Communication from the Commission to the European Parliament pursuant to the second subparagraph of Article 251 (2) of the EC Treaty concerning the common position of the Council on the adoption of a Regulation of the European Parliament and of the Council on conditions for access to the gas transmission networks
Date: 2004-11-16
Institutions: European Commission
Subjects: energy grid, energy policy, energy supply, gas supply, natural gas, single market

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.11.2004 
COM(2004) 760 final 

2003/0302 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251 (2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a regulation of the European 
Parliament and of the Council on conditions for access to the gas transmission networks 

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2003/0302 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251 (2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a regulation of the European 
Parliament and of the Council on conditions for access to the gas transmission networks 

1- 

BACKGROUND 

Date of transmission of the proposal to the EP and the Council
(document COM(2003) 741 final – C5–0644/2004 - 
2003/0302(COD)): 

12 December 2003 

Date  of  the  opinion  of  the  European  Economic  and  Social 
Committee: 

2 June 2004 

Date of the opinion of the European Parliament, first reading: 

20 April 2004 

Date of the amended proposal: 

No amended proposal has been 
submitted due to political 
urgency. All amendments 
accepted by the Commission have 
been accepted by the Council. 

Date of political agreement in the Council: 

10 June 2004 

Date of adoption of Common Position by the Council  

12 November 2004 

Annex 

Declaration of the Commission 

2- 

OBJECTIVE OF THE COMMISSION PROPOSAL 

This  proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  represents  a 
complementary  measure  to  Directive  2003/55/EC  concerning  common  rules  for  the  internal 
market  in  natural  gas  and  repealing  Directive  98/30/EC.  It  aims  at  setting  minimum 
requirements for conditions for access to the gas transmission networks.  

Experience, among others gathered by the EU Gas Regulatory Forum in Madrid, has shown 
that  qualitative  market  opening  is  as  important  as  quantitative  market  opening.  While 
Directive 2003/55/EC will fully open the market not later than July 2007, access conditions 
for Third Parties to the network in Member States are far from providing a level playing field. 
Both directive 2003/55/EC and the proposed Regulation acknowledge the crucial importance 
of  Third  Party  Access  as  the  principal  tool  to  open  the  market  and  introduce  competition. 

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However,  while  the  Directive  only  defines  the  objectives,  the  Regulation  aims  at  certain 
minimum requirements to be met with respect to this key element of the Directive, i.e. access 
conditions to the transmission network.  

3- 

COMMENTS ON THE COMMON POSITION 

With  the  exception  of  the  issues  set  in  4.4.,the  Common  Position  fully  corresponds  to  the 
proposal  from  the  Commission  with  respect  to  its  substance.  A  number  of  other  changes 
introduced  by  the  Council  and  the  European  Parliament  clarify  the  provisions  of  the 
Regulation with respect to its consistency with Directive 2003/55/EC or supplement them. 

Member States have not only acknowledged the need for the regulation as such, but also the 
fact that its scope has to go beyond pure cross-border  issues,  in  order  to avoid distortion of 
competition and discrimination.  

4- 

COMMISSION DETAILED COMMENTS 

4.1  Amendments  accepted  by  the  Commission  and  incorporated  in  full  or  in  part  in  the 
common position 

Amendment  1:  The  amendment  is  acceptable  in  so  far  it  highlights  the  need  to  tackle 
remaining barriers to trade. 

Amendment  3:  The  amendment  highlights  the  need  for  consultation  and  collaboration 
between the Commission and the relevant industry, to which the Commission agrees. 

Amendment 4: The acceptable part of the amendment provides clarification. 

Amendment  7:  The  proposed  definition  of  “network  users”  provides  clarification  and 
simplification without limiting the scope of the definition as proposed by the Commission. 

Amendment  12:  The  amendment  brings  the  text  in  line  with  the  respective  provisions  of 
Directive 2003/55/EC. It also takes the fact into account that in some Member States a certain 
degree  of  pipeline-to-pipeline  competition  exists.  Finally,  the  amendment  acknowledges  the 
need  to  design  tariffs  also  with  a  view  to  enabling  infrastructure  investments  as  well  as 
investments aiming at a flow of gas unimpeded by quality or other interoperability issues.  

Amendment 13: Convergence of tariff structures and balancing mechanisms would facilitate 
and improve conditions to trade natural gas.  

Amendment 15: The matter could be left to the market, since it would be in the interest of the 
transmission system operator to market as much capacity as possible. 

Amendment 18: The amendment covers an important aspect discussed in the Madrid process. 
It  would  protect  TSOs  from  risks  linked  to  uneconomic  behaviour  of  network  users  or 
unreliable network users. 

Amendments 19, 26, and 32: The amendments provide clarification. 

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Amendments  20  and  39:  The  amendments  are  based  on  the  voluntary  Guidelines  for  Good 
TPA  Practice  agreed  in  Madrid  and  strikes  the  right  balance  between  the  requirements  of  a 
competitive market and security of supply. 

Amendment 21: It is important to define the time-scale under which unused capacity should 
be  offered  on  an  interruptible  basis.  Otherwise,  network  users  could  not  benefit  from  this 
service, if time-ahead would not allow to react.  

Amendment 23: Publication of tariff derivation and of the underlying methodology as well as 
information on the structure of tariffs is a clear transparency requirement and needed, in order 
to enable competition and avoid unfair and inappropriate tariffs. 

Amendment  25  middle  part:  The  approval  of  relevant  points  of  a  transmission  system  on 
which the information must be made public after consultation with network user would ensure 
that information on those points are published which represent the most important ones for the 
market. 

Amendment  28:  The  amendment  complies  with  the  wording  of  Madrid  Guidelines.  It  is 
incorporated in substance, although the wording has been changed by the Council for the sake 
of legal clarity and textual consistency. 

Amendment 29: Harmonised balancing regimes are important to allow an unimpeded flow of 
gas and the development of spot markets.  

Amendment  34:  The  amendment  represents  a  useful  supplement  and  mirrors  corresponding 
provisions of Regulation (EC) 1228/2003. 

Amendment  36:  The  amendment  contributes  to  increased  efficiency  of  the  Commission’s 
work and streamlines the Commission’s reporting duties. 

Amendment 38: Involvement of network users in the development of standard contracts and 
network codes would increase their practical worth and applicability. 

Amendment  40  and  41:  The  amendment  is  based  on  the  voluntary  Guidelines  agreed  in 
Madrid.  Network  users  need  to  learn  how  availability  of  contracted  capacity  is  affected,  in 
order  to  take  necessary  measures  to  meet  their  customers’  needs  under  the  prevailing 
circumstances. In this respect, the level of transparency should be as high as possible.  

4.2 Amendments accepted by the Commission and not incorporated in the common position 

None 

4.3 Amendments rejected by the Commission and not incorporated in the common position  

Amendments 1 and 4: Those parts of the amendments implying a possible restriction of the 
scope  of  the  Regulation  to  cross-border  trade  cannot  be  accepted  by  the  Commission.  Any 
restriction of the scope of the Regulation to cross-border trade would render it impossible to 
achieve the underlying objectives of the RegulationRestricting the scope of the Regulation to 
cross-border trade would not enable the Regulation to ensure the necessary level playing field 
in  terms  of  access  conditions,  in  particular  with  Member  States  with  more  than  one 
transmission system operator. Issues addressed by the Regulation are relevant throughout gas 

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networks and are not confined to inter-connections. Restricting the scope of the regulation to 
cross-border trade would therefore render the proposed regulation almost useless. 

Amendments  2,  5  and  6  1st  part:  The  amendment  gives  the  wrong  impression  that  only 
transport  across  borders  would  lead  to  an  intensification  of  competition  throughout  the  EU, 
whilst  this  would  be  achieved  through  an  increased  number  of  market  participants  that  are 
able to supply gas throughout the EU (i.e. within Member States and across Member States). 
(see also comments on amendments 1 and 4). 

Amendment  6  2nd part: the amendment restricts the scope of the Regulation to transmission 
system  operators  as  defined  under  Directive  2003/55/EC.  This  is  likely  to  exclude  regional 
transmission systems and would thus not provide a level playing in terms of access conditions 
to transmission networks.  

Amendment 8: The amendment does not clearly distinguish between the concept of primary 
and secondary markets underlying the regulation. It would leave room for misunderstandings 
with respect to Article 8 “Capacity rights trading”, which means secondary markets. 

Amendment 9 and 10: The terms defined by these amendments do not occur in the text and no 
definition is therefore needed. 

Amendment 11: The definition of “relevant points” should occur in the Guidelines annexed to 
the  regulation,  in  order  to  allow  its  flexible  and  quick  adaptation  to  market  developments. 
Storage  facilities  have  been  deliberatedly  excluded  from  the  scope  of  the  regulation,  since 
their specific features and regulatory requirements would deserve an approach of its own.  

Amendment 14: The amendment would be difficult or impossible to apply in practice due to 
the general wording. 

Amendment  16:  The  subjects  addressed  by  the  amendment  are  beyond  the  scope  of  the 
regulation. 

Amendment  17:  The  amendment  aims  at  an  obligation  for  capacity  holders  to  offer  unused 
capacity on the secondary market. While the Commission shares the objectives and intentions 
of  the  amendment,  it  takes  the  view  that  with  respect  to  existing  contracts  economic 
incentives might be most promising. As for new contracts, the matter is addressed in Article 
5(2). 

Amendment 22: The amendment would introduce a considerable degree of discretionary with 
respect  to  what  should  be  considered  “prolonged  and  signifcant  contractual  congestion”.  In 
addition, the amendment would weaken the respective provisions ot the Commission’s text. It 
is worth highlighting that while existing contracts have – for legal reasons – to be dealt with 
in a different way, it is of fundamental importance that new contracts should take account of 
the  fact  that  capacity  hoarding  is  not  acceptable  in  a  competetive  market  and  that  use-it-or-
lose-it principles have to be applied. 

Amendment  24:  The  amendment  does  not  add  any  new  element.  The  definition  of  relevant 
points is contained in Art 6(3) and the Annex. 

Amendment  25  first  and  last  part:  The  points  relevant  for  publication  should  only  be 
addressed in Article 6(3) as a matter of clarity. Due to the large number of exit points in some 

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transmission systems, it is important to indicate at least a percentage of capacity of exit points, 
which have to be published. This requirement is met in the Annex. 

Amendment  27:  Due  to  the  large  differences  between  European  transmission  systems,  the 
amendment seems to be premature. The size of a system, availability of storage facilities and 
other flexibility tools to the TSO may predetermine its possiblities with respect to balancing 
services. In addition, the reference to market based balancing systems is too ambiguous, since 
there are different market based system on the EU gas market. 

Amendment 30: The amendment may convey wrong signals, restrict the steps to be taken to 
consultations and would delete the involvement of regulatory authorities, which is considered 
necessary to ensure non-discriminatory and transparent contracting procedures. 

Amendment 31: The amendment would not allow to carry out a proper consultation process 
with the industry, which the Commission considers of utmost importance. 

Amendment 35: Whilst the Commission has repeatedly stated its intention to maintain a close 
consultation  process  with  the  industry  and  gas  consumers,  it  would  institutionally  not  be 
correct to bind a committee set up under comitology rules to any consultation. 

Amendment 37: Some Member States are still enjoying derogations from Directive 98/30/EC. 
In order to ensure consistent application of Community law, in particular Article 22, 27 and 
28 of Directive 2003/55/EC, and the provisions of the regulation in question, derogations and 
exemptions  from  the  application  of  the  Regulation  are  indispensable,  since  the  Regulation 
supplements some of those provisions of the Directive, from which these Member States can 
derogate.  

Amendment  42:  Due  to  technical  reasons  related  to  the  pressure  conditions  in  the  network, 
which  are  subject  to  changes  on  a  relatively  short  notice,  published  capacities  often  require 
further confirmation before being contracted. This applies in particular to short-term services 
and services at short notice. 

4.4. Amendments rejected by the Commission and incorporated in the Common Possition 

Amendment  33:  The  Commission  considers  it  useful  to  highlight  the  right  of  European 
citizens and companies to go to the Court of Justice, where appropriate. However, the Council 
in adapting Article 11 to the requirements of the proposed Regulation, has deleted paragraphs 
2, 3, 4 and 5 of Article 11 in total, thereby incorporating Amendment 33 of the Parliament. 
The  Commission  accepts  this  appraoch  of  the  Council,  which  streamlines  the  provisions  of 
the Regulation.  

4.5. Changes introduced by the Council 

The definitions of “new market entrants” and “small players” contained in Article 2(23) and 
(24)  of  the  Commission’  initial  proposal  have  been  deleted.  This  is  acceptable  to  the 
Commission, because the concept of “new market entrants” and “small players” is sufficiently 
clear. However, the provisions addressing new market entrants in the text of the Regulation 
have been maintained.  

In  Article  9(1)  and  (2),  the  Council  has  reduced  the  scope  of  the  Comitology  procedure  as 
proposed  by  the  Commission.  It  has  deleted  all  subjects  not  yet  covered  by  Guidelines 
annexed to the Regulation. Only those subjects addressed already by the annexed Guidelines 

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have  been  maintained.  The  subjects  taken  out  by  the  Council  could  be  addressed  at  a  later 
stage,  e.g.  when  submitting  the  report  pursuant  to  Article  30  of  Directive  2003/55/EC  (2nd 
Internal Gas Market Directive). 

In order to avoid the impression that any of the Guidelines annexed to the Regulation require 
EU  wide  standardisation  or  harmonisation,  the  Council  has  introduced  a  new  paragraph 
(Article 9(3)) with a view to clarifying this issue. The Commission never intended to stipulate 
that  conditions  and  terms  on  access  to  the  network  should  be  standardised  at  Community 
level, but rather minimum standards regarding network access be set. For this reason, the text 
of Article 9(3) is acceptable to the Commission.  

For the sake of consistency with Directive 2003/55/EC, the Council has introduced Article 16 
on “Derogations and exemptions”. The provisions of this Article would bring about consistent 
application of Community law. Article 16 of the Regulation does not go beyond the scope of 
the derogations already laid down in Directive 2003/55/EC, but grants Member State with a 
derogation  under  Article  28  of  Directive  2003/55/EC  the  right  to  apply  for  a  temporary 
derogation from the application of this Regulation, subject to approval from the Commission. 

Finally, the Commission accepted an entry into force of the Regulation delayed by one year 
compared to its original proposal. In addition, it accepted that the Guidelines annexed to the 
Regulation should not be amended before 1 January 2007. As the Commission considers the 
Guidelines  contained  in  the  Annex  to  the  Regulation  sufficiently  complete,  comprehensive 
and  developed  in  order  to  respond  properly  to  market  requirements,  it  could  accept  this 
proposal, too. 

5- 

CONCLUSION 

The  Commission  would  have  preferred  the  entry  into  force  of  the  Regulation  in  2005,  but 
considers  that  the  political  agreement  adopted  on  10  June  (by  qualified  majority)  and  the 
consequent  common  position  adopted  on  12  November  2004  would  fully  accomplish  the 
objectives  envisaged  by  the  Regulation.  For  this  reason,  the  Commission  supports  the 
common position. 

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Annex 

Proposal for a Regulation on Conditions for Access to the Gas Transmission Networks 

Declaration of the Commission 

Storage and access to storage facilities do not fall under the scope of this Regulation. 

Storage  and  access  to  storage  facilities  will  therefore  not  be  addressed  in  Guidelines  laid 
down in Article 9(1) of the Regulation or as amended under Article 9(2) of this Regulation. 

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