level to achieve high
public service standards or measures intended to prevent
market foreclosure.

3.
The Commission shall, no later than 1 January 2006,
submit to the European Parliament and Council, a detailed
report outlining progress in creating the internal gas market.
The report shall, in particular, consider:

— the existence of non-discriminatory network access;

— effective regulation;

— the development of

the
conditions of transit, and the security of supply situation
in the Community;

interconnection infrastructure,

— the extent to which the full benefits of the opening of the
market are accruing to small enterprises and households,
notably with respect to public service standards;

— the extent

to which markets are in practice open to

effective competition;

— the extent

to which customers are actually switching

suppliers and renegotiating tariffs;

— price developments, including supply prices, in relation to

the degree of the opening of markets;

— whether effective and non-discriminatory third party access
to gas storage exists when technically and/or economically
necessary for providing efficient access to the system;

integrated

— the experience gained in the application of the Directive as
far as the effective independence of system operators in
and
concerned
undertakings
vertically
inde-
whether other measures in addition to functional
been
have
pendence
developed which
legal
to
unbundling.

separation
have

of
effects

equivalent

accounts

and

is

Where appropriate, the Commission shall submit proposals to
the European Parliament and the Council,
in particular to
guarantee high public service standards.

Where appropriate, the Commission shall submit proposals to
the European Parliament and the Council,
in particular to
ensure full and effective independence of distribution system
operators before 1 July 2007.

Article 32

Repeals

1.
Directive 91/296/EEC shall be repealed with effect from
1 July 2004, without prejudice to contracts concluded pursuant
to Article 3(1) of Directive 91/296/EEC, which shall continue
to be valid and to be implemented under the terms of the said
Directive.

Directive 98/30/EC shall be repealed from 1 July 2004,
2.
without prejudice
to the obligations of Member States
concerning the deadlines for transposition and application of
the said Directive. References made to the repealed Directive
shall be construed as being made to this Directive and should
be read in accordance with the correlation table in Annex B.

Article 33

Implementation

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
forthwith
Directive not later than 1 July 2004. They shall
inform the Commission thereof.

2. Member States may postpone the implementation of
Article 13(1) until 1 July 2007.

3. When Member States adopt these measures, they shall
contain a reference to this Directive or shall be accompanied
by such reference on the occasion of their official publication.
The methods of making such reference shall be laid down by
Member States.

Article 34

Entry into force

This Directive shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Union.

Article 35

Addressees

This Directive is addressed to the Member States.

Done at . . .

For the European Parliament

The President

For the Council

The President

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ANNEX A

Measures on consumer protection

Without prejudice to Community rules on consumer protection,
in particular Directives 97/7/EC of the European
Parliament and of the Council (1) and Council Directive 93/13/EC (2), the measures referred to in Article 3 are to
ensure that customers:

(a) have a right to a contract with their gas service provider that specifies:

— the identity and address of the supplier;

— the services provided, the service quality levels offered, as well as the time for the initial connection;

— if offered, the types of maintenance service offered;

— the means by which up-to-date information on all applicable tariffs and maintenance charges may be obtained;

— the duration of the contract, the conditions for renewal and termination of services and of the contract, the

existence of any right of withdrawal;

— any compensation and the refund arrangements which apply if contracted service quality levels are not met; and

— the method of initiating procedures for settlement of disputes in accordance with point (f).

Conditions shall be fair and well known in advance. In any case, this information should be provided prior to the
conclusion or confirmation of the contract. Where contracts are concluded through intermediaries, the above
information shall also be provided prior to the conclusion of the contract.

(b) are given adequate notice of any intention to modify contractual conditions and are informed about their right of
withdrawal when the notice is given. Service providers shall notify their subscribers directly of any increase in
charges, at an appropriate time no later than one normal billing period after the increase comes into effect. Member
States shall ensure that customers are free to withdraw from contracts if they do not accept the new conditions,
notified to them by their gas service provider.

(c) receive transparent information on applicable prices and tariffs and on standard terms and conditions, in respect of

access to and use of gas services.

(d) are offered a wide choice of payment methods. Any difference in terms and conditions shall reflect the costs to the
supplier of the different payment systems. General terms and conditions shall be fair and transparent. They shall be
given in clear and comprehensible language. Customers shall be protected against unfair or misleading selling
methods.

(e) shall not be charged for changing supplier.

(f) benefit from transparent, simple and inexpensive procedures for dealing with their complaints. Such procedures shall
enable disputes to be settled fairly and promptly with provision, where warranted, for a system of reimbursement
and/or compensation. They should follow, wherever possible, the principles set out in Commission Recommen-
dation 98/257/EC (3).

(g) connected to the gas system are informed about their rights to be supplied, under the national legislation applicable,

with natural gas of a specified quality at reasonable prices.

(1) OJ L 144, 4.6.1997, p. 19.
(2) OJ L 95, 21.4.1993, p. 29.
(3) OJ L 115, 17.4.1998, p. 31.

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ANNEX B

Correlation table

Directive 98/30/EC

This Directive

Article 1

Article 2

Article 3

Article 4

—

Article 5

Article 6

Article 7

—

Article 8

Article 9(1)

Article 10

—

Article 11

—

Article 12

Article 13

Article 14-16

—

Article 23

Article 17

—

Article 1 Scope

Article 2 Definitions

Article 3 PSOs and Customer protection

Article 4 Authorisation procedure

Article 5 Monitoring of security of supply

Article 6 Technical rules

Article 7 Designation of TSOs

Article 8 Tasks of TSOs

Article 9 Unbundling of TSOs

Article 10 Confidentiality for TSOs

Article 11 Designation of DSOs

Article 12 Tasks of DSOs

Article 13 Unbundling of DSOs

Article 14 Confidentiality for DSOs

Article 15 Combined operator

Article 16 Right of access to accounts

Article 17 Unbundling of accounts

Article 18 Third Party Access

Article 19 Access to storage

Article 20 Access to upstream pipeline networks

Article 21 Refusal of access

Article 22 New infrastructure

Articles 18 and 19

Article 23 Market opening and reciprocity

Article 20

Article 24 Direct lines

Articles 21(2)-(3) and 22

Article 25 Regulatory authorities

Article 24

Article 25

Article 26

—

—

Articles 27 and 28

—

Article 29

Article 30

Article 31

Article 26 Safeguard measures

Article 27 Derogations in relation to take-or-pay commitments

Article 28 Emergent and Isolated Markets

Article 29 Review procedure

Article 30 Committee

Article 31 Reporting

Article 32 Repeals

Article 33 Implementation

Article 34 Entry into force

Article 35 Addressees

ANNEX A Measures on consumer protection

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STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

1. On 2 May 2001,

the Commission presented a proposal
96/92/EC and 98/30/EC (1), based on Articles 47(2), 55 and 95 of the Treaty.

for a Directive amending Directives

2. The Economic and Social Committee delivered its Opinion (2) on 3 October 2001. The Committee

of the Regions decided not to deliver an Opinion.

3. The European Parliament adopted its Opinion (3) at first reading on 13 March 2002, approving 157
amendments, of which 90 amendments related to electricity and 67 to gas. In the light of this
opinion, the Commission presented a modified proposal on 10 June 2002 (4).

4. On 3rd February 2003, the Council adopted its Common Position in accordance with Article 251 of

the Treaty.

II. OBJECTIVE OF THE PROPOSAL

5. The proposal, which is part of a package, together with the Regulation on conditions for access to
the network for cross-border exchanges in electricity, contains ‘quantitative’ provisions with regard
to a full opening of the markets to all customers by 1 January 2005, as well as ‘qualitative’
provisions relating to the unbundling of transmission and distribution undertakings, third party
access and access to gas storage, regulatory authorities, public service obligations and consumer
protection.

III. ANALYSIS OF THE COMMON POSITION

6. The Council considered it more effective and coherent with Directives 96/92/EC and 98/30/EC to

recast the provisions of both Directives, as also suggested by the Parliament.

7. The main elements of the common position are the following:

(a) Public Service Obligations (PSO) and protection of final customers (Art. 3 and Annex A; Art. 31(2) and

(3))

The Council retained, as a general principle, the protection of final customers and ensuring a
high level of consumer protection. Examples of measures contributing to high standards of
consumer protection and information are presented in an Annex (Annex A), which is
mandatory for household customers. While public service requirements can be interpreted on
a national basis, they have to be implemented in a transparent and non-discriminatory way.
PSOs shall also be the subject of a detailed Commission report.

(b) Unbundling of transmission system operators (TSO) (Art. 9) and unbundling of distribution system

operators (DSO) (Art. 13, 29 and 33(2))

Transmission and distribution system operators (TSO/DSO) should be independent, in terms of
their legal form as well as their organisation and decision making, from activities not relating to
transmission, respectively, distribution. Moreover, TSO/DSOs have to fulfil four criteria on
functional independence (compliance, managerial independence, etc.). However, functional inde-
pendence regarding decision-making rights of the unbundled operator should not prevent some
form of co-ordination between the parent company and its subsidiaries.

DSOs serving 100 000 customers or less may be exempted from these provisions;
the
Commission will also review this threshold in the framework of its reporting exercise. Besides
Member States may postpone (Art. 33) the implementation of legal unbundling for DSOs until
full market opening.

(1) OJ C 240 E, 28.8.2001 p. 60.
(2) OJ C 36, 8.2.2002, p. 10.
(3) OJ C 47 E, 27.2.2003, p. 367.
(4) OJ C 227 E, 24.9.2002, p. 393.

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Furthermore, in the context of the review procedure provided for in Art. 29, a Member State
may, under certain conditions related to the manner in which it has carried out network access,
request to the Commission to be exempted from requirements such as the legal unbundling for
DSOs. This request may lead to the Commission submitting proposals to the Parliament and
Council to amend the relevant provisions of the Directive or provide for other appropriate
means.

(c) Access to storage (Art. 19 and 31(3))

Along the lines of the Commission's proposal, access to storage, linepack and ancillary services
may be organised on the basis of either negotiated access or regulated access (with published
tariffs), while noting (recital 21) that, where the market is sufficiently competitive, access to
storage/linepack/ancillary services could rely on market-based instruments.

Regarding LNG facilities, the text now ensures that a modicum of access, at published tariffs, is
ensured to ancillary services and temporary storage exclusively in relation to LNG activities. At
the same time, the text clarifies in which circumstances access to storage may be limited and
recalls the important role of storage facilities to implement e.g. security of supply (recital 20).

The Commission will review third party access to gas storage in its detailed report to be
submitted no later than 1 January 2006.

(d) Market opening (Art. 23, 28(2) and (3), and 31(3)) and implementation (Art. 33)

The Council followed the two-step opening proposed by the Commission, with 2004 for all
non-household customers as set by the Barcelona European Council, and 2007 for all customers.
Moreover the text provides for a progressive opening of the market for Member States still
qualifying as emergent markets (Art. 28).

By 1 January 2006 the Commission is due to produce a detailed report addressing i.a. public
service issues as well as various issues related to the implementation and consequences of the
market opening.

The Directive shall be implemented not later than 1 July 2004.

(e) Regulatory authorities (Art. 25)

The common position, whilst confirming the Barcelona conclusions that it is left to Member
States to define the institutional arrangements appropriate to carry out the regulatory tasks,
clarified the formulation of Art. 25(1) by stating that the independent regulatory authorities are
‘at least responsible for ensuring non-discrimination, effective competition and the efficient
functioning of the market, by at least monitoring’ various rules and conditions listed in the
Commission proposal. They are also responsible for approving ex-ante at least the methodologies
underlying the terms and conditions for connection and access to networks and for balancing
services, and have the authority to require ex-post modifications of these terms and conditions.

The text also clarified the provisions (Art. 25(5) and (6)) concerning the prompt handling of
complaints by administrative bodies.

(f) New infrastructure (Art. 22)

In the same spirit as the provision featuring in the proposal for a Regulation on cross-border
exchanges in electricity, the Council included detailed provisions (Art. 22) whereby new major
gas infrastructures or significant modifications to existing ones would be, totally or partially,
exempted from Art. 18 on third party access, Art. 19 on access to storage, and Art. 25(2) and
(3) on prior approval of terms and conditions for access. This exemption would take place under
restrictive conditions and be subject to the Commission control.

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(g) Unbundling of accounts (Art. 17)

Gas undertakings have to keep separate accounts for their transmission, distribution, LNG and
storage activities, and for other gas activities. Supply activities to eligible and to non-eligible
customers shall be separated in the accounts of these undertakings until full market opening.

(h) Exemptions (Art. 28(5) and (8))

Further to exemptions already granted under Directive 98/30/EC (e.g. for ‘Emergent and Isolated
markets’ and ‘Take-or-pay commitments’) the common position introduces the possibility of
time-limited exemptions for distribution infrastructure in specific geographical areas.

The Commission is invited to review regularly all the derogations granted under this Directive in
the framework of its reporting exercise.

IV. AMENDMENTS ACCEPTED

8. The Council accepted the following amendments, some of them in substance, partially or in
principle. Although the Parliament adopted some of these amendments in relation to the Electricity
proposal the Council was of the view that they were also relevant to the Gas one.

Title:

Amendment 91: split the proposed Directive in two separate legal acts

Recitals:

Amendment 2: reference to the Charter of Fundamental Rights (recital 32)

Amendment 92: consequent to division of proposal

Amendment 93 and 98: list obstacles impeding the functioning of the energy market (Recitals 2
and 5)

Amendment 97: stresses the calls for rapid work for the completion of the internal market in energy
from the European Council and the European Parliament (Recital 3)

Amendment 7: stresses the non-discriminatory character of network access (Recital 7)

Amendment 22: is a consequence to amendment 1 (Recital 29)

Amendment 94: stresses that free choice of suppliers is only possible in a fully open market
(Recital 4)

Amendments 95 and 96: importance of access to third country networks (Recital 5)

Amendment 99: independence of system operators (Recital 8)

Amendment 100: exempting small distribution companies from administrative burden (Recital 11)

Amendment 101: transparent and non-discriminatory tariffs for the access to networks need further
measures to be taken by Member States (Recital 21)

Amendments 103 and 104: importance and tasks of regulatory authorities (Recitals 13 and 15)

Amendment 105: benefits resulting from the internal market should contribute to indirectly create
employment as a result of the efficiency gains enjoyed by enterprises (Recital 16)

Amendments 106 and 107: progressive market opening (Recitals 17 and 18)

Amendment 109: stresses the need for monitoring of the supply/demand balance in order to allow
appropriate measures to be taken (Recital 22)

Amendment 108: need for clarification on access for storage (Recital 19)

Amendments 110 and 117: network access for biogas and gas from biomass (Recital 23)

Amendment 111: importance of long-term take-or pay contracts (Recital 24)

Amendment 112: information of customers' right to be supplied (Recital 25)

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Articles:

Amendment 116: consequence of Amendment 1 (Art. 1 both Directives)

Amendment 118: extends the scope to biogas and gas from biomass (Art. 1)

Amendment 34: definition of eligible customer (Art. 2(28))

Amendments 119 and 120: definition of storage and LNG facilities (Art. 2(9), (10) and (11))

Amendment 123: definition of security (Art. 2(32))

Amendment 125: addition of the objective of achieving a sustainable gas market (Art. 3(1));
extension of public service obligations (Art. 3(2))

Amendment 42 (partially): measures to protect vulnerable customers (Art. 3(3))

Amendment 126: possibility for eligible customers to switch to a new supplier (Art.3(3))

Amendment 127 and 128: notification of possible competition effect of PSOs-related measures, and
Commission reporting (Art. 3(6) and 31(2))

Amendment 130 (partially) and 132: monitoring of security of supply covers also the quality and
level of maintenance of the networks (Art. 5) and Commission reporting (Art. 31(1))

Amendment 61: independence of a system operator which is part of a vertically integrated under-
taking (Art. 9)

Amendment 137 (partially): specifies the decision-making rights of TSOs (Art. 9(2)(c), 13(2)(c)
and 15(c))

Amendment 162: Member States may require TSOs to comply with minimum standards for the
system (Art. 8(3))

Amendments 59 and 135 (partially): criteria for terms and conditions for balancing the transmission
system (Art. 8(2))

Amendment 66: specifies the right of access to accounts (Art. 16(1))

Amendments 149 and 184: specify tasks of regulatory authorities (Art. 25(1)-(3))

Amendments 150 and 151: power of regulatory authorities to require from operators the modifi-
cation of terms and conditions (Art. 25(4)); efficient handling of complaints (Art. 25(5) and (6))

Amendments 85, 86 and 153: Commission reporting requirements (Art. 31(1))

Amendments 129, 158, 159 and 160 (in substance):
(Annex A)

information to be provided to customers

V. AMENDMENTS NOT INTEGRATED

9. The Council considered that amendments 98, 108, 121, 122, 124, 131, 133, 138, 139, 142, 183,
161 and 175, 145, 146, 148, 152, 155 were either not in coherence with the proposed Gas
Directive,
the Directive, or were already covered by
existing provisions, and decided therefore not to integrate them in its common position. The
Commission has rejected notably amendments 91 (and consequential amendments), 95, 96, 121,
122, 133, 138, 139, 142, 146, 148, 152, 155, 161, 175, 183.

too restrictive, not within the scope of