Proposal for a Regulation of the European Parliament and of the Council on conditions for access to the gas transmission networks
Date: 2003-12-10
Institutions: European Commission
Subjects: energy grid, energy policy, energy supply, natural gas, pipeline transport

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 10.12.2003
COM(2003) 741 final

2003/0302 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on conditions for access to the gas transmission networks

(presented by the Commission)

EN

  EN

EXPLANATORY MEMORANDUM

1. 

INTRODUCTION AND BACKGROUND

On 26th June 2003, the European Parliament and the Council adopted Directive 2003/55/EC
concerning  common  rules  for  the  internal  market  in  natural  gas  and  repealing  Directive
98/30/EC.  While  Directive  98/30/EC,  the  1st  Internal  Market  Directive,  took  the  first
relatively  tentative  steps  towards  the  creation  of  the  internal  market  for  gas,  the  second
Directive is expected to provide the necessary structural changes in the regulatory framework
to tackle remaining barriers to the completion of the internal market.

The second Internal Gas Market Directive in particular provides for

(cid:1)  The right for all non-household gas customers to freely choose their supplier no later than

1 July 2004 with all customer to have this right by 1 July 2007.

(cid:1)  Third party access to transmission and distribution networks on the basis of published and

regulated tariffs;

(cid:1)  The  establishment  of  a  regulatory  authority  in  each  Member  State  with  a  common

minimum set of responsibilities;

(cid:1)  Legal unbundling of transmission and large and medium sized distribution companies;

(cid:1)  Access to storage facilities either on a negotiated or regulated basis.

By this, the Directive  will provide the basic structural reforms necessary to develop  the  gas
internal  market.  However,  without  additional  detailed  measures  regarding  the  manner  in
which transmission systems are operated, the objectives set by the Community in this context
are unlikely to be met.

2. 

REASONS JUSTIFYING THE REGULATION

The  principle  to  supplement  the  internal  energy  market  directives  through  a  regulation
detailing  basic  principles  and  implementation  measures  of  certain  key  subjects  considered
necessary  for  the  well  functioning  of  the  internal  energy  market  has  already  been
acknowledged  by  the  Council.  It  adopted  Regulation  (EC)  1228/2003  of  the  European
Parliament and Council on conditions for access to the network for cross-border exchanges in
electricity. This Regulation provides for common tariff structures (including tariffs for cross-
border electricity trade), the provision of information on interconnection capacities and rules
regarding congestion management.

Taking  into  account  the  differences  between  electricity  and  gas,  similar  rules  concerning
principles and implementation measures  are necessary  for  the  internal  gas  market,  too.  This
has  been  recognised  by  the  Commission,  Member  States,  national  regulatory  authorities,  as
well  as  the  gas  industry  and  network  users.  Consequently,  the  European  Gas  Regulatory
Forum, which meets bi-annually in Madrid, agreed already in February 2002 (5th meeting of
the Forum) on a set of guidelines (usually referred to as “Guidelines for Good TPA Practice”)
which transmission system operators pledged to respect. These  guidelines  were non-binding
and agreed on a voluntary basis.

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The  Forum  is  chaired  by  the  Commission  and  attended  by  representatives  of  national
regulatory authorities, Member States, representatives of network operators and users as well
as  gas  consumers.  In  recent  meetings,  representatives  of  Russia  participated,  too,  in  the
context  of  the  EU-Russia  Energy  Dialogue.  The  Forum  seeks  to  develop  technical  rules
relevant to the completion of the internal gas market by consensus.

In a first compliance report presented to the Forum in October 2002, the Commission stated
some  achievements  and  progress  in  complying  with  the  first  Guidelines  agreed  in  February
2002. However, it also observed

(cid:1)  a significant lack of compliance with the Guidelines

(cid:1)  a significant degree of uncertainty about compliance with the Guidelines

(cid:1)  significant  differences  in  compliance  with  the  Guidelines  and  in  access  conditions  in

general between individual system operators.

As  a  consequence,  the  Commission  proposed  a  more  detailed  and  comprehensive  set  of
guidelines for adoption through the Forum. Between October 2002 (6th meeting of the Madrid
Forum)  and  September  2003  (7th  meeting  of  the  Madrid  Forum),  this  revised  set  of  the
“Guidelines for Good TPA Practice” (GGP2) has been intensively and extensively discussed
At  the  7th  meeting  of  the  Forum,  it  accepted  a  revised  set  of  Guidelines  for  Good  TPA
Practice.

It  is  important  to  note  that  while  the  second  report  on  compliance  with  the  first  set  of  the
Guidelines presented at the 7th meeting of the EU Gas Regulatory Forum in September 2003
indicated  a  significant  improvement  in  terms  of  compliance  with  the  Guidelines,  there
remained an important and unacceptable level of non-compliance. As a consequence, a level
playing field in terms of access conditions to the gas transmission network is far from being
achieved.  The  way  access  conditions  are  designed  predetermines  the  starting  point  for
competition to develop. Thus, insufficiently developed and asymmetric access conditions are
currently  detrimental  to  a  well  functioning  internal  European  market  for  natural  gas.
Implementing the  revised Guidelines  for  Good TPA Practice,  as agreed in September 2003,
would  result  in  access  conditions  to  the  network  compatible  to  the  requirements  of  such  a
market.

For this reason, it is obvious that the internal market for natural gas can only work effectively,
if access conditions to the network across the single market  correspond to  certain minimum
standards  on  key  aspects  of  Third  Party  Access.  Such  standards  are  essential,  in  order  to
ensure a level playing field and allow exploiting business opportunities also for new market
entrants  and  small  companies.  Conditions  on  access  to  the  network  must  not  discriminate
against different scales of network users, since this could lead to distortion of competition and
would  in  any  case  prevent  gas  consumers  to  equally  benefit  from  the  internal  market  of
natural gas.

Network users requesting access to the network must be able to rely on a sufficient level of
transparency needed to carry out their business, as otherwise business opportunities emerging
from short and long term market developments could not be exploited. Effective and efficient
congestion  management  procedures  as  well  as  basic  rules  for  secondary  markets  would  be
supplementary  in  this  respect  and  would,  in  addition,  contribute  to  an  efficient  use  of  the
network.  A  certain  range  of  services  –  flexible  in  duration  and  starting  dates,  firm  and
interruptible  at  reasonable  tariffs,  while  standardised  to  the  most  possible  extent  –  also

3

 
represents an indispensable prerequisite for market participants to reap the potential benefits
of the internal market for natural gas.

In  order  to  provide  for  mechanisms  further  promoting  non-discrimination  and  competition,
which  is  based  on  Third  Party  Access  and  thus  access  conditions  to  the  network,  basic
principles  on  access  charges  and  balancing  rules/balancing  charges  are  necessary.  Such
principles are also crucial for the creation of a level playing field for all players on the single
EU market for natural gas and would facilitate the entry into the market for new players. It is
worth underlining again that all stakeholders in the Madrid Forum have accepted a set of rules
contained in the revised set of Guidelines for Good TPA Practice, which fully complies with
those requirements of conditions for access to the network.

Therefore,  it  is  necessary  to  ensure  that  the  new  Guidelines  are  fully  applied  by  all
transmission system operators across the EU internal market for natural gas. Representatives
of all associations representing network users at the 7th EU Gas Regulatory Forum asked the
Commission to ensure proper implementation of the Guidelines with a view to guaranteeing
the  highest  possible  level  of  compliance  in  the  light  of  EU  legislation.  The  rules  and
principles contained in the Guidelines should therefore form the basis of a new Regulation on
conditions for access to gas transmission networks. This Regulation should be equivalent and
procedurally the same, as the Regulation on access to the network for cross-border exchanges
in electricity.

3. 

PROCEDURAL ASPECTS

Like  the  Regulation  on  access  to  the  network  for  cross-border  exchanges  in  electricity,  this
Regulation  should  provide  a  set  of  basic  principles  to  be  respected.  Detailed  implementing
rules  should  be  contained  in  guidelines  annexed  to  the  Regulation,  which  can  be  modified
pursuant  to  a  Committee  procedure  foreseen  in  Article  5  and  7  of  Council  Decision
1999/468/EC1, usually known as the regulatory Comitology procedure.

It is important in this respect that the Regulation is an instrument that permits these guidelines
to be evolved and completed. For example, as recognised at the September 2003 meeting of
the  European  Gas  Regulatory  Forum,  detailed  work  now  needs  to  progress  on  the  issue  of
contractual  congestion  management  (“use-it-or-lose-it”)  rules.  The  “regulatory  comitology”
procedure provides for such a mechanism.

However, the consensus based approach of the European Gas Regulatory Forum needs to be
maintained  within  the  context  of  the  regulatory  comitology  procedure.  The  Forum  should
remain  the  basis  for  preparing  new  or  revised  guidelines.  It  is  therefore  appropriate  to  give
legal recognition to this Forum within this Regulation, and to give it a formal consultative role
in the preparation and discussion of guidelines.

Similarly, national regulatory authorities play a vital role in preparing any such guidelines. In
addition  to  the  leading  role  played  by  them  in  the  European  Gas  Regulatory  Forum,  it  is
appropriate  that  the  new  European  Energy  Regulatory  Group,  established  by  Commission
decision  2003/796/EC  of  11  November  20032,  also  plays  a  formal  consultative  role  in  the
preparation of guidelines.

1
2 

OJ L 184 of 17.7.1999, p. 23.
OJ L 296 of 14.11.2003, p. 34.

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4. 

TOPICS ADDRESSED

The  second  set  of  the  “Guidelines  for  Good  TPA  Practice”,  which  were  accepted  by  all
participants at the 7th meeting of the EU Gas Regulatory Forum in September 2003, cover the
following:

(cid:1)  The criteria according to which charges for access to the network are determined, to ensure
that  they  take  fully  into  account  the  need  for  system  integrity  and  reflect  effectively
incurred costs.

(cid:1)  A common minimum set of third party access services – regarding notably for example the

duration of transportation contracts offered and on an interruptible basis.

(cid:1)  Common rules regarding contractual congestion of networks that balance the need to free
up unused capacity with the rights of the holders of the capacity to use it when necessary.

(cid:1)  Information in particular on technical requirements and available capacity.

(cid:1)  Rules ensuring that transmission system operators operate balancing systems in a manner

compatible with the internal market.

(cid:1)  Common basic requirements regarding the trading of primary rights to capacity.

Consequently, the enforcing provisions  of this regulation spell out the underlying principles
of

(cid:1)  Charges for access to networks

(cid:1)  Third Party access services

(cid:1)  Capacity allocation mechanism and congestion management procedures

(cid:1)  Transparency requirements

(cid:1)  Balancing and imbalance charges

(cid:1)  Secondary markets

Measures  implementing  these  principles  are  contained  in  the  guidelines  annexed  to  the
Regulation. As mentioned above, a comitology procedure with preceding consultations of the
EU Gas Regulatory Forum and the European Regulators Group for Electricity  and Gas will
ensure updated guidelines in line with the needs of the market.

5

 
2003/0302 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on conditions for access to the gas transmission networks

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION

Having regard to the Treaty establishing the European Community, and in particular Article 95
thereof,

Having regard to the proposal from the Commission3,

Having regard to the opinion of the European Economic and Social Committee4,

Having regard to the opinion of the Committee of the Regions5,

Acting in accordance with the procedure laid down in Article 251 of the Treaty6,

Whereas

(1) 

(2) 

(3) 

3

4

5

6

7

Directive  2003/55/EC  of  the  European  Parliament  and  of  the  Council  of  26  June  2003
concerning  common rules for the internal market in natural  gas  and repealing  Directive
98/30/EC7 has made a significant contribution towards the creation of an internal market
for gas. It is now necessary to provide structural changes in the regulatory framework to
tackle  remaining  barriers  to  the  completion  of  the  internal  market.  Additional  technical
rules  are  necessary,  in  particular  regarding  tariff  principles,  transparency,  congestion
management and balancing.

Experience gained in the implementation and monitoring of  a first set of Guidelines for
Good  Practice,  adopted  by  the  European  Gas  Regulatory  Forum    in  2002  demonstrates
that in order to ensure the full implementation of these rules in all Member States, and to
provide  a  minimum  guarantee  for  equal  market  access  in  practice,  it  is  necessary  to
provide that they become legally enforceable.

A  second  set  of  common  rules,  “the  Second  Guidelines  for  Good  Practice”  has  been
adopted at the meeting of the Forum on 24-25 September 2003. This Regulation should,
therefore lay down, on the basis of those Guidelines basic principles and rules regarding

OJ C […], […], p. […].
OJ C […], […], p. […].
OJ C […], […], p. […].
OJ C […], […], p. […].
OJ L 176 of 15.7.2003, p. 57.

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(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

network  access  and  third  party  access  services,  congestion  management,  transparency,
balancing and the trading of capacity rights.

It is necessary to specify the criteria according to which charges for access to the network
are determined, to ensure that they fully comply with the principle of non-discrimination
and the needs of a well-functioning internal market and take fully into account the need
for system integrity and reflect effectively incurred costs.

A common minimum set of third party access services – regarding notably for example
the duration of transportation contracts offered and on a interruptible basis – is necessary
to provide  a common minimum  standard  of access in practice throughout  the  European
Union  and  to  allow  exploiting  the  benefits  accruing  from  a  well-functioning  internal
market for gas.

The  management  of  contractual  congestion  of  networks  is  an  important  issue  in
completing the internal gas market. It is necessary to develop common rules that balance
the  need  to  free  up  unused  capacity  in  accordance  with  the  “use-it-or-lose-it”  principle
with the rights of the holders of the capacity to use it when necessary, while at the same
time enhancing liquidity of capacity.

Although  physical  congestion  of  networks  is  rarely  a  problem  at  present  in  the
Community,  it  may  become  one  in  the  future.  It  is  important  therefore  to  provide  the
basic principle for the allocation of congested capacity in such circumstances.

For  network  users  to  gain  effective  access  to  gas  networks  they  need  information  in
particular  on  technical  requirements  and  available  capacity  to  enable  them  exploiting
business  opportunities  coming  up  in  the  framework  of  the  internal  market.  Common
minimum standards on such transparency requirements are necessary.

Non-discriminatory and transparent balancing systems for gas, operated by transmission
system operators, are important mechanisms, particularly for new market entrants which
may have more difficulty balancing their overall sales portfolio than  companies  already
established within a relevant market. It is therefore necessary, to lay down rules ensuring
that transmission system operators operate such mechanisms in a manner compatible with
non-discriminatory, transparent and effective access conditions to the network.

(10)  The trading of primary rights to capacity is an important part of developing a competitive
market and creating liquidity. This Regulation should therefore lay down basic  rules on
that issue.

(11)  National regulatory authorities should ensure compliance with the rules contained in this

Regulation and the guidelines adopted pursuant to it.

(12) 

In  the  guidelines  annexed  to  the  Regulation,  specific  detailed  rules  implementing  these
principles  are  defined,  on  the  basis  of  the  second  Guidelines  for  Good  Practice.  These
rules will need to evolve over time, and be implemented by further rules on issues such as
the  alleviation  of  contractual  congestion.  Thus,  the  Regulation  needs  to  provide  for  the
adoption of such new rules in accordance with Council Decision 1999/468/EC of 28 June
1999 laying down the procedures for the exercise of implementing powers assigned to the
Commission8.

8

OJ L 184, 17.7.1999, p. 23.

7

 
                                                
(13)  The Member States and the competent national authorities should be required to provide
treated
the  Commission.  Such 
relevant 
confidentially  by  the  Commission.  Where  necessary,  the  Commission  should  have  an
opportunity  to  request  relevant  information  directly  from  undertakings  concerned,
provided that the competent national authorities are informed.

information  should  be 

information 

to 

(14)  This Regulation and the guidelines  adopted  in accordance  with this Regulation shall  be

without prejudice of the application of the Community competition rules.

(15)  Since  the  objective  of  the  proposed  action,  namely  the  setting  of  fair  rules  for  access
conditions  to  natural  gas  transmission  systems,  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, as set out in Article 5 of the Treaty. In accordance with
the  principle  of  proportionality,  as  set  out  in  that  Article,  this  Regulation  does  not  go
beyond what is necessary in order to achieve this objective.

HAVE ADOPTED THIS REGULATION :

Article 1
Subject matter and scope

This  Regulation  aims  at  setting  fair  rules  for  access  conditions  to  natural  gas  transmission
systems taking into account the specificities of national and regional markets. This shall involve
principles for charges for access to the network, the definition of necessary services, harmonised
principles for capacity allocation and congestion management, the determination of transparency
requirements  balancing  and  imbalance  charges,  and  the  need  of  facilitating  secondary  markets
for capacity trading.

Article 2
Definitions

1.

For  the  purpose  of  this  Regulation  and  of  guidelines  to  be  adopted  pursuant  to  this
Regulation, the following definitions shall apply:

(1) 

(2) 

(3) 

(4) 

“transmission”  shall  mean  the  transport  of  natural  gas  through  a  high  pressure
network  or  a  regional  pipeline  network,  which  mainly  contains  high  pressure
pipelines, other than an upstream pipeline network with a view to its delivery to
customers, but not including supply;

“transportation  contract”  means  a  contract  which  the  transmission  system
operator  has  concluded  with  a  network  user  with  a  view  to  carrying  out
transmission;

“capacity” means the maximum flow, expressed in normal cubic meters per time
unit  or  in  energy  unit  per  time  unit,  to  which  the  network  user  is  entitled  in
accordance with the provisions of the transportation contract;

“congestion  management”  means  management  of  the  capacity  portfolio  of  the
transmission  system  operator  with  a  view  to  optimal  and  maximum  use  of  the

8

 
technical  capacity  and  the  timely  detection  of  future  congestion  and  saturation
points;

“secondary market” means the market of the capacity traded otherwise than on
the primary market;

“nomination” means the prior reporting by the network user to the transmission
undertaking of the actual flow that he wishes to inject into or withdraw from the
system;

“re-nomination” means the reporting of a corrected nomination;

“residual  balancing”  means  the  physical  balancing  to  ensure  system  integrity
during the balancing period;

“system integrity” means any situation in respect of a transmission network or a
transmission  facility  in  which  the  pressure  and  the  quality  of  the  natural  gas
remain within the minimum and maximum limits laid down by the transmission
system  operator,  so  that  the  transmission  of  natural  gas  is  guaranteed  from  a
technical standpoint;

“balancing period” means the period within which the off-take of an amount of
natural gas, expressed in units of energy, must be offset by every network  user
by  means  of  the  injection  of  the  same  amount  of  natural  gas  into  the
transmission  network  in  accordance  with  the  transportation  contract  or  the
network code;

“network users” means a customer of a transmission system operator who would
sign  the  relevant  network  code  or  enter  into  transportation  contracts  with
transmission system operators for shipping  gas; network users  may  include  but
are  not  limited  to  end-use  customers,  producers,  suppliers,  traders  and,  on
condition that it is necessary for transmission system operators to carry out their
functions in relation to transmission, transmission system operators,

“interruptible  services”  mean  services  offered  by  the  transmission  system
operator, based on interruptible capacity;

“interruptible capacity” means gas transmission capacity that can be interrupted
by the transmission system operator according to the conditions stipulated in the
transportation contract;

“long-term services” mean services offered by the transmission system operator
with a duration of one year or more than one year;

“short-term services” mean services offered by the transmission system operator
with a duration of less than one year;

“firm capacity” means gas transmission capacity contractually guaranteed by the
transmission system operator;

“technical  capacity”    means  the  maximum  firm  capacity  that  the  transmission,
system  operator  can  offer  to  the  network  users,  taking  account  of  the  system
integrity and the operational requirements of the transmission network;

(5) 

(6) 

(7) 

(8) 

(9) 

(10) 

(11) 

(12) 

(13) 

(14) 

(15) 

(16) 

(17) 

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(18) 

(19) 

(20) 

(21) 

(22) 

(23) 

“contracted capacity” means capacity that the transmission system operator has
allocated to a network user by means of a transportation contract;

“available capacity” means the part of the technical capacity that is not allocated
and is still available to the system at that moment;

“contractual  congestion”  means  a  situation  where  the  level  of  firm  capacity
demand exceeds the technical capacity, i.e. all technical capacity is contracted as
firm;

“primary  market”  means  the  market  of  the  capacity  traded  directly  by  the
transmission system operator;

“physical  congestion”  means  a  situation  where  the  level  of  demand  for  actual
deliveries exceeds the technical capacity at some point in time;

 “new market entrants” means undertakings that are not yet active in gas supply
in the Member State concerned and which qualify as small player, or have only
entered  the  market  within  2  years  following  the  entry  into  force  of  this
Regulation and which qualify as small player;

(24) 

“small  player”  means  a  company  with  a  market  share  of  less  than  3%  of  the
national gas market, on which it is active;

2.

The definitions contained in Article 2 of Directive 2003/55/EC shall also apply.

1.

2.

1.

2.

Article 3
Charges for access to networks

Charges  applied  by  transmission  system  operators  for  access  to  networks  shall  be
transparent,  take  into  account  the  need  for  system  integrity  and  reflect  effectively
incurred  costs,  including  appropriate  return  on  investments,  and  where  appropriate
taking  regard  to  international  benchmarking  of  tariffs  and  applied  in  a  non-
discriminatory manner.

The charges shall facilitate efficient gas trade and competition, while at the same time
avoiding cross-subsidies between network users.

Charges  for  network  access  shall  not  restrict  market  liquidity  or  distort  trade  across
borders of different transmission systems.

Article 4
Third Party Access services

Transmission  system  operators  shall  offer  third  party  access  services  on  the  same
contractual basis to all network users, either using standard transportation contracts or a
common network code.

Transmission  system  operators  shall  provide  both  firm  and  interruptible  third  party
access  services.  The  price  of  interruptible  capacity  shall  reflect  the  probability  of
interruption, if not otherwise laid down by the relevant regulatory authorities.

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3.

4.

1.

2.

3.

4.

1.

2.

3.

Transmission  system  operators  shall  offer  to  network  users  both  long  and  short-term
services.

Transportation  contracts  signed  outside  of  a  natural  gas  year  with  non-standard  start
dates  or  with  a  shorter  duration  than  a  standard  transportation  contract  on  an  annual
basis shall not result in arbitrarily higher tariffs.

Article 5
Principles of Capacity allocation mechanisms and congestion management procedures

Transmission  system  operators  shall  implement  and  publish  non-discriminatory  and
transparent capacity allocation mechanisms.

When  transmission  system  operators  conclude  new  transportation  contracts,  these
contracts shall take into account the following principles, which shall apply in cases of
contractual congestion:

(a) 

the  transmission  system  operator  shall  offer  unused  capacity  on  the  primary
market;

(b)  network  users  who  wish  to  re-sell  their  unused  contracted  capacity  on  the

secondary market shall be entitled to do so.

When  capacity  contracted  under  existing  transportation  contracts  remains  unused  and
contractual congestion occurs, transmission system operators shall apply Article 5(2)(a)
and  (b)  unless  this  would  infringe  the  requirements  of  the  existing  transportation
contracts, Where this would infringe the existing transportation contracts, transmission
system operators shall, in consultation with the competent authorities, endeavour to free
up  this  capacity,  in  order  for  the  principles  laid  down  in  Article  5(2)(a)  and  (b)  to  be
applied.

In the event that physical congestion exists, non-discriminatory, market-based solutions
shall be applied.

Article 6
Transparency requirements

Transmission system operators shall publish detailed information regarding the services
they offer  and the  relevant  conditions  applied,  together  with  the  technical  information
necessary for network users to gain effective network access.

For  the  services  provided,  transmission  system  operators  shall  publish  information  on
technical, contracted and available capacities on a numerical basis for all relevant points
on a regular and rolling basis and in a user-friendly standardised manner.

The relevant points of a transmission system that must be published shall be approved
by  national  regulatory  authorities.  They  shall  include  at  least  the  most  important  exit
points of a given transmission system the cumulated exit capacity of which accounts at
least  for  50%  of  total  capacity  of  the  exit  points  operated  by  the  given  transmission
system operator.

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4.

Where a transmission system operator considers that he is not entitled for confidentiality
reasons  to  publish  all  the  data  required,  he  shall  seek  the  agreement  of  the  national
regulatory authority to limit publication for the point or points in question.

The  national  regulatory  authority  shall  grant  or  refuse  the  agreement,  taking  into
account  the  need  to  respect  legitimate  commercial  confidentiality  and  the  objective  of
creating  a  competitive  internal  gas  market.  In  such  circumstances  available  capacity
shall  be  published  without  indicating  the  numerical  data  that  would  contravene
confidentiality.

No  exemption  from  the  obligation  to  publish  shall  be  possible  where  three  or  more
network users have contracted capacity at the same point.

1.

2.

3.

4.

5.

6.

Article 7
Balancing and imbalance charges

Balancing rules shall be designed in a fair, non-discriminatory, and transparent manner
and  shall  be  based  on  objective  criteria.  Balancing  rules  shall  reflect  genuine  system
needs taking into account the resources available to the transmission system operator.

In  case  of  non-market  based  balancing  systems,  tolerance  levels  shall  at  least  be
designed  in  a  way  that  reflects  seasonality  and  the  actual  technical  capabilities  of  the
transmission  system.  Tolerance  levels  shall  reflect  genuine  system  needs  taking  into
account the resources available to the transmission system operator.

Balancing  charges  shall  be  broadly  cost-reflective,  whilst  providing  appropriate
incentives on network users to balance their input and off-take of gas. They shall avoid
cross-subsidisation  between  network  users  and  shall  not  hamper  the  entry  of  new
market entrants.

Balancing charges shall be published.

Transmission  system  operators  may  collect  penalties  from  network  users  whose  input
into  and  off-take  from  the  transmission  system  is  not  in  balance  according  to  the
balancing rules laid down in paragraph 1.

Penalties  which exceed the effectively incurred balancing costs shall be re-distributed
to the network users on a non-discriminatory basis. The method for re-distributing those
costs shall be approved by the relevant national authorities.

Transmission system operators, provided that they have obtained or can be reasonably
expected  to  obtain  the  relevant  information,  shall  provide  sufficient,  well-timed  and
reliable  on-line  based  information  on  the  balancing  status  of  network  users  that  is
necessary  to  enable  network  users  to  take  timely  corrective  actions.  Charges  for  the
provision of such information shall be approved by the national regulatory authority and
published.

The  level  of  information  provided  shall  reflect  the  level  of  information  available  to
transmission system operators.

12

 
Article 8
Secondary markets

Transmission system operators shall take reasonable steps to allow and facilitate capacity rights
to be freely tradable between registered network users in a secondary market. They shall develop
standardised  transportation  contracts  and  procedures  on  the  primary  market  to  facilitate
secondary trade of capacity and recognise the transfer of primary capacity rights where notified
by network users. The standardised transportation contracts and procedures shall be approved by
the national regulatory authority

Article 9
Guidelines

1.

Where appropriate, guidelines providing the minimum degree of harmonisation required
to achieve the aim of this Regulation shall specify:

(a) 

details of tariff methodology, in accordance with Article 3;

(b)  details  of  third  party  access  services  including  the  character,  duration  and  other

requirements of these services, in accordance with Article 4;

(c) 

details  of  the  principles  underlying  capacity  allocation  mechanisms  and  on  the
application  of  congestion  management  procedures  in  case  of  contractual
congestion, in accordance with Article 5;

(d)  details on the definition of the technical information necessary for network users
to gain effective access to the system and the definition of all relevant points for
transparency  requirements,  including  the  information  to  be  published  at  all
relevant points and the time schedule according to which this information shall be
published, in accordance with Article 6;

(e) 

details on balancing rules and imbalance charges, in accordance with Article 7;

(f) 

details on secondary markets, in accordance with Article 8.

2.

3.

Guidelines on the issues listed in paragraph 1(b), (c) and (d) shall be laid down in the
Annex.  They  shall  be  amended  by  the  Commission  in  accordance  with  the  procedure
referred to in Article 14(2).

The  Commission  shall  in  accordance  with  the  procedure  referred  to  in  Article  14(2),
adopt guidelines on the issues listed in paragraph 1(a), (e) and (f).

Article 10
Regulatory authorities

When carrying out their responsibilities under this  Regulation, the  regulatory  authorities of the
Member States shall ensure compliance with this Regulation and the guidelines adopted pursuant
to Article 9.

Where appropriate they shall cooperate with each other and with the Commission.

13

 
1.

2.

3.

4.

Article 11
Provision of information and confidentiality

Member  States  and  the  regulatory  authorities  shall,  on  request,  provide  to  the
Commission all information necessary for the purposes of Article 9.

The Commission shall fix a reasonable time limit within which the information is to be
provided,  taking  into  account  the  complexity  of  the  information  required  and  the
urgency with which the information is needed.

If  the  Member  State  or  the  regulatory  authority  concerned  does  not  provide  this
information within the given time-limit pursuant to paragraph 1, the  Commission may
request  all  information  necessary  for  the  purpose  of  Article  9  directly  from  the
undertakings concerned.

When sending a request for information to an undertaking, the Commission shall at the
same  time  forward  a  copy  of  the  request  to  the  regulatory  authorities  of  the  Member
State in whose territory the seat of the undertaking is situated.

In its request for information, the Commission shall state the legal basis of the request,
the time limit within which the information is to be provided, the purpose of the request
and also the penalties provided for in Article 13(2) for supplying incorrect, incomplete
or misleading information. The Commission shall fix a reasonable time limit taking into
account  the  complexity  of  the  information  required  and  the  urgency  with  which  the
information is needed.

The owners of the undertakings or their representatives and, in the case of legal persons,
the persons authorised to represent them by law of by their instrument of incorporation,
shall supply the information requested. Lawyers duly authorised to act may supply the
information  on  behalf  of  their  clients,  in  which  case  the  client  shall  remain  fully
responsible if the information supplied is incomplete, incorrect or misleading.

Where an undertaking does not provide the information requested within the time-limit
fixed by the Commission or supplies incomplete information, the Commission may by
decision  require  the  information  to  be  provided.  The  decision  shall  specify  what
information  is  required  and  fix  an  appropriate  time-limit  within  which  it  is  to  be
supplied.  It  shall  indicate  the  penalties  provided  for  in  Article  13(2).  It  shall  also
indicate the right to have the decision reviewed by the Court of Justice of the European
Communities.

The  Commission  shall  at  the  same  time  send  a  copy  of  its  decision  to  the  regulatory
authorities of the Member State within the territory of which the residence of the person
or the seat of the undertaking is situated.

5.

The Commission shall use the  information collected  pursuant to this  Regulation    only
for the purposes of Article 9.

14

 
Article 12
Right of Member States to provide for more detailed measures

This regulation shall be without prejudice to the rights of Member States to maintain or introduce
measures  that  contain  more  detailed  provisions  than  those  set  out  in  this  Regulation  and  the
guidelines referred to in Article 9.

Article 13
Penalties

1.

2.

1.

2.

The Commission  may by  decision  impose  on  undertakings  fines  not  exceeding  1%  of
the  total  turnover  in  the  preceding  business  year  where,  intentionally  or  negligently,
they  supply  incorrect,  incomplete  or  misleading  information  in  response  to  a  request
made pursuant to Article 11(2) or fail to supply information within the time-limit fixed
by a decision adopted pursuant to the first subparagraph of Article 11(4).

In setting the amount of a fine, regard shall be had to the gravity of the failure to comply
with the requirements of the first subparagraph.

Penalties  provided  for  pursuant  to  paragraph  1  and  decisions  taken  pursuant  to
paragraph 2 shall not be of a criminal law nature.

Article 14
Committee

The Commission shall be assisted by the Committee set up by Article 13 of Regulation
(EC) No 1228/2003 on conditions for access to the network for cross-border exchanges
in electricity.9

Where  reference  is  made  to  this  paragraph,  Article  5  and  7  of  Decision  1999/468/EC
shall apply, having regard to the provisions of Article 8 thereof.

The  period  laid  down  in  Article  5(6)  of  Decision  1999/468/EC  shall  be  set  at  three
months.

Article 15
Commission Report

The  Commission  shall  monitor  the  implementation  of  this  Regulation.  It  shall  submit  to  the
European Parliament and the Council no more than three years after the entry into force of this
Regulation  a  report  on  the  experience  gained  in  its  application.  In  particular  the  report  shall
examine to what extent the Regulation  has been successful in ensuring non-discriminatory  and
cost-reflective network access conditions for gas transmission networks in order to contribute to
customer  choice  in  a  well  functioning  internal  market  and  to  long-term  security  of  supply.  If
necessary, the report shall be accompanied by appropriate proposals and/or recommendations.

9 

OJ L 176 of 15.7.2003, p. 1.

15

 
                                                
Article 16
Entry into force

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

It shall apply from 1 July 2005.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, […]

For the European Parliament
The President
[…]

For the Council
The President
[…]

16

 
Annex

GUIDELINES ON

THIRD PARTY ACCESS SERVICES,

PRINCIPLES UNDERLYING CAPACITY ALLOCATION MECHANISM AND CONGESTION
MANAGEMENT PROCEDURES AND THE APPLICATION OF CONGESTION MANAGEMENT
PROCEDURES IN CASE OF CONTRACTUAL CONGESTION, AND

THE DEFINITION OF THE TECHNICAL INFORMATION NECESSARY FOR NETWORK USERS TO GAIN
EFFECTIVE ACCESS TO THE SYSTEM AND THE DEFINITION OF ALL RELEVANT POINTS FOR
TRANSPARENCY REQUIREMENTS, INCLUDING THE INFORMATION TO BE PUBLISHED AT ALL
RELEVANT POINTS AND THE TIME SCHEDULE ACCORDING TO WHICH THIS INFORMATION SHALL
BE PUBLISHED

1. 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

THIRD PARTY ACCESS SERVICES

Transmission  system  operators  shall  offer  firm  and  interruptible  services  down  to  a
minimum period of one day.

Standard  transportation  contracts  and  common  network  code  shall  be  designed  in  a
manner that facilitates trading and re-utilisation of capacity contracted by network users
without hampering capacity release.

Transmission  system  operators  shall  implement  standardised  nomination  and  re-
nomination procedures and units of measurement, once agreed within EASEE-gas. They
shall  develop  information  systems  and  electronic  communication  means  to  provide
adequate  data  to  network  users  and  to  simplify  transactions,  such  as  nominations,
capacity contracting and transfer of capacity rights between network users.

Transmission  system  operators  shall  harmonise  formalised  request  procedures  and
response  times according  to  best industry  practice with  the aim  of minimising  response
times.  They  shall  provide  for  on-line  screen  based  capacity  booking  and  confirmation
systems, nominations and re-nominations procedures agreed within EASEE-gas no later
than 1 July 2005.

Transmission system operators shall not separately charge network users for information
requests  and  transactions  associated  with  their  transportation  contracts  and  which  are
carried out according to standard rules and procedures.

Information requests that require extraordinary or excessive expenses such as  feasibility
studies may be charged separately, provided the charges can be duly substantiated.

Transmission system operators shall co-operate with other transmission system operators
in  co-ordinating  the  maintenance  of  their  respective  networks  in  order  to  minimise  any
disruption of transmission services to network users and transmission system operators in
other  areas  and  in  order  to  ensure  equal  benefits  with  respect  to  security  of  supply
including in relation to transit.

17

 
(8) 

(9) 

2. 

2.1. 

(1) 

(2) 

(3) 

Transmission  system  operators  shall  publish  at  least  once  a  year,  by  a  predetermined
deadline,  all  planned  maintenance  periods  that  might  affect  network  users’  right  from
transportation  contracts  and  corresponding  operational  information  with  adequate
advance notice. This shall include publishing on  a  prompt and non-discriminatory basis
any changes to planned maintenance periods and notification of un-planned maintenance,
as soon as that information becomes available to the TSO. During maintenance periods,
TSOs shall publish regularly updated information on the details of and expected duration
and effect of the maintenance.

Transmission  system  operators  shall  maintain  and  make  available  to  the  regulatory
authority  upon  request  a  daily  log  of  the  actual  maintenance  and  flow  disruptions  that
have occurred. Information shall also be made  available on request to those affected by
any disruption.

PRINCIPLES  UNDERLYING  CAPACITY  ALLOCATION  MECHANISM  AND  CONGESTION
MANAGEMENT  PROCEDURES  AND  APPLICATION  OF  CONGESTION  MANAGEMENT
PROCEDURES IN CASE OF CONTRACTUAL CONGESTION

Principles  underlying  capacity  allocation  mechanism  and  congestion  management
procedures

Capacity  allocation  mechanism  and  congestion  management  procedures  shall  facilitate
the  development  of  competition  and  liquid  trading  of  capacity  and  shall  be  compatible
with market mechanisms including spot markets and trading hubs. They shall be flexible
and capable of adapting to evolving market circumstances.

These  mechanisms  and  procedures  may  take  into  account  the  integrity  of  the  system
concerned as well as security of supply.

These  mechanisms  and  procedures  shall  neither  hamper  the  entry  of  new  market
participants nor create undue barriers to enter the market. They shall not prevent market
participants,  including  new  market  entrants  and  companies  with  a  small  market  share,
from competing effectively.

2.2.  Congestion management procedures in case of contractual congestion

(1) 

(2) 

(3) 

(4) 

In  the  event  that  contracted  capacity  goes  un-used,  transmission  system  operators  shall
make this capacity available on the primary market on an interruptible basis via contracts
of differing duration, as long as this capacity is not offered by the relevant network user
(capacity holder) on the secondary market at a reasonable price.

Revenues from released interruptible capacity shall be split according to rules laid down
by  the  relevant  regulatory  authority.    These  rules  shall  be  compatible  with  the
requirement of an effective and efficient use of the system.

A reasonable price for released interruptible capacity may be determined by the relevant
regulatory authorities taking into account the specific circumstances prevailing.

Transmission system operators shall make reasonable endeavours to offer at least parts of
the unused capacity to the market as firm capacity.

18

 
3. 

DEFINITION  OF  THE  TECHNICAL  INFORMATION  NECESSARY  FOR  NETWORK  USERS  TO
GAIN  EFFECTIVE  ACCESS  TO  THE  SYSTEM  AND  THE  DEFINITION  OF  ALL  RELEVANT
POINTS  FOR  TRANSPARENCY  REQUIREMENTS,  INCLUDING  THE  INFORMATION  TO  BE
PUBLISHED AT ALL RELEVANT POINTS AND THE TIME SCHEDULE ACCORDING TO WHICH
THIS INFORMATION SHALL BE PUBLISHED

3.1.  Definition of the technical information necessary for network users to gain effective

access to the system

Transmission system operators shall publish in national language(s) and at the same time
in English at least the following information about their systems and services:

(a)  A detailed and comprehensive description of the different services offered and their

charges;

(b)  The  different  types  of  transportation  contracts  available  for  these  services  and  as
applicable, the network code and/or the standard conditions outlining the rights and
responsibilities  for  all  network  users  including  standard  transportation  contracts
and other relevant documents;

(c)  The standard procedures applied when using the transmission system including the

definition of key terms;

(d) 

Provisions  on  capacity  allocation,  congestion  management  and  anti-hoarding  and
re-utilisation procedures;

(e)  The  rules  applicable  for  capacity  trade  on  the  secondary  market  vis-à-vis  the

transmission system operator;

(f) 

If  applicable,  the  flexibility  and  tolerance  levels  included  in  transportation  and
other  services  without  separate  charge  and  as  well  as  any  flexibility  offered  in
addition to this and the corresponding charges;

(g)  A  detailed  description  of  the  gas  system  of  the  transmission  system  operator
indicating  all  relevant  points  interconnecting  its  system  with  that  of  other
transmission  system  operators  and/or  gas  infrastructure  such  as    LNG  and
infrastructure necessary for providing ancillary services as defined by Article 2(14)
of Directive 2003/55/EC;

(h) 

Information on gas quality and pressure requirements;

(i) 

The rules applicable for connection to the system operated by the TSO;

(j)  Any information on proposed and/or actual changes to the services or conditions,

including the items listed in points a) to i).

3.2.  Definition of all relevant points for transparency requirements

Relevant points shall include at least:

(a)  All entry points to a network operated by a transmission system operator

(b)  The most important exit points covering at least 50% of total exit capacity of the

network of a given transmission system operator

19

 
(c)  All points connecting different networks of transmission system operators

(d)  All points connecting the network of a transmission system operator with an LNG

terminal

(e)  All  essential  points  within  the  network  of  a  given  transmission  system  operator
including points connecting to gas hubs. All points are considered essential which,
based on experience, are likely to experience physical congestion.

(f)  All  points  connecting  the  network  of  a  given  transmission  system  operator  to
infrastructure necessary for providing ancillary services as defined by Article 2(14)
of Directive 2003/55/EC.

Information to be published at all relevant points and the time schedule according
to which this information should be published

At  all  relevant  points,  transmission  system  operators  shall  publish  the  following
information  about  the  capacity  situation  down  to  daily  periods  on  the  Internet  on  a
regular/rolling basis and in a user-friendly standardised manner:

(a) 

the maximum technical capacity for flows in both directions

(b) 

the total contracted and interruptible capacity

(c) 

the available capacity

For  all  relevant  points,  transmission  system  operators  shall  publish  available  capacities
for a period of at least 18 months ahead and shall update this information at least every
month or more frequently, if new information becomes available.

Transmission  system  operators  shall  publish  daily  updates  of  availability  of  short-term
services  (day-ahead  and-week  ahead)  based,  inter  alia,  on  nominations,  prevailing
contractual  commitments  and  regular  long-term  forecasts  of  available  capacities  on  an
annual basis for up to 10 years for all relevant points.

Transmission system operators shall publish historical maximum and minimum monthly
capacity utilisation rates and annual average flows at all relevant points for the past three
years on a rolling basis.

Transmission system operators shall keep a daily log of actual aggregated flows for three
months.

Transmission system operators shall keep effective records of all capacity contracts and
all other relevant information in relation to calculating and providing access to available
capacities, to which relevant national authorities shall have access to fulfil their duties.

Transmission  system  operators  shall  provide  user-friendly  instruments  for  calculating
tariffs for the services available and for verifying on-line the capacity available.

3.3. 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8)  Where transmission system operators are unable to publish information in accordance to
paragraph 1, 3 and 7, they shall consult with their relevant national authorities and set up
an Action Plan  for implementation  as soon  as possible, but not later than 31  December
2005 at the latest.

20

 
LEGISLATIVE FINANCIAL STATEMENT

Policy area(s): Energy and Transport

Activity(ies): Energy Industry and Internal Market

TITLE OF ACTION: Proposal for a Regulation of the European Parliament and of the Council on
conditions for access to the gas transmission network.

1. 

BUDGET LINE(S) + HEADING(S)

06 01 02 11 04 – Studies and consultations

2. 

OVERALL FIGURES

Total allocation for action (Part B):

2.1. 

Period of application:

annual

2.2. 

Overall multiannual estimate on expenditure:

a) Schedule of  commitment  appropriations/payment appropriations  (financial intervention) (see
point 6.1.1)

Non applicable

Commitments

Payments

€ million (to 3rd decimal place)

2004

2005

2006

2007

2008

Total

b) Technical and administrative assistance and support expenditure(see point 6.1.2)

Non Applicable

Commitments

Payments

Subtotal a+b

Commitments

Payments

21

 
c)  Overall  financial  impact  of  human  resources  and  other  administrative  expenditure
(see points 7.2 and 7.3)

Commitments/
payments

0,441

0,441

0,441

0,216

0,216

TOTAL a+b+c

Commitments/Paym
ents

0,441

0,441

0,441

0,216

0,216

Compatibility with the financial programming and the financial perspective

(cid:1) Proposal compatible with the existing financial programming

This  proposal  will  entail  reprogramming  of  the  relevant  heading  in  the  financial
perspective

(cid:1) This may entail application of the provisions of the Interinstitutional Agreement.

2.3. 

Financial impact on revenue10:

(cid:1) No financial implications (involves technical aspects regarding implementation of

a measure)

OR

(cid:1) Financial impact – the effect on revenue is as fol lows:

Note: All details and observations pertaining to the method of calculating the effect on
revenue should be included in a separate annex.

Budget line Revenue

€ million (to 1 decimal place)

Situation following action

Year n

n+1

n+2

n+3

n+4

n+5

Prior to
action
(Year n-
1)

a) Revenue in absolute terms

b) Change in Revenue

 (cid:1)

(Please state each budget line involved, adding the appropriate number of rows to the table if
there is an effect on more than one budget line)

10

For further information see a separate guidance paper.

22

 
                                                
3. 

BUDGET CHARACTERISTICS

Type of expenditure

New

EFTA
participat
ion

Participation
applicant
countries

Heading
Financial
Perspective

No 3

Comp/
Non-comp

Non-Comp

Non-diff

Yes

Yes

No

4. 

LEGAL BASIS

The Treaty establishing the European Community, in particular Article 95.

5. 

DESCRIPTION AND GROUNDS

5.1. 

Need for Community intervention 11

5.1.1.  Objectives pursued

The  Gas  Directive  progressively  opens  up  national  gas  markets  to  competition.
However, in order to create a real integrated internal market, effective trading rules are
necessary,  and  notably  a  harmonised  approach  on  cross-border  tarification  for
transmission tariffs and commonly implemented mechanisms for dealing with capacity
allocation and congestion at borders.

In  order  to  deal  with  this,  the  Commission  launched  the  “Madrid  process”,  a  Forum
composed of the Commission, national Regulators, Member States and industry. Much
progress has been made, in particular the agreement of Guidelines for Good Practice at
the most recent Forum.

It is now crucial to ensure that these guidelines are fully implemented by Member States
and  that  they  can  be  modified  as  experience  is  collected.  To  deal  with  this  the
Commission  proposes  a  Regulation  which  (a)  sets  out  the  basic  principles  of  access
conditions to the gas transmission network and (b) permits the Commission, subject to a
comitology  procedure  (The  comitology  Committee  already  established  by  Regulation
No  1228/2003  will  be  used),  to  adopt  binding  guidelines  on  the  precise  mechanism
according to which the harmonised rules should be applied. Thus, the Commission takes
on new executive responsibilities.

The  objectives  pursued  by  the  Regulation  are,  therefore,  the  rapid  entry  into  force  of
cost-reflective mechanisms on charges for access to networks, a common minimum set
of  Third  Party  Access  services,  common  rules  regarding  contractual  congestion,
information  and  balancing  requirements  as  well  as  rules  for  free  trading  of  primary
capacity  rights  to  network  capacity.  It  is  expected  that  the  Regulation  may  enter  into
force in late 2004/early 2005.

11

For further information see a separate guidance paper.

23

 
                                                
The objectives pursued  by  this financial action  is  to provide the  Commission  with the
means to effectively carry out these new responsibilities.

5.1.2.  Measures taken in connection with ex ante evaluation

a) Explain how and when the ex ante evaluation was conducted (author, timing, and where the
reports are available) or how the corresponding information was gathered

The Commission’s  ongoing  “benchmarking” exercises  have  revealed  the  difficulties  associated
with cross border competition for gas and the dominance of most national incumbents. Without
trade,  then  the  objective  of  consumer  choice  in  the  gas  industry  will  not  be  achieved.  This
analysis was backed up by  a  survey  of  large  customers. Many  respondents were unhappy  with
progress in market opening and access conditions to the  network and considered  that  a  lack of
opportunity  to  look  to  other  Member  States  for  a  supplier  contributed  to  the  perceived  poor
performance. For these reasons the Commission proposes a new Regulation on access conditions
across the EU, which foresees the above-mentioned Regulatory Committee of Member States.

To prepare the adoption of the proposed Regulation, the Commission set up the Madrid Forum.
This has now met 7 times. The Forum recently  agreed  voluntary Guidelines for Good Practice
for , in particular, gas transmission companies to adhere to, as discussed above.

b) Describe briefly the findings and lessons learnt from the ex ante evaluation.

The discussions at the Madrid Forum, as well as the reaction to the Commission’s other work on
this subject, has shown that the introduction of effective rules on cross-border gas transmission is
fundamental  for  the  creation  of  a  real  internal  market  for  gas.  It  has  also  shown  that  the
development  of  such  rules  is  technically  extremely  complex,  and  controversial.  Furthermore,
once a robust methodology is determined, calculation of costs relating to cross-border trade will
be difficult and time-consuming. In this light, a Regulation has been viewed as necessary to deal
with the issues effectively.

5.1.3.  Measures taken following ex post evaluation

It is believed that a detailed review of the effectiveness of the approach set out in the Regulation
in  developing  common  rules,  as  well  as  the  effectiveness  of  the  financial  actions  taken  by  the
Commission to support this effort, should take place two  years after the entry  into force of the
Regulation.

5.2. 

Actions envisaged and arrangements for budget intervention

The  adoption  of  common  rules  on  cross-border  gas  transmission  would  lead  to  increased
competition  throughout  the  EU  and  thus  lower  gas  prices,  thus  benefiting  all  consumers,  both
domestic  and  industrial.  The  financial  actions  envisaged  are  to  prepare  the  entry  into  force  of
such rules, and are thus highly technical and specific in nature, and would thus be of interest to
national regulators, Member States, the European Parliament and relevant industry.

The specific objectives of the Regulation are the entry into force, by end 2005 of a harmonised
system  for  cross-border  transmission  tarification  based  on  principles  of  simplicity,  cost-
reflectiveness  and  non-discrimination.  Also  they  are  the  entry  into  force  of  common  rules  on
capacity allocation at the adoption of the Regulation and, if necessary in the light of experience,
their revision. The specific objectives of the financial actions are thus to (i) complete appropriate
studies leading to the entry into force of a detailed guidelines on tarification by September 2005,
(ii) the revision of the current Guidelines for Good practice, on the basis of necessary study, by

24

 
end  2005.  Thereafter,  the  specific  objective  is  the  ongoing  revision  of  these  guidelines,  if
necessary, on the basis of additional studies on an annual basis.

- The concrete measures to be taken to implement the action:

The  launch  of  studies  leading  to  the  adoption  and  agreement  of  guidelines  on  cross-border
tarification (to March 2005); second the adoption of a decision on actual tariffs (end 2005) and
third the re-examination of guidelines of good practice on the basis of necessary study work (end
2005).

To achieve these objectives the following financial actions are envisaged:

Action  1 :  in  order  to  develop  detailed  guidelines  with  respect  to  tarification,  considerable
preparatory work is necessary, often technical (engineering) and financial (accounting) in nature.
This also applies to the question whether and how the guidelines contained in the Regulation on
congestion  management  are  amended.  To  achieve  this,  it  is  cost  effective  to  prepare  the
guidelines through expert studies.

The expected outcome is the entry into force, and subsequent maintenance and refinement of a
system  of  cross-border  tarification  for  gas  and  evolving  guidelines  on  good  practice  for  gas
transmission leading to a consistent EU wide approach.

Member  States  alone  cannot  resolve  these  issues:  to  develop  an  effective  tarification  system  a
harmonised approach is imperative and cannot be developed at national level. Such a proposal is
therefore wholly in line with the subsidiarity principle, and indeed is made necessary by it.

However,  Member  States’  regulatory  authorities  need  to  be  involved  in  this  process.  The
Commission would therefore take these decisions after consultation of a committee made up of
representatives  of  Member  States,  created  in  accordance  with  Council  Decision  1999/468/EC
laying  down  the  procedures  for  the  exercise  of  implementing  powers  conferred  on  the
Commission (“Comitologie”).

5.3.  Methods of implementation

Much of this work will be carried out internally by the Commission; preparing the final text of
guidelines, ensuring their adoption through the comitology procedure, and adopting decisions on
actual  tariff  levels.  However,  in  preparing  this  work  it  will  be  necessary  to  have  recourse  to
external studies providing economic, accounting and technical expertise;

6. 

FINANCIAL IMPACT

6.1. 

Total financial impact on Part B - (over the entire programming period)

Not applicable

(The method of calculating the total amounts set out in the table below must be explained by the
breakdown in Table 6.2. )

25

 
6.1.1.  Financial intervention

Commitments in € million (to the 3rd decimal place)

2004

2005

2006

2007

2008

Total

Breakdown

Etc.

6.1.2.  Technical  and  administrative  assistance,  support  expenditure  and  IT  expenditure  (

Commitment appropriations)

Non Applicable

Year N

N + 1

 N + 2

N + 3

N + 4

Total

N + 5 and
subs.
Years

1) 
administrative assistance

Technical 

and

Technical 

a) 
offices

assistance

b)  Other 
administrative assistance:

technical 

and

- intra muros :

- extra muros :

of  which  for  construction
and 
of
maintenance 
computerised  management
systems

Subtotal 1

2) Support expenditure

a) Studies

b) Meetings of experts

c) Information and
publications

Subtotal 2

TOTAL

26

 
6.2. 

Calculation  of  costs  by  measure  envisaged  in  Part  B  (over  the  entire
programming period)12

(Where  there  is  more  than  one  action,  give  sufficient  detail  of  the  specific  measures  to  be
taken for each one to allow the volume and costs of the outputs to be estimated. ).

Not applicable

Breakdown

Commitments in € million (to the 3rd decimal place)

Type
of outputs
(projects, files )

Number of
outputs

Average unit
cost

(total for years
1…n)

Total cost

(total for years
1…n)

1

2

3

4=(2X3)

TOTAL COST

If necessary explain the method of calculation

7. 

IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE

7.1. 

Impact on human resources

Types of post

Staff to be assigned to management of the
action using existing and/or additional
resources

Number of
permanent posts

Number of
temporary posts

Total

Permanent
officials 
Temporary staff

or

A

B

C

Other human resources

Total

2

2

Description of tasks deriving from the
action

1.  Preparation  of  guidelines  on  cross-
border  tarification  and  cross  border
gas transmission.

12

For further information see a separate guidance paper.

27

 
                                                
7.2. 

Overall financial impact of human resources

Type of human resources

Amount €

Method of calculation *

Officials

Temporary staff

Other human resources

216.000

2*108.000 €

(give budget line)

Total

216.000

The amounts are total expenditure for twelve months.

Other administrative expenditure deriving from the action

Budget line

(number and heading)

Overall allocation (Title A7)

A0701 – Missions

A07030 – Meetings
A07031 – Compulsory committees (1)
A07032 – Non-compulsory committees (1)

A07040 – Conferences

A0705 – Studies and consultations

… Other expenditure (state which)

Information systems (A-5001/A-4300)

Other expenditure - Part A (state which)

Amount €

Method of calculation

225.000

One  study  per  year  is  necessary  in
order  to  prepare  the  adoption  and/or
amendment of the guidelines: per study
250  man/days  à  900€  (average  rate  of
experts) = 225.000€

Total

225.000

The amounts are total expenditure for twelve months.

(1) Specify the type of committee and the group to which it belongs.

I.

II.

III.

Annual total (7.2 + 7.3)

Duration of action

Total cost of action (I x II)

441.000€

not limited

441.000€/year

The requirements in terms of human and other administrative resources are to be met within
the resources made available to DG TREN in the framework of the annual allocation process.

FOLLOW-UP AND EVALUATION

7.3. 

Follow-up arrangements

(Adequate  follow-up  information  must  be  collected,  from  the  outset  of  each  action,  on  the
inputs,  outputs  and  results  of  the  intervention.  In  practice  this  means  i.)  Identification  of
indicators  for  inputs,  outputs  and  results  ii.)  Putting  in  place  methods  for  the  collection  of
data.

28

 
The result of the measures foreseen in the draft Regulation will be assessed in the light of the
future development of intra-Community trade in gas, as of the relevant Eurostat Statistics.

7.4. 

Arrangements and schedule for the planned evaluation

(Describe the planned schedule and arrangements for interim and ex post evaluations to be
carried out in order to assess whether the intervention has achieved the objectives set. In the
case  of  multi-annual  programmes,  at  least  one  thorough  evaluation  in  the  life  cycle  of  the
programme  is  needed.  For  other  activities  an  ex  post  or  mid-term  evaluation  should  be
carried out at a periodicity not exceeding six years).

Two  years  following  the  entry  into  force  of  the  Regulation  it  is  intended  to  carry  out  an
internal evaluation of the success in adopting the necessary guidelines and rules permitting a
tarification and harmonised congestion management system to enter into force. The success of
this  system  will  be  evaluated  in  terms  of  its  ability  to  reduce  transaction  costs  for  gas
consumers.  The  use  and  value  of  the  study  work  carried  out  in  achieving  this  will  also  be
evaluated as well as the accuracy of the audit work carried out on calculations of individual
country tariffs and the cost-effectiveness of the approach.

8. 

ANTI-FRAUD MEASURES

(Article 3(4) of the Financial Regulation: "In order to prevent risk of fraud or irregularity, the
Commission  shall  record  in  the  financial  statement  any  information  regarding  existing  and
planned fraud prevention and protection measures.")

Reimbursement  of  experts  and  payment  of  experts  for  studies  carried  out  will  be  made  in
compliance with applicable financial rules.

29