Common Position (EC) No 9/2009 of 9 January 2009 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 the adoption of a Directive of the European Parliament and of the Council concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (Text with EEA relevance)
Date: 2009-01-09
Institutions: Council of the European Union
Subjects: approximation of laws, energy distribution, energy supply, energy transport, natural gas, single market

24.3.2009

EN

Official Journal of the European Union

C 70 E/37

COMMON POSITION (EC) No 9/2009

adopted by the Council on 9 January 2009

with a view to the adoption of Directive 2009/…/EC of the European Parliament and of the Council
of … concerning common rules for the internal market in natural gas and repealing Directive
2003/55/EC

(Text with EEA relevance)

(2009/C 70 E/02)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

(5)

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 47(2) and Articles 55 and 95
thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Economic and
Social Committee (1),

Having regard to the opinion of
Regions (2),

the Committee of

the

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

laid down in

Whereas:

(1)

(2)

(3)

(4)

The internal market
in natural gas, which has been
progressively implemented throughout the Community
since 1999, aims at delivering real choice for all
consumers of the European Union, be they citizens or
businesses, new business opportunities
and more
cross-border
trade, so as to achieve efficiency gains,
competitive prices, and higher standards of service, and
to contribute to security of supply and sustainability.

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 (4) has made a
significant contribution towards the creation of such an
internal market in natural gas.

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

freely to choose their

However, at present, there are obstacles to the sale of gas
on equal terms and without discrimination or disadvan-
tages in the Community. In particular, non-discriminatory
network access and an equally effective level of regulatory
supervision in each Member State do not yet exist.

(1) OJ C 211, 19.8.2008, p. 23.
(2) OJ C 172, 5.7.2008, p. 55.
(3) Opinion of the European Parliament of 9 July 2008 (not yet published
in the Official Journal), Council Common Position of 9 January 2009
and Position of the European Parliament of … (not yet published in the
Official Journal).

(4) OJ L 176, 15.7.2003, p. 57.

The Communication of the Commission of 10 January
2007 entitled ‘An Energy Policy for Europe’ highlighted
the importance of completing the internal market
in
natural gas and of creating a level playing field for all
natural gas undertakings established in the Community.
The Communications of the Commission of 10 January
2007 entitled ‘Prospects for the internal gas and electri-
city market’ and ‘Inquiry pursuant to Article 17 of Regu-
lation (EC) No 1/2003 into the European gas and electri-
city sectors (Final Report)’ showed that the present rules
and measures do not provide the necessary framework
for achieving the objective of a well-functioning internal
market.

(6) Without effective separation of networks from activities
of production and supply (‘effective unbundling’), there is
an inherent risk of discrimination not only in the opera-
tion of the network but also in the incentives for verti-
cally integrated undertakings to invest adequately in their
networks.

(7)

(8)

The rules on legal and functional unbundling as provided
for in Directive 2003/55/EC have not, however,
led to
effective unbundling of the transmission system opera-
tors. At its meeting in Brussels on 8 and 9 March 2007,
the European Council therefore invited the Commission
to develop legislative proposals for the ‘effective separa-
tion of supply and production activities from network
operations’.

supply. For

Only the removal of the incentive for vertically integrated
undertakings
to discriminate against competitors as
regards network access and investment can ensure effec-
tive unbundling. Ownership unbundling, which implies
the appointment of the network owner as the system
operator and its independence from any supply and
production interests, is clearly an effective and stable way
to solve the inherent conflict of interests and to ensure
security of
the European
this
Parliament, in its resolution of 10 July 2007 on prospects
for the internal gas and electricity market referred to
ownership unbundling at transmission level as the most
effective tool by which to promote investments in infra-
structure in a non-discriminatory way, fair access to the
network for new entrants and transparency in the
market. Under ownership unbundling, Member States
should therefore be required to ensure that the same
person or persons are not entitled to exercise control
over a production or supply undertaking and, at the
a
control or
same

any right over

exercise

reason,

time,

C 70 E/38

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Official Journal of the European Union

24.3.2009

transmission system operator or transmission system.
Conversely, control over a transmission system or trans-
mission system operator should preclude the possibility
of exercising control or any right over a production or
supply undertaking. Within those limits, a production or
supply undertaking should be able to have a minority
shareholding in a transmission system operator or trans-
mission system.

(9)

(10)

The definition of the term ‘control’ is taken from Council
Regulation (EC) No 139/2004 of 20 January 2004 on
the control of concentrations between undertakings (the
EC Merger Regulation) (1).

Since ownership unbundling requires, in some instances,
the restructuring of undertakings, Member States should
be granted additional time to apply the relevant provi-
sions. In view of the vertical links between the electricity
and gas sectors, the unbundling provisions should apply
across the two sectors.

(11) Under ownership unbundling,

to ensure full

indepen-
dence of network operation from supply and production
interests and to prevent exchanges of any confidential
information, the same person should not be a member of
the managing boards of both a transmission system
operator or a transmission system and an undertaking
performing any of the functions of production or supply.
For the same reason, the same person should not be
entitled to appoint members of the managing boards of a
transmission system operator or a transmission system
and to exercise control or any right over a production or
supply undertaking.

the choice of implementing ownership unbundling either
by direct divestiture or by splitting the shares of the inte-
grated undertaking into shares of the network under-
taking and shares of the remaining supply and produc-
tion undertaking, provided
requirements
resulting from ownership unbundling are complied with.

that

the

(15)

The full effectiveness of the independent system operator
or independent transmission operator solutions should
be ensured by way of specific additional rules. The inde-
pendence of the transmission operator should, inter alia,
be ensured through certain ‘cooling-off’ periods during
which no management or other relevant activity giving
access to the same information as could have been
obtained in a managerial position is exercised in the
vertically integrated undertaking.

(16) A Member State has the right to opt for full ownership
unbundling in its territory. Where a Member State has
exercised that right, an undertaking does not have the
right to set up an independent system operator or an
independent
an
undertaking performing any of the functions of produc-
indirectly exercise
tion or supply cannot directly or
control or any right over a transmission system operator
from a Member State that has opted for full ownership
unbundling.

transmission operator.

Furthermore,

(17) Under this Directive different types of market organisa-
tion will exist in the internal market in natural gas. The
measures that Member States could take in order to
ensure a level playing field should be based on overriding
requirements of general interest. The Commission should
be consulted on the compatibility of the measures with
the Treaty and Community law.

(12)

The setting up of a system operator or a transmission
operator independent from supply and production inter-
ests should enable a vertically integrated undertaking to
maintain its ownership of network assets whilst ensuring
an effective separation of interests, provided that such
independent system operator or such independent trans-
mission operator performs all the functions of a system
operator and detailed regulation and extensive regulatory
control mechanisms are put in place.

(13) Where, on … (*), an undertaking owning a transmission
system is part of a vertically integrated undertaking,
Member States
should therefore be given a choice
between ownership unbundling and setting up a system
operator or transmission operator which is independent
from supply and production interests.

(14)

To preserve fully the interests of the shareholders of verti-
cally integrated undertakings, Member States should have

(1) OJ L 24, 29.1.2004, p. 1.
(*) Date of entry into force of this Directive.

(18)

(19)

The implementation of effective unbundling should
respect the principle of non-discrimination between the
public and private sectors. To this end, the same person
should not be able to exercise control or any right, in
violation of the rules of ownership unbundling or the
independent system operator option, solely or jointly,
over the composition, voting or decision of the bodies of
both the transmission system operators or the transmis-
sion systems and the production or supply undertakings.
With regard to ownership unbundling and the indepen-
dent system operator solution, provided that the Member
State in question is able to demonstrate that the require-
ment is complied with, two separate public bodies should
be able to control production and supply activities on the
one hand and transmission activities on the other.

should apply

Effective separation of network activities from supply and
production activities
the
Community to both Community and non-Community
undertakings. To ensure that network activities and
supply and production activities throughout the Com-
munity remain independent from each other, regulatory
authorities should be empowered to refuse certification

throughout

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Official Journal of the European Union

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to transmission system operators that do not comply
with the unbundling rules. To ensure the consistent appli-
cation of those rules across the Community, the regula-
the
tory authorities should take utmost account of
Commission's opinion when the former take decisions
on certification. To ensure,
in addition, respect for the
international obligations of the Community, the Commis-
sion should have the right to give an opinion on certifi-
cation in relation to a transmission system owner or a
transmission system operator which is controlled by a
person or persons
third
countries.

from a third country or

(22)

It is necessary to ensure the independence of storage
system operators in order to improve third-party access
to storage facilities that are technically and/or economic-
ally necessary for providing efficient access to the system
for the supply of customers. It is therefore appropriate
that storage facilities are operated through legally separate
entities that have effective decision-making rights with
respect
to assets necessary to maintain, operate and
develop storage facilities. It is also necessary to increase
transparency in respect of the storage capacity that is
offered to third parties, by obliging Member States to
define and publish a non-discriminatory, clear framework
that determines the appropriate regulatory regime applic-
able to storage facilities.

(20)

The safeguarding of energy supply is an essential element
of public security and is therefore inherently connected
to the efficient functioning of the internal market in gas.
Gas can reach the citizens of the Union only through the
network. Functioning gas markets and, in particular, the
networks and other assets associated with gas supply are
essential for public security, for the competitiveness of
the economy and for the well-being of the citizens of the
Union. Persons from third countries should therefore
only be allowed to control a transmission system or a
transmission system operator if they comply with the
requirements of effective separation that apply inside the
Community. Without prejudice to the international obli-
gations of
the Community considers
that the gas transmission system sector is of high impor-
tance to the Community and therefore additional safe-
guards are necessary regarding the preservation of the
security of supply of energy to the Community to avoid
any threats to public order and public security in the
Community and the welfare of the citizens of the Union.
The security of supply of energy to the Community
requires, in particular, an assessment of the independence
of network operation, the level of the Community's and
individual Member States' dependence on energy supply
from third countries, and the treatment of both domestic
and foreign trade and investment in energy in a particular
third country.

the Community,

Security of supply should therefore be assessed in the
light of the factual circumstances of each case as well as
the rights and obligations arising under international law,
in particular the international agreements between the
Community and the third country concerned. Where
appropriate the Commission is encouraged to submit
recommendations to negotiate relevant agreements with
third countries addressing the security of supply of
energy to the Community or to include the necessary
issues in other negotiations with those third countries.

(21)

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

Confidentiality requirements for commercially sensitive
information are particularly important where data of a
strategic nature are concerned or where there is only a
single user of a storage facility.

than at

required,

(23) Non-discriminatory access to the distribution network
determines downstream access to customers at retail
level. The scope for discrimination as regards third party
is less significant at
access and investment, however,
distribution level
transmission level where
congestion and the influence of production interests are
generally greater than at distribution level. Moreover,
legal and functional unbundling of distribution system
to Directive
operators was
2003/55/EC, only from 1 July 2007 and its effects on
the internal market in natural gas still need to be evalu-
ated. The rules on legal and functional unbundling
currently in place can lead to effective unbundling
provided they are more clearly defined, properly imple-
mented and closely monitored. To create a level playing
field at retail
level, the activities of distribution system
operators should therefore be monitored so that they are
prevented from taking advantage of their vertical integra-
tion as regards their competitive position on the market,
in particular
in relation to household and small
non-household customers.

pursuant

(24)

To avoid imposing a disproportionate financial and
administrative burden on small distribution system
operators, Member States should be able, where neces-
sary, to exempt such companies from the legal distribu-
tion unbundling requirements.

(25) Directive 2003/55/EC introduced a requirement

for
Member States
to establish regulators with specific
competences. However, experience shows that the effec-
tiveness of regulation is frequently hampered through a
lack of independence of regulators from government, and
insufficient powers and discretion. For this reason, at its
meeting in Brussels on 8 and 9 March 2007,
the
European Council
invited the Commission to develop
legislative proposals providing for further harmonisation
of the powers and strengthening of the independence of
national energy regulators. It should be possible for those
national regulatory authorities to cover both the electri-
city and the gas sectors.

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Official Journal of the European Union

24.3.2009

(26)

(27)

Energy regulators need to be able to take decisions on all
relevant regulatory issues if the internal market in natural
gas is to function properly, and to be fully independent
from any other public or private interests. This precludes
neither judicial review nor parliamentary supervision in
accordance with the constitutional
law of the Member
States. In addition, approval of the budget of the regu-
lator by the national
legislator does not constitute an
obstacle to budgetary autonomy.

(30)

In order to ensure effective market access for all market
players, including new entrants, non-discriminatory and
cost-reflective balancing mechanisms are necessary. This
should be achieved through the setting up of transparent
market-based mechanisms for the supply and purchase of
gas, needed in the framework of balancing requirements.
National regulatory authorities should play an active role
to ensure that balancing tariffs are non-discriminatory
and cost-reflective. At the same time, appropriate incen-
tives should be provided to balance the in-put and
off-take of gas and not to endanger the system.

(28) National regulatory authorities should be able to fix or
approve tariffs, or
the methodologies underlying the
calculation of the tariffs, on the basis of a proposal by
the transmission system operator or distribution system
operator(s) or
system
liquefied natural gas
operator, or on the basis of a proposal agreed between
those operator(s) and the users of
In
carrying out those tasks, national regulatory authorities
should ensure that transmission and distribution tariffs
are non-discriminatory and cost-reflective, and should
take account of the long-term, marginal, avoided network
costs from demand-side management measures.

the network.

(LNG)

(29)

Energy regulators should have the power to issue binding
decisions in relation to natural gas undertakings and to
impose effective, proportionate and dissuasive penalties
on natural gas undertakings which fail to comply with
their obligations or to propose that a competent court
impose such penalties on them. Regulatory authorities
should also be granted the power to decide, irrespective
of the application of competition rules, on appropriate
measures promoting effective competition necessary for
the proper functioning of the internal market in natural
gas. The establishment of gas-release programmes is one
of the possible measures that can be used to promote
effective competition and ensure the proper functioning
of the market. Energy regulators should also be granted
the powers to contribute to ensuring high standards of
public service in compliance with market opening, to the
protection of vulnerable customers, and to the full effec-
tiveness of consumer protection measures. Those provi-
sions should be without prejudice to both the Commis-
sion's powers concerning the application of competition
rules including the examination of mergers with a Com-
munity dimension, and the rules on the internal market
such as the free movement of capital.

The independent body to which a party affected by the
decision of a national regulator has a right to appeal
could be a court or other tribunal empowered to conduct
a judicial review.

supply, market

in major new infrastructure should be
Investments
strongly promoted while ensuring the proper functioning
of the internal market in natural gas. In order to enhance
the positive effect of exempted infrastructure projects on
competition and security of
interest
during the project planning phase should be tested and
congestion management rules should be implemented.
Where an infrastructure is located in the territory of
more than one Member State, the Agency for the Coop-
eration of Energy Regulators established by Regulation
(EC) No …/2009 (1) of the European Parliament and of
the Council (the ‘Agency’) should handle as a last resort
the exemption request in order to take better account of
its cross-border implications and to facilitate its adminis-
trative handling. Moreover, given the exceptional risk
profile of constructing these exempt major infrastructure
projects it should be possible temporarily to grant partial
derogations to undertakings with supply and production
interests in respect of
the
for security of
projects concerned. This should apply,
supply reasons, in particular, to new pipelines within the
Community transporting gas from third countries into
the Community.

the unbundling rules for

(31)

(32)

The internal market in natural gas suffers from a lack of
liquidity and transparency hindering the efficient alloca-
tion of resources, risk hedging and new entry. Trust in
the market, its liquidity and the number of market parti-
cipants needs to increase, and, therefore, regulatory over-
sight of undertakings active in the supply of gas needs to
be increased. Such requirements should be without preju-
dice to, and compatible with, existing Community legisla-
tion on financial markets. Energy regulators and financial
market regulators need to cooperate in order to enable
each other
the markets
concerned.

an overview of

to have

Prior to the adoption by the Commission of guidelines
the
defining further the record keeping requirements,
Agency and the Committee of European Securities Regu-
lators (the ‘CESR’) should confer and advise the Commis-
sion in regard to their content. The Agency and the CESR
should also cooperate to investigate further and advise on
whether transactions in gas supply contracts and gas deri-
vatives should be subject to pre and/or post-trade trans-
parency requirements and,
if so, what the content of
those requirements should be.

(33)

In the interests of security of supply, the supply/demand
balance in individual Member States should be moni-
tored, and monitoring should be followed by a report on
taking account of
the situation at Community level,

(1) OJ L …

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interconnection capacity between areas. Such monitoring
should be carried out sufficiently early to enable appro-
priate measures to be taken if security of supply is
compromised. The construction and maintenance of the
necessary network infrastructure, including interconnec-
tion capacity, should contribute to ensuring a stable gas
supply.

(38) Measures implemented by Member States to achieve the
objectives of social and economic cohesion may include,
in particular, the provision of adequate economic incen-
tives, using, where appropriate, all existing national and
Community tools. Such tools may include liability
mechanisms to guarantee the necessary investment.

(34) 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-discrimi-
natory access to the gas system, provided such access is
permanently compatible with the relevant technical rules
and safety standards. Those rules and standards should
ensure that those gases can technically and safely be
injected into, and transported through the natural gas
system and
chemical
characteristics.

address

should

their

also

(35)

(36)

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

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
level to achieve high public service
standards.

Member States
should ensure 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
Member States to protect
final customers may differ
according to whether they are aimed at household custo-
mers or small and medium sized enterprises.

(37)

Respect for the public service requirements is a funda-
mental requirement of this Directive, and it is important
respected by all
that common minimum standards,
Member States, are specified in this Directive, which take
into account
the objectives of common protection,
security of supply, environmental protection and equiva-
lent 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,
national circumstances and subject
to the respect of
Community law.

(39)

(40)

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
under Article 88(3) of the Treaty to notify them to the
Commission.

service

requirements and the

The public
common
minimum standards that follow from them need to be
further strengthened to make sure that all consumers can
benefit
from competition. A key aspect of supplying
customers is access to consumption data, and consumers
must have access to their data so that they can invite
competitors to make an offer based on those data.
Consumers should also have the right to be properly
informed about
their energy consumption. Regularly
provided information on energy costs will create incen-
tives for energy savings because it will give customers
direct feedback on the effects of investment in energy
efficiency and change of behaviour.

(41)

In order to contribute to security of supply whilst main-
taining a spirit of solidarity between Member States,
notably in the event of an energy supply crisis,
it is
important to provide a framework for regional coopera-
tion in a spirit of solidarity. This cooperation in a spirit
of solidarity may rely, if Member States so decide, first
and foremost on market-based mechanisms.

(42) With a view to creating an internal market in natural gas,
Member States should foster the integration of
their
national markets and the cooperation of system operators
at Community and regional level.

(43)

(44)

Regulatory authorities should also provide information
on the market to permit the Commission to exercise its
role of observing and monitoring the internal market in
natural gas and its short, medium and long term evolu-
tion, including aspects such as supply and demand, trans-
mission and distribution infrastructure,
cross-border
and consumer prices,
trade,
market
and efficiency
improvements.

investments, wholesale

and environmental

liquidity

internal market

Since the objective of this Directive, namely the creation
in natural gas,
of a fully operational
cannot be sufficiently achieved by the Member States and
can therefore 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 proportion-
ality, as set out in that Article, this Directive does not go
beyond what
to achieve that
objective.

is necessary in order

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Official Journal of the European Union

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(45) Under Regulation (EC) No …/2009 of

the European
Parliament and of the Council of … on conditions for
access to the natural gas transmission network (1), the
Commission may adopt guidelines to achieve the neces-
sary degree of harmonisation. Such guidelines, which
constitute binding implementing measures, are, also with
regard to certain provisions of this Directive, a useful tool
which can be adapted quickly where necessary.

(46)

(47)

(48)

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
implementing powers
the exercise of
procedures for
conferred on the Commission (2).

the

for providing

guidelines necessary

In particular, the Commission should be empowered to
adopt
the
minimum degree of harmonisation required to achieve
the aim of this Directive. Since those measures are of
general scope and are designed to amend non-essential
elements of this Directive, by supplementing it with new
non-essential elements, they must be adopted in accord-
ance with the
regulatory procedure with scrutiny
provided for in Article 5a of Decision 1999/468/EC.

In accordance with point 34 of
the Interinstitutional
Agreement on better law-making (3), Member States are
encouraged to draw up, for themselves and in the interest
of the Community, their own tables, illustrating, as far as
possible, the correlation between this Directive and the
transposition measures, and to make them public.

(49) Given the scope of the amendments made to Directive
2003/55/EC herein, it is desirable, for reasons of clarity
and rationalisation, that the provisions in question should
be recast by bringing them all together in a single text in
a new Directive.

(50)

This Directive respects
rights, and
observes the principles, recognised in particular by the
Charter of Fundamental Rights of the European Union,

the fundamental

HAVE ADOPTED THIS DIRECTIVE:

CHAPTER I

Subject matter, scope and definitions

Article 1

Subject matter and scope

This Directive establishes common rules for the transmis-
1.
sion, distribution, supply and storage of natural gas.
It lays
down the rules relating to the organisation and functioning of
the natural gas sector, access to the market, the criteria and
procedures applicable to the granting of authorisations for
transmission, distribution, supply and storage of natural gas and
the operation of systems.

(1) OJ L …
(2) OJ L 184, 17.7.1999, p. 23.
(3) OJ C 321, 31.12.2003, p. 1.

2.
The rules established by this Directive for natural gas,
including 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
apply:

this Directive, the following definitions

least one of

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

(2) ‘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
natural gas from one or more such projects to a processing
plant or terminal or final coastal landing terminal;

(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;

(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
other systems, and for ensuring the long-term ability of
the system to meet reasonable demands for the transporta-
tion 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) ‘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 distribu-
tion of gas;

(7) ‘supply’ means the sale,

including resale, of natural gas,

including LNG, to customers;

(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
their
functions;

in carrying out

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(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;

(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;

(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;

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

reserved exclusively for

(15) ‘linepack’ means the storage of gas by compression in gas
excluding
transmission system operators

transmission and distribution systems, but
facilities
carrying out their functions;

reserved for

(16) ‘interconnected system’ means a number of systems which

are linked with each other;

(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;

(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 natural gas undertakings where
the same person or the same persons are entitled, directly
or indirectly, to exercise control, and where the under-
taking or group of undertakings perform at least one of
the functions of transmission, distribution, LNG or storage,
and at least one of the functions of production or supply
of natural gas;

(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
the
the Treaty on consolidated
Article 44(2)(g) (*) of
accounts (1) and/or associated undertakings, within the
meaning of Article 33(1) of that Directive, and/or under-
takings which belong to the same shareholders;

based

1983

June

13

on

of

(23) ‘system users’ means any natural or legal persons supplying

to, or being supplied by, the system;

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

(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;

(28) ‘eligible customers’ means customers who are free to
purchase gas from the supplier of their choice, within the
meaning of Article 36;

(29) ‘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

(30) ‘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;

(34) ‘gas supply contract’ means a contract for the supply of

natural gas, but does not include a gas derivative;

(35) ‘gas derivative’ means a financial instrument specified in
points 5, 6 or 7 of Section C of Annex I to Directive
2004/39/EC of
the
Council of 21 April 2004 on markets in financial instru-
ments (2), where that instrument relates to natural gas;

the European Parliament and of

(36) ‘control’ means any rights, contracts or any other means
which, either separately or in combination, and having
regard to the considerations of fact or law involved, confer
the possibility of exercising decisive influence on an under-
taking, in particular by:

(a) ownership or the right to use all or part of the assets

of an undertaking;

(*) 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).

(1) OJ L 193, 18.7.1983, p. 1.
(2) OJ L 145, 30.4.2004, p. 1.

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(b) rights or contracts which confer decisive influence on
the composition, voting or decisions of the organs of
an undertaking.

munity tools, for the maintenance and construction of necessary
network infrastructure, including interconnection capacity.

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, secure and
environmentally sustainable market in natural gas, and shall not
discriminate between those undertakings as regards either rights
or obligations.

sector,

2.
Having full regard to the relevant provisions of the Treaty,
in particular Article 86 thereof, Member States may impose on
undertakings operating in the gas
in the general
economic interest, public service obligations which may relate
to security, including security of supply, regularity, quality and
price of
including
supplies, and environmental protection,
energy efficiency and climate protection. Such obligations shall
be clearly defined,
transparent, non-discriminatory, verifiable
and shall guarantee equality of access for natural gas undertak-
ings of the Community to national consumers. In relation to
security of supply, energy efficiency/demand-side management
and for the fulfilment of environmental goals, as referred to in
this paragraph, Member States may introduce the implementa-
tion of long-term planning, taking into account the possibility
of third parties seeking access to the system.

3. Member States shall take appropriate measures to protect
final customers and to ensure high levels of consumer protec-
tion, and shall, in particular, ensure that there are adequate safe-
including appropriate
guards to protect vulnerable customers,
measures to help them avoid disconnection.
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
for customers
connected to the gas network. They shall ensure high levels of
consumer protection, particularly with respect to transparency
terms and conditions, general
regarding general contractual
information and dispute settlement mechanisms. Member States
shall ensure that the eligible customer is effectively able to
switch to a new supplier. As regards at least household custo-
mers those measures shall include those set out in Annex I.

last resort

5. Member States may decide not to apply the provisions of
Article 4 with respect to distribution insofar as their application
would obstruct, in law or in fact, the performance of the obliga-
tions imposed on natural gas undertakings in the general
trade
economic interest and insofar as the development of
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.

6. Member States shall, upon implementation of this Direc-
tive, inform the Commission of all measures adopted to fulfil
including consumer and environ-
public service obligations,
mental protection, and their possible 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 every two years of any
changes to such measures, whether or not they require a deroga-
tion from this Directive.

Article 4

Authorisation procedure

In circumstances where an authorisation (e.g.

1.
licence,
permission, concession, consent or approval) is required for 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, pipelines
and associated equipment on their territory, in accordance with
paragraphs 2 to 4. Member States or any competent authority
they designate may also grant authorisations on the same basis
for the supply of natural gas and for wholesale customers.

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 authorisation to
build and/or operate natural gas facilities or applying for an
authorisation to supply natural gas. The non-discriminatory
criteria and procedures for the granting of authorisations shall
be made public.

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

4. Member States shall implement appropriate measures to
achieve the objectives of social and economic cohesion and
environmental protection, which may include means to combat
climate change, and security of supply. Such measures may
include, in particular, the provision of adequate economic incen-
tives, using, where appropriate, all existing national and Com-

4.
For the development of newly supplied areas and efficient
operation generally, and without prejudice to Article 37,
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.

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Article 5

Monitoring of security of supply

Member States shall ensure the monitoring of security of supply
issues. Where Member States consider it appropriate, they may
delegate that task to the regulatory authorities referred to in
in particular, cover the
Article 44(1). Such monitoring shall,
supply/demand balance on the national market, the level of
expected future demand and available supplies, envisaged addi-
tional capacity 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, a report outlining the findings resulting
from the monitoring of those issues, as well as any measures
taken or envisaged to address them and shall
forward that
report to the Commission forthwith.

2. Member States shall ensure, through the implementation
of this Directive, that transmission system operators have one
or more integrated system(s) at regional level covering two or
more Member States for capacity allocation and for checking
the security of the network.

3.
If vertically integrated transmission system operators parti-
cipate in a joint undertaking established for implementing such
cooperation, the joint undertaking shall establish and implement
a compliance programme which sets out the measures to be
taken to ensure that discriminatory and anticompetitive conduct
is excluded. That compliance programme shall set out
the
the objective of
specific obligations of employees to meet
excluding discriminatory and anticompetitive conduct. It shall
be subject to the approval of the Agency. Compliance with the
programme shall be independently monitored by the compli-
ance officers of the vertically integrated transmission system
operators.

Article 6

Regional solidarity

1.
In order to safeguard a secure supply on the internal
market in natural gas, Member States shall cooperate in order to
promote regional and bilateral solidarity.

2.
Such cooperation shall cover situations resulting or likely
to result in the short term in a severe disruption of supply
affecting a Member State. It shall include:

(a) coordination of national emergency measures referred to in
Article 8 of Council Directive 2004/67/EC of 26 April
2004 concerning measures to safeguard security of natural
gas supply (1);

(b) identification and, where necessary,

development or
upgrading of electricity and natural gas interconnections;
and

(c) conditions and practical modalities for mutual assistance.

The Commission shall be kept

3.
cooperation.

informed of

such

The Commission may adopt guidelines for regional coop-
4.
eration in a spirit of solidarity. Those measures, designed to
amend non-essential elements of
this Directive by supple-
menting it, shall be adopted in accordance with the regulatory
procedure with scrutiny referred to in Article 50(3).

Article 8

Technical rules

Member States shall ensure that technical safety criteria are
defined and that technical rules establishing the minimum tech-
nical design and operational requirements for 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 interoper-
ability 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
the rules on information society
services (2).

CHAPTER III

Transmission, storage and LNG

Article 9

Unbundling of

transmission systems and transmission

system operators

Article 7

1. Member States shall ensure that from … (*):

Promotion of regional cooperation

(a) each undertaking which owns a transmission system acts as

a transmission system operator;

1. Member States shall cooperate among themselves for the
purpose of integrating their national markets at least at the
level. In particular, Member States shall promote the
regional
cooperation of transmission system operators at a regional level,
and foster the consistency of their legal and regulatory frame-
work. The geographical areas covered by such regional coopera-
tion shall include cooperation in geographical areas defined in
accordance with Article 12(3) of Regulation (EC) No …/2009.
Such cooperation may cover other geographical areas.

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

(b) the same person or persons are not entitled:

(i) directly or indirectly to exercise control over an under-
taking performing any of the functions of production or
supply, and directly or indirectly to exercise control or
exercise any right over a transmission system operator
or over a transmission system; or

(2) OJ L 204, 21.7.1998, p. 37.
(*) Date of transposition of this Directive plus one year, i.e. 30 months

after the date of entry into force of this Directive.

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(ii) directly or indirectly to exercise control over a transmis-
sion system operator or over a transmission system, and
directly or indirectly to exercise control or exercise any
right over an undertaking performing any of the func-
tions of production or supply;

(c) the same person or persons are not entitled to appoint
members of the supervisory board, the administrative board
or bodies legally representing the undertaking, of a transmis-
sion system operator or a transmission system, and directly
or indirectly to exercise control or exercise any right over an
undertaking performing any of the functions of production
or supply; and

(d) the same person is not entitled to be a member of the
supervisory board, the administrative board or bodies legally
representing the undertaking, of both an undertaking
performing any of the functions of production or supply
and a transmission system operator or a transmission
system.

The rights referred to in points (b) and (c) of paragraph 1

2.
shall include, in particular:

(a) the power to exercise voting rights; or

(b) the power to appoint members of the supervisory board,
the administrative board or bodies legally representing the
undertaking.

3.
For the purpose of point (b) of paragraph 1, the notion
‘undertaking performing any of the functions of production or
supply’ shall include ‘undertaking performing any of the func-
tions of generation and supply’ within the meaning of Directive
2009/…/EC of the European Parliament and of the Council
of … concerning common rules for the internal market in elec-
tricity (1), and the terms ‘transmission system operator’ and
‘transmission system
‘transmission system’
operator’ and ‘transmission system’ within the meaning of
Directive 2009/…/EC.

include

shall

4. Member States may allow for derogations from points (b)
and (c) of paragraphs 1 until … (*), provided that transmission
system operators are not part of a vertically integrated under-
taking.

5.
The obligation set out in point (a) of paragraph 1 of this
Article shall be deemed to be fulfilled in a situation where two
or more undertakings which own transmission systems have
created a joint venture which acts as a transmission system
operator in two or more Member States for the transmission
systems concerned. No other undertaking may be part of the
joint venture, unless it has been approved under Article 15 as
an independent system operator or as an independent transmis-
sion operator for the purposes of Chapter IV.

For the implementation of this Article, where the person
6.
(c) and (d) of paragraph 1 is the
referred to in points (b),
Member State or another public body,
two separate public
bodies exercising control over a transmission system operator or
over a transmission system on the one hand, and over an under-
taking performing any of the functions of production or supply
on the other, shall be deemed not to be the same person or
persons.

(1) OJ L …
(*) Date of transposition of this Directive plus two years, i.e. 42 months

after entry into force of this Directive.

7. Member States shall ensure that neither commercially
sensitive information referred to in Article 16 held by a trans-
mission system operator which was part of a vertically inte-
grated undertaking, nor the staff of such a transmission system
operator, is transferred to undertakings performing any of the
functions of production and supply.

8. Where on … (**), the transmission system belongs to a
vertically integrated undertaking a Member State may decide not
to apply paragraph 1.

In such case, the Member State concerned shall either:

(a) designate an independent system operator in accordance

with Article 14, or

(b) comply with the provisions of Chapter IV.

9. Where, on … (**), the transmission system belongs to a
vertically integrated undertaking and there are arrangements in
place which guarantee more effective independence of the trans-
mission system operator than the provisions of Chapter IV, a
Member State may decide not to apply paragraph 1.

10.
Before an undertaking is approved and designated as a
transmission system operator under paragraph 9 of this Article,
it shall be certified according to the procedures laid down in
Article 10(4), (5) and (6) of this Directive and in Article 3 of
Regulation (EC) No …/2009, pursuant to which the Commis-
sion shall verify that the arrangements in place clearly guarantee
transmission system
more
operator than the provisions of Chapter IV.

independence of

effective

the

11.
Vertically integrated undertakings which own a transmis-
sion system shall not in any event be prevented from taking
steps to comply with paragraph 1.

12.
Undertakings performing any of the functions of produc-
tion or supply shall not in any event be able to directly or indir-
ectly take control over or exercise any right over unbundled
transmission system operators in Member States which apply
paragraph 1.

Article 10

Designation and certification of

transmission system

operators

1.
Before an undertaking is approved and designated as trans-
mission system operator, it shall be certified according to the
procedures laid down in paragraphs 4, 5 and 6 of this Article
and in Article 3 of Regulation (EC) No …/2009.

2.
Undertakings which own a transmission system and which
have been certified by the national regulatory authority as
having complied with the requirements of Article 9, pursuant to
the certification procedure, shall be approved and designated as
transmission system operators by Member States. The designa-
tion of transmission system operators shall be notified to the
Commission and published in the Official Journal of the European
Union.

(**) Date of entry into force of this Directive.

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3.
Transmission system operators shall notify to the regula-
tory authority any planned transaction which may require a
reassessment of
their compliance with the requirements of
Article 9.

4.
The regulatory authorities shall monitor the continuing
compliance of transmission system operators with the require-
ments of Article 9. They shall open a certification procedure to
ensure such compliance:

(a) upon notification by the transmission system operator

pursuant to paragraph 3;

(b) on their own initiative where they have knowledge that a
planned change in rights or influence over transmission
system owners or transmission system operators may lead
to an infringement of Article 9, or where they have reason
to believe that such an infringement may have occurred; or

(c) upon a reasoned request from the Commission.

5.
The regulatory authorities shall adopt a decision on the
certification of a transmission system operator within a period
of four months from the date of the notification by the trans-
mission system operator or from the date of the Commission
request. After expiry of that period, the certification shall be
deemed to be granted. The explicit or tacit decision of the regu-
latory authority shall become effective only after the conclusion
of the procedure set out in paragraph 6.

6.
The explicit or tacit decision on the certification of a
transmission system operator shall be notified without delay to
the Commission by the regulatory authority, together with all
to that decision. The
the relevant
Commission shall act in accordance with the procedure laid
down in Article 3 of Regulation (EC) No …/2009.

information with respect

7.
The regulatory authorities and the Commission may
request from transmission system operators and undertakings
performing any of the functions of production or supply any
information relevant for the fulfilment of their tasks under this
Article.

The regulatory authorities and the Commission shall
sensitive
of

confidentiality

commercially

the

8.
preserve
information.

Article 11

Certification in relation to third countries

1. Where certification is requested by a transmission system
owner or a transmission system operator which is controlled by
a person or persons from a third country or third countries, the
regulatory authority shall notify the Commission.

The regulatory authority shall also notify to the Commission
without delay any circumstances that would result in a person
or persons from a third country or third countries acquiring
control of a transmission system or a transmission system
operator.

2.
Transmission system operators shall notify to the regula-
tory authority any circumstances that would result in a person
or persons from a third country or third countries acquiring
control of the transmission system or the transmission system
operator.

months from the date of notification by the transmission
system operator. It shall refuse the certification if it has not
been demonstrated:

(a) that the entity concerned complies with the requirements of

Article 9; and

(b) to the regulatory authority or

to another competent
authority designated by the Member State that granting
certification will not put at risk the security of energy
supply of the Member State and the Community. In consid-
ering that question the regulatory authority or other compe-
tent authority so designated shall take into account:

(i) the rights and obligations of

the Community with
respect to that third country arising under international
law,
including any agreement concluded with one or
more third countries to which the Community is a
party and which addresses the issues of security of
energy supply;

(ii) the rights and obligations of the Member State with
respect to that third country arising under agreements
concluded with it,
insofar as they are in compliance
with Community law; and

(iii) other specific facts and circumstances of the case and

the third country concerned.

4.
The regulatory authority shall notify the decision to the
Commission without delay, together with all the relevant infor-
mation with respect to that decision.

shall

States

provide

5. Member
regulatory
authority and/or the designated competent authority referred to
in point (b) of paragraph 3, before the regulatory authority
adopts a decision on the certification, to request an opinion
from the Commission on whether:

the

for

(a) the entity concerned complies with the requirements of

Article 9; and

(b) granting certification will not put at risk the security of

energy supply to the Community.

6.
The Commission shall examine the request referred to in
paragraph 5 as soon as it is received. Within a period of two
months after receiving the request, it shall deliver its opinion to
the national regulatory authority or, if the request was made by
the designated competent authority, to that authority.

In preparing the opinion, the Commission may request the
views of the Agency, the Member State concerned, and inter-
ested parties. In the event that the Commission makes such a
request,
the two-month period shall be extended by two
months.

In the absence of an opinion by the Commission within the
period referred to in the first and second subparagraphs, the
Commission is deemed not to raise objections to the decision of
the regulatory authority.

7. When assessing whether
the control by a person or
persons from a third country or third countries will put at risk
the security of energy supply to the Community, the Commis-
sion shall take into account:

3.
The regulatory authority shall adopt a draft decision on
the certification of a transmission system operator within four

(a) the specific facts of the case and the third country or third

countries concerned; and

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(b) the rights and obligations of the Community with respect to
that third country or third countries arising under interna-
tional law, including an agreement concluded with one or
more third countries to which the Community is a party
and which addresses the issues of security of supply.

the Commission's opinion.

8.
The national regulatory authority shall, within a period of
two months after the expiry of the period referred to in para-
graph 6, adopt its final decision on the certification. In adopting
its final decision the national regulatory authority shall take
utmost account of
In any event
Member States shall have the right to refuse certification where
granting certification puts at risk the Member State's security of
energy supply. Where the Member State has designated another
competent authority to assess point (b) of paragraph 3, it may
require the national regulatory authority to adopt its final deci-
sion in accordance with the assessment of
that competent
authority. The regulatory authority's final decision and the
Commission's opinion shall be published together.

9.
Nothing in this Article shall affect the right of Member
States to exercise, in compliance with Community law, national
legal controls to protect legitimate public security interests.

The Commission may adopt guidelines setting out the
10.
details of the procedure to be followed for the application of
this Article. Those measures, designed to amend non-essential
elements of this Directive by supplementing it, shall be adopted
in accordance with the regulatory procedure with scrutiny
referred to in Article 50(3).

11.
This Article, with exception of point (a) of paragraph 3,
shall also apply to Member States which are subject to a deroga-
tion under Article 48.

Article 12

Designation of storage and LNG system operators

Member States shall designate, or shall require natural gas
undertakings which own 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 storage and LNG system operators.

Article 13

Tasks of transmission, storage and/or LNG system
operators

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

(c) provide any other transmission system operator, any other
storage system operator, any other LNG system operator
and/or any distribution system operator, sufficient informa-
tion 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; and

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

efficient access to the system.

2.
Rules adopted by transmission system operators for balan-
cing the gas transmission system shall be objective, transparent
including rules for the charging of
and non-discriminatory,
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 established
pursuant to a methodology compatible with Article 40(6) in a
and shall be
non-discriminatory
published.

and cost-reflective way

3. Member States may require transmission system operators
to comply with minimum requirements for the maintenance
and development of the transmission system, including inter-
connection capacity.

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

Article 14

Independent system operators

1. Where the transmission system belongs to a vertically
integrated undertaking on … (*), Member States may decide not
to apply Article 9(1) and designate an independent system
operator upon a proposal from the transmission system owner.
Such designation shall be
the
Commission.

to approval by

subject

The Member State may approve and designate an indepen-

2.
dent system operator only where:

(a) the candidate operator has demonstrated that it complies

with the requirements of Article 9(1)(b), (c) and (d);

(b) the candidate operator has demonstrated that it has at its
technical, physical and

disposal
human resources to carry out its tasks under Article 13;

the required financial,

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;

(c) the candidate operator has undertaken to comply with a
10-year network development plan monitored by the regu-
latory authority;

(*) Date of entry into force of this Directive.

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(d) the transmission system owner has demonstrated its ability
to comply with its obligations under paragraph 5. To this
end, it shall provide all the draft contractual arrangements
relevant
with the candidate undertaking and any other
entity;

(e) the candidate operator has demonstrated its ability to
under Regulation (EC)
transmission

comply with its obligations
No …/2009 including the cooperation of
system operators at European and regional level.

3.
Undertakings which have been certified by the regulatory
requirements of
authority as having complied with the
Article 11 and Article 14(2) shall be approved and designated
as independent system operators by Member States. The certifi-
cation procedure in either Article 10 of
this Directive and
Article 3 of Regulation (EC) No …/2009 or in Article 11 of this
Directive shall be applicable.

4.
Each independent system operator shall be responsible for
granting and managing third-party access, including the collec-
tion of access charges and congestion charges, for operating,
maintaining and developing the transmission system, as well as
for ensuring the long-term ability of the system to meet reason-
able demand through investment planning. When developing
the transmission system the independent system operator shall
be responsible for planning (including authorisation procedure),
construction and commissioning of the new infrastructure. For
this purpose, the independent system operator shall act as a
transmission system operator in accordance with this Chapter.
The transmission system owner shall not be responsible for
granting and managing third-party access, nor for investment
planning.

5. Where an independent system operator has been desig-
nated, the transmission system owner shall:

(a) provide all the relevant cooperation and support to the inde-
its tasks,

pendent system operator for the fulfilment of
including in particular all relevant information;

(b) finance the investments decided by the independent system
operator and approved by the regulatory authority, or give
its agreement to financing by any interested party including
the independent system operator. The relevant
financing
arrangements shall be subject to approval by the regulatory
authority. Prior to such approval, the regulatory authority
shall consult the transmission system owner together with
other interested parties;

(c) provide for the coverage of liability relating to the network
assets, excluding the liability relating to the tasks of the
independent system operator; and

Article 15

Unbundling of transmission system owner and storage
system operator

1.
A transmission system owner, where an independent
system operator has been appointed, and a storage system
operator which are part of vertically integrated undertakings
shall be independent at least in terms of their legal form, organi-
sation and decision making from other activities not relating to
transmission, distribution and storage.

This Article shall apply only to storage facilities that are techni-
cally and/or economically necessary for providing efficient
access to the system for the supply of customers pursuant to
Article 32.

2.
In order to ensure the independence of the transmission
system owner and storage system operator referred to in para-
graph 1, the following minimum criteria shall apply:

(a) persons responsible for the management of the transmission
system owner and storage system operator shall not partici-
pate in company structures of the integrated natural gas
undertaking responsible, directly or
the
day-to-day operation of
the production and supply of
natural gas;

indirectly,

for

(b) appropriate measures shall be taken to ensure that

the
professional interests of persons responsible for the manage-
ment of the transmission system owner and storage system
operator are taken into account in a manner that ensures
that they are capable of acting independently;

(c) the storage 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 storage facilities. This shall not
preclude the existence of appropriate coordination mechan-
isms to ensure that the economic and management supervi-
sion rights of the parent company in respect of return on
assets regulated indirectly in accordance with Article 40(6)
in a subsidiary are protected. In particular, this shall enable
the parent company to approve the annual financial plan, or
any equivalent instrument, of the storage system operator
and to set global limits on the levels of indebtedness of its
subsidiary. It shall not permit the parent company to give
instructions
regarding day-to-day operations, nor with
respect to individual decisions concerning the construction
or upgrading of storage facilities, that do not exceed the
the approved financial plan, or any equivalent
terms of
instrument; and

(d) provide guarantees

to facilitate financing any network
expansions with the exception of those investments where,
pursuant to point (b), it has given its agreement to financing
by any interested party including the independent system
operator.

In close cooperation with the regulatory authority, the
6.
relevant national competition authority shall be granted all rele-
vant powers to effectively monitor compliance of the transmis-
sion system owner with its obligations under paragraph 5.

(d) the transmission system owner and the storage system
operator shall 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 compliance programme shall set
out the specific obligations of employees to meet those
objectives. An annual report, setting out the measures taken,
shall be submitted by the person or body responsible for
monitoring the compliance programme to the regulatory
authority and shall be published.

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3.
The Commission may adopt guidelines to ensure full and
effective compliance of the transmission system owner and of
the storage system operator with paragraph 2 of this Article.
Those measures, designed to amend non-essential elements of
this Directive by supplementing it, shall be adopted in accord-
ance with the regulatory procedure with scrutiny referred to in
Article 50(3).

Article 16

Confidentiality for transmission system operators and
transmission system owners

1. Without prejudice to Article 29 or any other legal duty to
disclose information, each transmission, storage and/or LNG
system operator, and each transmission system owner, shall
preserve the confidentiality of commercially sensitive informa-
tion obtained in the course of carrying out its activities, and
shall prevent information about its own activities which may be
commercially advantageous from being disclosed in a discrimi-
natory manner. In particular, it shall not disclose any commer-
cially sensitive information to the remaining parts of the under-
taking, unless this is necessary for carrying out a business trans-
action. In order to ensure the full respect of the rules on infor-
mation unbundling, Member States shall ensure that the trans-
mission system owner including,
in the case of a combined
operator, the distribution system operator, and the remaining
part of the undertaking do not use joint services, such as joint
legal services, apart from purely administrative or IT functions.

Transmission, storage and/or LNG system operators shall
2.
not,
in the context of sales or purchases of natural gas by
related undertakings, misuse commercially sensitive information
obtained from third parties in the context of providing or nego-
tiating access to the system.

CHAPTER IV

Independent Transmission Operator

Article 17

Assets, equipment, staff and identity

1.
Transmission system operators shall be equipped with all
human, technical, physical and financial resources necessary for
fulfilling their obligations under this Directive and carrying out
the activity of gas transmission, in particular:

(a) assets that are necessary for the activity of gas transmission,
including the transmission system, shall be owned by the
transmission system operator;

(b) personnel necessary for the activity of gas transmission,
including the performance of all corporate tasks, shall be
employed by the transmission system operator;

(c) leasing of personnel and rendering of services, to and from
any other parts of the vertically integrated undertaking shall
be prohibited. A transmission system operator may,
however, render services to the vertically integrated under-
taking as long as:

(i) the provision of those services does not discriminate
between system users, is available to all system users on
the same terms and conditions and does not restrict,
distort or prevent competition in production or supply;
and

(ii) the terms and conditions of

the provision of
services are approved by the regulatory authority;

those

(d) without prejudice to the decisions of the Supervisory Body
under Article 20, appropriate financial resources for future
investment projects and/or for the replacement of existing
assets shall be made available to the transmission system
operator in due time by the vertically integrated undertaking
following an appropriate request
from the transmission
system operator.

The activity of gas transmission shall include at least the

2.
following tasks in addition to those listed in Article 13:

(a) the representation of the transmission system operator and
contacts to third parties and the regulatory authorities;

(b) the representation of

the transmission system operator
within the European Network of Transmission System
Operators for Gas (‘ENTSO for Gas’);

(c) granting and managing third-party access on a non-discrimi-
natory basis between system users or classes of system
users;

(d) the collection of all the transmission system related charges
including access charges, balancing charges for ancillary
services
services
(balancing costs, energy for losses);

treatment, purchasing of

such as gas

(e) the operation, maintenance and development of a secure,

efficient and economic transmission system;

(f) investment planning ensuring the long-term ability of the
reasonable demand and guaranteeing

system to meet
security of supply;

(g) the setting up of appropriate joint ventures, including with
one or more transmission system operators, gas exchanges,
and the other relevant actors pursuing the objective to
develop the creation of regional markets or to facilitate the
liberalisation process; and

(h) all corporate services, including legal services, accountancy

and IT services.

Transmission system operators shall be organised in the
form of a limited liability company as referred to in

3.
legal
Article 1 of Council Directive 68/151/EEC (1).

(1) First Council Directive 68/151/EEC of 9 March 1968 on coordination
of safeguards which, for the protection of the interests of members and
others, are required by Member States of companies within the
meaning of the second paragraph of Article 58 of the Treaty, with a
view to making such safeguards equivalent throughout the Community
(OJ L 65, 14.3.1968, p. 8).

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4.
The transmission system operator shall not, in its corpo-
rate identity, communication, branding and premises, create
confusion in respect of the separate identity of the vertically
integrated undertaking or any part thereof.

5.
The transmission system operator shall not share IT
systems or equipment, physical premises and security access
systems with any part of the vertically integrated undertaking,
nor use the same consultants or external contractors for IT
systems or equipment, and security access systems.

The accounts of transmission system operators shall be
6.
audited by an auditor other than the one auditing the vertically
integrated undertaking or any part of it.

Article 18

Independence of the transmission system operator

1. Without prejudice to the decisions of
the Supervisory
Body under Article 20, the transmission system operator shall
have:

(a) effective decision-making rights, independent from the verti-
cally integrated undertaking, with respect to assets necessary
to operate, maintain or develop the transmission system;
and

(b) the power to raise money on the capital market in particular

through borrowing and capital increase.

The transmission system operator shall at all times act so
2.
as to ensure it has the resources it needs in order to carry out
the activity of transmission properly and efficiently and develop
and maintain an efficient, secure and economic transmission
system.

the

vertically

Subsidiaries of

3.
integrated undertaking
performing functions of production or supply shall not have
any direct or indirect shareholding in the transmission system
operator. The transmission system operator shall neither have
any direct or indirect shareholding in any subsidiary of the verti-
cally integrated undertaking performing functions of production
or supply, nor receive dividends or any other financial benefit
from that subsidiary.

the transmission system operator

4.
The overall management structure and the corporate
statutes of the transmission system operator shall ensure effec-
tive independence of
in
compliance with this Chapter. The vertically integrated under-
taking shall not determine, directly or indirectly, the competitive
behaviour of the transmission system operator in relation to the
day to day activities of the transmission system operator and
management of the network, or in relation to activities neces-
sary for the preparation of the 10-year network development
plan developed pursuant to Article 22.

In fulfilling their tasks in Article 13 and Article 17(2) of
5.
complying with Article 13(1),
this Directive,
Article 14(1)(a), Article 16(2), (3) and (5), Article 18(6) and
Article 21(1) of Regulation (EC) No …/2009,
transmission
system operators shall not discriminate against different persons

and

in

or entities and shall not restrict, distort or prevent competition
in production or supply.

6.
Any commercial and financial relations between the verti-
cally integrated undertaking and the transmission system
operator, including loans from the transmission system operator
to the vertically integrated undertaking, shall comply with
market conditions. The transmission system operator shall keep
detailed records of such commercial and financial relations and
make them available to the regulatory authority upon request.

The

transmission system operator

for
7.
approval by the regulatory authority all commercial and finan-
cial agreements with the vertically integrated undertaking.

submit

shall

The

transmission system operator

inform the
8.
regulatory authority of the financial resources, referred to in
Article 17(1)(d), available for future investment projects and/or
for the replacement of existing assets.

shall

9.
The vertically integrated undertaking shall refrain from
any action impeding or prejudicing the transmission system
operator from complying with its obligations in this Chapter
and shall not require the transmission system operator to seek
permission from the vertically integrated undertaking in
fulfilling those obligations.

An undertaking which has been certified by the regula-
10.
tory authority as being in compliance with the requirements of
this Chapter shall be approved and designated as a transmission
system operator by the Member State concerned. The certifica-
tion procedure in either Article 10 of this Directive and Article 3
of Regulation (EC) No …/2009 or in Article 11 of this Directive
shall apply.

Article 19

Independence of the staff and the management of the
transmission system operator

the

regarding

Decisions

appointment

1.
and renewal,
working conditions including remuneration, and termination of
the term of office, of the persons responsible for the manage-
ment and/or members of the administrative bodies of the trans-
mission system operator shall be taken by the Supervisory Body
of the transmission system operator appointed in accordance
with Article 20.

the administrative bodies of

2.
The identity of, and the conditions governing the term,
the duration and the termination of office of, the persons nomi-
nated by the Supervisory Body for appointment or renewal as
persons responsible for the executive management and/or as
members of
the transmission
system operator, and the reasons for any proposed decision
terminating such term of office, shall be notified to the regula-
tory authority. Those conditions and the decisions referred to in
paragraph 1 shall become binding only if
the regulatory
authority has
raised no objections within three weeks of
notification.

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The regulatory authority may object to the decisions referred to
in paragraph 1 where:

(a) doubts arise as to the professional independence of a nomi-
the management and/or

nated person responsible for
member of the administrative bodies; or

(b) in the case of premature termination of a term of office,
doubts exist regarding the justification of such premature
termination.

3.
No professional position or responsibility, interest or busi-
ness relationship, directly or indirectly, with the vertically inte-
grated undertaking or any part of it or its controlling share-
holders other than the transmission system operator shall be
exercised for a period of three years before the appointment of
the persons responsible for the management and/or members of
the administrative bodies of the transmission system operator
who are subject to this subparagraph.

The first subparagraph shall apply to the majority of
the
persons responsible for the management and/or members of the
administrative bodies of the transmission system operator.

the administrative bodies of

The persons responsible for the management and/or members
of
transmission system
operator, who are not subject to the provisions set out in the
first subparagraph, shall have exercised no management or other
relevant activity in the vertically integrated undertaking for a
period of at least six months before their appointment.

the

The persons

responsible for

4.
the management and/or
members of the administrative bodies, and employees of the
transmission system operator shall have no other professional
position or
relationship,
directly or indirectly, with any other part of the vertically inte-
grated undertaking or with its controlling shareholders.

interest or business

responsibility,

The persons

responsible for

5.
the management and/or
members of the administrative bodies, and employees of the
transmission system operator shall hold no interest in or receive
any financial benefit, directly or indirectly, from any part of the
vertically integrated undertaking other than the transmission
system operator. Their
remuneration shall not depend on
activities or results of the vertically integrated undertaking other
than those of the transmission system operator.

6.
Effective rights of appeal to the regulatory authority shall
be guaranteed for any complaints by the persons responsible for
the management and/or members of the administrative bodies
of the transmission system operator against premature termina-
tions of their term of office.

After termination of their term of office in the transmis-
7.
sion system operator, the persons responsible for its manage-
ment and/or members of its administrative bodies shall have no
professional position or responsibility, interest or business rela-
tionship with any part of the vertically integrated undertaking
other than the transmission system operator, or with its control-
ling shareholders for a period of not less than four years.

8.
The second subparagraph of paragraph 3 and paragraph 7
shall be applicable to all the persons belonging to the executive
management and to those directly reporting to them on matters
related to the operation, maintenance or development of the
network.

Article 20

Supervisory Body

1.
The transmission system operator shall have a Supervisory
Body which shall be in charge of taking decisions which may
have a significant impact on the value of the assets of the share-
holders within the transmission system operator, in particular
decisions regarding the approval of the annual and longer-term
financial plans, the level of indebtedness of the transmission
system operator and the amount of dividends distributed to
shareholders. The decisions falling under the remit of the Super-
visory Body shall exclude those that are related to the day to
day activities of the transmission system operator and manage-
ment of the network, and in relation to activities necessary for
the preparation of the 10-year network development plan devel-
oped pursuant to Article 22.

2.
The Supervisory Body shall be composed of members
representing the vertically integrated undertaking, members
representing third party shareholders and, where the relevant
legislation of a Member State so provides, members representing
other interested parties such as employees of the transmission
system operator.

The first subparagraph of Article 19(2),

the first sub-
3.
paragraph of Article 19(3) and Article 19(4) to (7) shall apply
to at least half of the members of the Supervisory Body minus
one.

Point (a) of the second subparagraph of Article 19(2) shall apply
to all the members of the Supervisory Body.

Article 21

Compliance programme and compliance officer

1. Member States shall ensure that
transmission system
operators establish and implement a compliance programme
which sets out the measures taken in order to ensure that discri-
minatory conduct is excluded, and ensure that the compliance
with that programme is adequately monitored. The compliance
programme shall set out the specific obligations of employees to
meet those objectives. It shall be subject to approval by the
regulatory authority. Without prejudice to the powers of the
national regulator, compliance with the program shall be inde-
pendently monitored by a compliance officer.

2.
The compliance officer shall be appointed by the Supervi-
sory Body. The compliance officer may be a natural or legal
to (7) shall apply to the compliance
person. Article 19(2)
officer. The regulatory authority may object to the appointment
of a compliance officer for reasons of lack of independence or
professional capacity.

3.

The compliance officer shall be in charge of:

(a) monitoring
programme;

the

implementation

of

the

compliance

(b) elaborating an annual report, setting out the measures taken
the compliance programme and

in order to implement
submitting it to the regulatory authority;

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(c) reporting to the Supervisory Body and issuing recommenda-
tions on the compliance programme and its implementa-
tion;

After prior approval by the regulatory authority,

11.
Supervisory Body may dismiss the compliance officer.

the

(d) notifying the

regulatory authority on any substantial
breaches with regard to the implementation of the compli-
ance programme; and

(e) reporting to the regulatory authority on any commercial
relations between the vertically integrated

and financial
undertaking and the transmission system operator.

4.
The compliance officer shall submit the proposed deci-
sions on the investment plan or on individual investments in
the network to the regulatory authority. This shall occur at the
latest when the management and/or the competent administra-
tive body of the transmission system operator submits them to
the Supervisory Body.

5. Where the vertically integrated undertaking, in the general
assembly or through the vote of the members of the Supervi-
sory Body it has appointed, has prevented the adoption of a
decision with the effect of preventing or delaying investments in
the network, the compliance officer shall report this to the regu-
latory authority.

6.
The conditions governing the mandate or the employment
conditions of the compliance officer shall be subject to approval
by the regulatory authority and shall ensure the independence
of the compliance officer.

7.
The compliance officer shall report regularly, either orally
or in writing, to the regulatory authority and shall have the
right to report regularly, either orally or in writing, to the Super-
visory Body of the transmission system operator.

The compliance officer may attend all meetings of the
8.
management or administrative bodies of
the transmission
system operator, and those of the Supervisory Body and the
general assembly. The compliance officer shall attend all meet-
ings that address the following matters:

(a) conditions for access to the network, as defined in Regu-
lation (EC) No …/2009, in particular regarding tariffs, third
party access services, capacity allocation and congestion
management,
secondary
markets;

transparency,

balancing

and

(b) projects undertaken in order

to operate, maintain and
develop the transmission system, including investments in
new transport connections, in expansion of capacity and in
optimisation of existing capacity;

(c) energy purchases or sales necessary for the operation of the

transmission system.

The compliance officer shall monitor the compliance of

9.
the transmission system operator with Article 16.

12.
The compliance officer shall have access to the offices of
the transmission system operator without prior announcement.

Article 22

Network development and powers to make investment
decisions

1.
Every year, transmission system operators shall submit to
the regulatory authority a 10-year network development plan
based on existing and forecast supply and demand after having
consulted all the relevant stakeholders. The plan shall contain
efficient measures in order to guarantee the adequacy of the
system and the security of supply.

The 10-year network

2.
particular:

development plan shall,

in

(a) indicate to market participants the main transmission infra-
structure that need to be built or upgraded over the next
ten years;

(b) contain all the investments already decided and identify new
investments which have to be executed in the next three
years; and

(c) provide for a time frame for all investment projects.

3. When elaborating the 10-year network development plan,
the transmission system operator shall make reasonable assump-
tions about the evolution of the production, supply, consump-
tion and exchanges with other countries, taking into account
investment plans for regional and Community-wide networks,
as well as investment plans for storage and LNG regasification
facilities.

The regulatory authority shall consult all actual or poten-
4.
tial system users on the 10-year network development plan in
an open and transparent manner. Persons or undertakings
claiming to be potential system users may be required to
substantiate such claims. The regulatory authority shall publish
the result of
in particular possible
needs for investments.

the consultation process,

the
The regulatory authority shall examine whether
5.
10-year network development plan covers all investment needs
identified during the consultation process, and whether it is
consistent with the non-binding Community-wide 10-year
network development plan referred to in Article 8(3)(b) of
If any doubt arises as to the
Regulation (EC) No …/2009.
consistency with the non-binding Community-wide 10-year
network development plan,
the regulatory authority shall
consult the Agency. The regulatory authority may require the
transmission system operator to amend its plan.

10.
The compliance officer shall have access to all relevant
data and to the offices of the transmission system operator and
to all the information necessary for the fulfilment of his task.

The regulatory authority shall monitor and evaluate the

6.
implementation of the 10-year network development plan.

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7.
In circumstances where the transmission system operator,
other than for overriding reasons beyond its control, does not
execute an investment, which, under the 10-year network devel-
opment plan, was to be executed in the following three years,
Member States shall ensure that
the regulatory authority is
required to take at least one of the following measures to ensure
that the investment in question is made if such investment is
still relevant on the basis of the most recent 10-year network
development plan:

(a) to require the transmission system operator to execute the

investments in question;

(b) to organise a tender procedure open to any investors for the

investment in question; or

(c) to oblige the transmission system operator to accept a
increase to finance the necessary investments and

capital
allow independent investors to participate in the capital.

its powers
When the regulatory authority has made use of
under point (b) of the first subparagraph,
it may oblige the
transmission system operator to agree to one or more of the
following:

(a) financing by any third party;

(b) construction by any third party;

(c) building the new assets concerned itself;

(d) operating the new asset concerned itself.

The transmission system operator shall provide the investors
with all
information needed to realise the investment, shall
connect new assets to the transmission network and shall gener-
ally make its best efforts to facilitate the implementation of the
investment project.

The relevant financial arrangements shall be subject to approval
by the regulatory authority.

system operator shall ensure sufficient entry and exit capacity
for the new connection.

CHAPTER V

Distribution and supply

Article 24

Designation of distribution system operators

Member States shall designate, or shall require undertakings
which own or are responsible for distribution systems to desig-
nate, 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 25,
26 and 27.

Article 25

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.

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

Each distribution system operator shall provide any other
3.
distribution, transmission, LNG, and/or storage system operator
with sufficient information to ensure that the transport and
storage of natural gas takes place in a manner compatible with
the secure and efficient operation of the interconnected system.

8. When the regulatory authority has made use of its powers
under the first subparagraph of paragraph 7, the relevant tariff
regulations shall cover the costs of the investments in question.

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

Article 23

Decision-making powers regarding the connec-
tion of storage facilities, LNG regasification
facilities and industrial customers to the trans-
mission system

The transmission system operator

1.
shall establish and
publish transparent and efficient procedures and tariffs for non-
discriminatory connection of storage facilities, LNG regasifica-
tion facilities and industrial customers to the transmission
system. Those procedures shall be subject to approval by the
regulatory authority.

2.
The transmission system operator shall not be entitled to
refuse the connection of a new storage facility, LNG regasifica-
tion facility or industrial customer on the grounds of possible
future limitations to available network capacities or additional
costs linked with necessary capacity increase. The transmission

5. Where a distribution system operator is responsible for
balancing the distribution system, rules adopted by it for that
purpose shall be objective, transparent and non-discriminatory,
including rules for the charging of system users for energy
imbalance. Terms and conditions, including rules and tariffs, for
the provision of such services by distribution system operators
shall be established pursuant to a methodology compatible with
Article 40(6) in a non-discriminatory and cost-reflective way
and shall be published.

Article 26

Unbundling of distribution system operators

1. Where the distribution system operator is part of a verti-
cally integrated undertaking, it shall be independent at least in
terms of its legal form, organisation and decision making from
other activities not relating to distribution. Those rules shall not
create an obligation to separate the ownership of assets of the
distribution system from the vertically integrated undertaking.

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2.
In addition to the requirements under paragraph 1, where
the distribution system operator is part of a vertically integrated
undertaking, it shall be independent in terms of its organisation
and decision-making from the other activities not related to
distribution. In order to achieve this, the following minimum
criteria shall apply:

activities of the distribution system operator are monitored so
that it cannot take advantage of its vertical integration to distort
competition.
In particular, vertically integrated distribution
in their communication and
system operators
branding, create confusion in respect of the separate identity of
the supply branch of the vertically integrated undertaking.

shall not,

(a) those persons responsible for the management of the distri-
bution system operator must not participate in company
structures of the integrated natural gas undertaking respon-
sible, 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
professional interests of persons responsible for the manage-
ment of the distribution system operator are taken into
account in a manner that ensures that they are capable of
acting independently;

the distribution system operator shall have at

(c) the distribution system operator must have effective deci-
sion-making rights, independent from the integrated natural
gas undertaking, with respect to assets necessary to operate,
maintain or develop the network. In order to fulfil those
tasks,
its
disposal the necessary resources including human, technical,
financial and physical resources. 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, regulated
indirectly in accordance with Article 40(6) in a subsidiary
this shall enable the parent
are protected.
company to approve the annual
financial plan, or any
equivalent instrument, of the distribution system operator
and to set global limits on the levels of indebtedness of its
subsidiary. It shall not permit the parent company to give
regarding day-to-day operations, nor with
instructions
respect to individual decisions concerning the construction
or upgrading of distribution lines, that do not exceed the
terms of
the approved financial plan, or any equivalent
instrument; and

In particular,

the

shall

set out

(d) the distribution system operator must establish a compli-
ance programme, which sets out measures taken to ensure
that discriminatory conduct is excluded, and ensure that
observance of it is adequately monitored. The compliance
programme
specific obligations of
employees to meet that objective. An annual report, setting
out the measures taken, shall be submitted by the person or
the
body
compliance
for monitoring
programme,
the distribution
system operator, to the regulatory authority referred to in
Article 38(1) and shall be published. The compliance officer
of the distribution system operator shall be fully indepen-
dent and shall have access to all the necessary information
of the distribution system operator and any affiliated under-
taking to fulfil his task.

the compliance officer of

responsible

3. Where the distribution system operator is part of a verti-
cally integrated undertaking, Member States shall ensure that the

4. Member States may decide not to apply paragraphs 1, 2
and 3 to integrated natural gas undertakings serving less than
100 000 connected customers.

Article 27

Confidentiality obligations of distribution system operators

1. Without prejudice to Article 29 or any other legal duty to
disclose information, each distribution system operator shall
preserve the confidentiality of commercially sensitive informa-
tion 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 discrimi-
natory manner.

Distribution system operators shall not, in the context of
2.
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 28

Combined operator

Article 26(1) shall not prevent the operation of a combined
transmission, LNG, storage and distribution system operator
provided that operator complies with Articles 9(1), or 14
and 15, or Chapter IV or falls under Article 48(6).

CHAPTER VI

Unbundling and transparency of accounts

Article 29

Right of access to accounts

the

1. Member States or any competent authority they designate,
including the regulatory authorities referred to in Article 38(1)
and
in
Article 33(3), shall, insofar as necessary to carry out their func-
tions, have right of access to the accounts of natural gas under-
takings as set out in Article 30.

authorities

settlement

referred

dispute

to

2. Member States and any designated competent authority,
including the regulatory authorities referred to in Article 38(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.

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Article 30

CHAPTER VII

Unbundling of accounts

1. Member States shall take the necessary steps to ensure that
the accounts of natural gas undertakings are kept in accordance
with paragraphs 2 to 5 of this Article. Where natural gas under-
takings benefit from a derogation from this provision on the
basis of Article 48(2) and (4), they shall at least keep their
internal accounts in accordance with this Article.

2.
Natural gas undertakings, whatever their system of owner-
ship 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 compa-
nies
Fourth Council Directive
to the
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).

adopted pursuant

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.

in

gas

their

shall,

Natural

undertakings

3.
internal
accounting, keep separate accounts for each of their transmis-
sion, 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 discrimination,
cross-subsidisation and distortion of competition. They shall
also keep accounts, which may be consolidated, for other gas
activities not relating to transmission, distribution, LNG and
storage. Until 1 July 2007, they shall keep separate accounts for
supply activities for eligible customers and supply activities for
non-eligible customers. Revenue from ownership of the trans-
mission or distribution network shall be specified in the
they shall keep consolidated
accounts. Where appropriate,
accounts for other, non-gas activities. The internal accounts
shall include a balance sheet and a profit and loss account for
each activity.

The audit, referred to in paragraph 2, shall, in particular,
the obligation to avoid discrimination and

4.
verify
cross-subsidies referred to in paragraph 3 is respected.

that

5.
Undertakings shall specify in their internal accounting the
rules for the allocation of assets and liabilities, expenditure and
income as well as for depreciation, without prejudice to nation-
ally applicable accounting rules, which they follow in drawing
up the separate accounts referred to in paragraph 3. Those
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 transaction

6.
of a certain size conducted with related undertakings.

(*) 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.

Organisation of access to the system

Article 31

Third-party access

1. Member States shall ensure the implementation of a
system of third party access to the transmission and distribution
system, and LNG facilities based on published tariffs, applicable
to all eligible customers,
including supply undertakings, and
applied objectively and without discrimination between system
users. Member States shall ensure that
those tariffs, or the
methodologies underlying their calculation are approved prior
to their entry into force in accordance with Article 40 by a
regulatory authority referred to in Article 38(1) and that those
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

the
3.
conclusion of long-term contracts in so far as they comply with
Community competition rules

this Directive shall not prevent

Article 32

Access to storage

in accordance with

For the organisation of access to storage facilities and line-
1.
pack when technically and/or economically necessary for
providing efficient access to the system for the supply of custo-
mers, as well as for the organisation of access to ancillary
services, Member States may choose either or both of the proce-
dures referred to in paragraphs 3 and 4. Those procedures shall
operate
and
non-discriminatory criteria. Member States shall define and
publish criteria according to which it may be determined
whether access to storage facilities and linepack is technically
and/or economically necessary in order to provide efficient
access to the system for the supply of customers. Member States
shall make public, or oblige storage and transmission system
operators to make public, which storage facilities, or which
parts of those storage facilities, and which linepack is offered
under the different procedures referred to in paragraphs 3 and
4.

transparent

objective,

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.

In the case of negotiated access, Member States shall take
3.
the necessary measures for natural gas undertakings and eligible
customers either inside or outside the territory covered by the
interconnected system to be able to negotiate access to storage
facilities and linepack, when technically and/or economically
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.

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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 by … (*) and on
an annual basis every year thereafter.

4.
In the case of regulated access Member States shall take
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, line-
pack and other ancillary services, on the basis of published
tariffs and/or other terms and obligations for use of that storage
and linepack, when technically and/or economically 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 under-
takings other than the owner and/or operator of the system or a
related undertaking.

all other users of the upstream pipeline network or relevant
processing or handling facilities who may be affected; and

(d) the need to apply their laws and administrative procedures,
the grant of

in conformity with Community law,
authorisation for production or upstream development.

for

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.

4.
In the event of cross-border disputes, the dispute-settle-
ment arrangements for the Member State having jurisdiction
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 each other with a view to ensuring that
the provisions of this Directive are applied consistently.

Article 33

Access to upstream pipeline networks

Article 34

Refusal of access

1. Member States shall take the necessary measures to ensure
that natural gas undertakings and eligible customers, wherever
they are located, are able to obtain access to upstream pipeline
networks,
including facilities supplying technical services inci-
dental to such access, 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 53.

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
fair and open access, achieving a competitive
objectives of
market in natural gas and avoiding any abuse of a dominant
position, taking into account security and regularity of supplies,
capacity which is or can reasonably be made available, and
environmental protection. The following may be taken into
account:

Natural gas undertakings may refuse access to the system
1.
on the basis of
lack of capacity or where the access to the
system would prevent them from carrying out the public-service
obligations referred to in Article 3(2) which are assigned to
them or on the basis of serious economic and financial difficul-
ties with take-or-pay contracts having regard to the criteria and
procedures set out in Article 47 and the alternative chosen by
the Member State in accordance with paragraph 1 of
that
Article. Duly substantiated reasons shall be given for any 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 circum-
stances where Member States apply Article 4(4), Member States
shall take such measures.

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

technical

of
overcome;

(b) the need to avoid difficulties which cannot reasonably be
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

Article 35

New infrastructure

interconnectors, LNG
1. Major new gas infrastructure,
and storage facilities, may, upon request, be exempted, for a
limited period of time, from the provisions of Articles 9, 31, 32
and 33 and Article 40(6),
(7) and (8) under the following
conditions:

i.e.

(*) 6 months after the implementation deadline referred to in Article 33(1)

of Directive 2003/55/EC.

(a) the investment must enhance competition in gas supply and

enhance security of supply;

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(b) the level of risk attached to the investment must be such
that the investment would not take place unless an exemp-
tion was granted;

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

(d) charges must be levied on users of that infrastructure;

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

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

The regulatory authority referred to in Chapter VIII may,
3.
on a case-by-case basis, decide on the exemption referred to in
paragraphs 1 and 2.

4. Where the infrastructure in question is located in the terri-
tory of more than one Member State, the Agency shall exercise
the tasks conferred on the regulatory authorities of the Member
States concerned by the present Article. This shall, however,
apply only:

(a) where the regulatory authorities concerned have not been
able to reach an agreement within a period of six months
from the date the exemption was requested before the last
of these regulatory authorities; or

(b) upon a joint
concerned.

request

from the regulatory authorities

The regulatory authorities concerned may, jointly, request that
the period referred to in point (a) of the first subparagraph is
extended by up to six months.

5.
An exemption may cover all or part of the capacity of the
new infrastructure, or of the existing infrastructure with signifi-
cantly increased capacity.

In deciding to grant an exemption, consideration shall be given,
to the need to impose conditions
on a case-by-case basis,
regarding the duration of the exemption and non-discriminatory
access to the infrastructure. When deciding on those conditions,
account shall, in particular, be taken of the additional capacity
to be built or the modification of existing capacity, the time
horizon of the project and national circumstances.

Before granting an exemption, the regulatory authority shall
decide upon the rules and mechanisms for management and
allocation of capacity. The rules shall require that all potential
users of the infrastructure are invited to indicate their interest in
contracting capacity before capacity allocation in the new infra-
structure,
including for own use, takes place. The regulatory
authority shall require congestion management rules to include
the obligation to offer unused capacity on the market, and shall
require users of the infrastructure to be entitled to trade their
contracted capacities on the secondary market. In its assessment
of the criteria referred to in points (a), (b) and (e) of paragraph 1,

the regulatory authority shall take into account the results of
that capacity allocation procedure.

The exemption decision, including any conditions referred to in
the fourth subparagraph of
shall be duly
reasoned and published.

this paragraph,

Notwithstanding paragraph 3, Member States may provide
6.
that their regulatory authority or the Agency, as the case may
be, shall submit, for the purposes of the formal decision, to the
relevant body in the Member State its opinion on the request
for an exemption. That opinion shall be published together with
the decision.

7.
The regulatory authority shall transmit to the Commis-
sion, without delay, a copy of every request for exemption as of
its receipt. The 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 informa-
tion may be submitted to the Commission in aggregate 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
exemption,
information justifying the need for

authority, or Member State, granted the
including the financial
the exemption;

(b) the analysis undertaken of the effect on competition and the
effective functioning of the internal market in natural gas
resulting from the grant of the exemption;

(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 result
authorities

consultation with the

regulatory

of
the
concerned;

(e) the contribution of the infrastructure to the diversification

of gas supply.

8. Within a period of two months beginning on the day of
following the receipt of a notification, the Commission may
take a decision requiring the regulatory authority to amend or
withdraw the decision to grant an exemption. That two-month
period may be extended by an additional period of two months
where further information is sought by the Commission. That
additional period shall begin on the day following the receipt of
the complete information. The initial two-month period may
also be extended with the consent of both the Commission and
the regulatory authority.

Where the requested information is not provided within the
period set out in the request, the notification shall be deemed to
be withdrawn unless, before the expiry of that period, either the
period has been extended with the consent of both the Commis-
sion and the regulatory authority, or the regulatory authority, in
a duly reasoned statement, has informed the Commission that it
considers the notification to be complete.

The regulatory authority shall comply with the Commission
decision to amend or withdraw the exemption decision within a
period of one month and shall
inform the Commission
accordingly.

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The Commission shall preserve the confidentiality of commer-
cially sensitive information.

The Commission's approval of an exemption decision shall lose
its effect two years from its adoption in the event that construc-
tion of the infrastructure has not yet started, and five years
from its adoption in the event that the infrastructure has not
become operational.

9.
The Commission may adopt guidelines for the application
of the conditions laid down in paragraph 1 of this Article and
to set out the procedure to be followed for the application of
paragraphs 3, 5, 7 and 8 of
this Article. Those measures,
designed to amend non-essential elements of this Directive by
supplementing it, shall be adopted in accordance with the regu-
latory procedure with scrutiny referred to in Article 50(3).

In circumstances where an authorisation (e.g.

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

3. Member States may issue an authorisation to construct a
direct line subject either to the refusal of system access on the
basis of Article 34 or to the opening of a dispute-settlement
procedure under Article 40.

CHAPTER VIII

NATIONAL REGULATORY AUTHORITIES

Article 36

Article 38

Market opening and reciprocity

Designation and independence of regulatory authorities

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

Each Member State shall designate a single national regula-

1.
tory authority at national level.

(a) until 1 July 2004, eligible customers as

specified in
Article 18 of Directive 98/30/EC of the European Parliament
and of the Council of 22 June 1998 concerning common
in natural gas (1). Member
rules for the internal market
States shall publish, by 31 January each year, the criteria for
the definition of those eligible customers;

(b) from 1 July 2004, all non-household customers;

(c) from 1 July 2007, all customers.

2.

To avoid imbalance in the opening of the gas markets:

(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; and

(b) where transactions as described in point

(a) are refused
because the customer is eligible in only one of the two
systems, the Commission may, taking into account the situa-
tion 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 37

Direct lines

1. Member States
enable:

shall

take the necessary measures

to

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

(b) any such eligible customer within their

territory to be

supplied through a direct line by natural gas undertakings.

(1) OJ L 204, 21.7.1998, p. 1.

2.
Paragraph 1 of this Article shall be without prejudice to
the designation of other regulatory authorities at regional level
within Member States, provided that there is one senior repre-
sentative for representation and contact purposes at Community
level within the Board of Regulators of the Agency in compli-
ance with Article 13(1) of Regulation (EC) No …/2009.

By way of derogation from paragraph 1 of this Article, a
3.
Member State may designate regulatory authorities for small
systems on a geographically separate region whose consump-
tion, in 2008, accounted for less than 3 % of the total consump-
tion of the Member State of which it is part. This derogation
shall be without prejudice to the appointment of one senior
representative for representation and contact purposes at Com-
munity level within the Board of Regulators of the Agency in
compliance with Article 13(1) of Regulation (EC) No …/2009.

4. Member States shall guarantee the independence of the
regulatory authority and shall ensure that it exercises its powers
impartially and transparently. For this purpose, Member States
shall ensure that, when carrying out
the regulatory tasks
conferred upon it by this Directive and related legislation, the
regulatory authority:

(a) is legally distinct and functionally independent from any

other public or private entity;

(b) ensures that its staff and the persons responsible for its

management:

(i) act independently from any market interest; and

(ii) do not seek or take direct instructions from any govern-
ment or other public or private entity when carrying
out the regulatory tasks. This requirement is without
prejudice to close cooperation, as appropriate, with
other relevant national authorities or to general policy
guidelines issued by the government not related to the
regulatory powers and duties under Article 40.

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In order to protect the independence of the regulatory

5.
authority, Member States shall in particular ensure that:

Article 40

(a) the regulatory authority can take autonomous decisions,
independently from any political body, and has autonomy
in the implementation of the budget, and adequate human
and financial resources to carry out its duties;

Duties and powers of the regulatory authority

1.

The regulatory authority shall have the following duties:

(b) the regulatory authority's top management is appointed for
at least five years, and may be relieved from office during its
term only if it no longer fulfills the conditions set out in
this Article or it has been guilty of serious misconduct
under national law.

(a) ensuring compliance of

transmission and distribution
system operators, and where relevant, system owners, as
well as of any natural gas undertakings, with their obliga-
tions under this Directive and other relevant Community
legislation, including as regards cross-border issues;

Article 39

(b) cooperating in relation to cross-border issues with the regu-
the Member States

latory authority or authorities of
concerned;

General objectives of the regulatory authority

(c) complying with, and implementing, any relevant

legally

binding decisions of the Agency and of the Commission;

In carrying out the regulatory tasks specified in this Directive,
the regulatory authority shall take all reasonable measures in
pursuit of the following objectives within the framework of
their duties and powers as laid down in Article 40,
in close
consultation with other relevant national authorities, as appro-
priate, and without prejudice to their competencies:

(a) promoting, in close cooperation with the Agency, regulatory
authorities of other Member States and the Commission, a
competitive, secure and environmentally sustainable internal
market in natural gas within the Community, and effective
market opening for all customers and suppliers in the
Community;

(b) developing competitive and properly functioning regional
markets within the Community in view of the achievement
of the objectives referred to in point (a);

States,

(c) eliminating restrictions on trade in natural gas between
Member
appropriate
cross-border transmission capacities to meet demand and
enhancing the integration of national markets which may
facilitate natural gas flow across the Community;

developing

including

(d) promoting the development of secure, reliable and efficient
non-discriminatory systems as well as system adequacy;

(e) facilitating the access of new production capacity to the
network, in particular removing barriers that could prevent
access of new market entrants;

(f) ensuring that system operators and system users are granted
appropriate incentives, in both the short and the long term,
to increase efficiencies in system performance and foster
market integration;

(g) ensuring the efficient functioning of their national market,
competition and consumer

effective

and to promote
protection;

(h) contributing to high standards of public service for natural
gas, the protection of vulnerable customers, and the effec-
tiveness of the consumer protection measures set out in
Annex I.

(d) reporting annually on its activity and the fulfilment of its
duties to the relevant authorities of the Member States, the
Agency and the Commission. Such reports shall cover the
steps taken and the results obtained as regards each of the
tasks listed in this Article;

(e) ensuring that there are no cross-subsidies between trans-
mission, distribution, storage, LNG and supply activities;

(f) monitoring investment plans of the transmission system
operators, and providing in its annual report an assessment
of the investment plans of the transmission system opera-
tors as regards their consistency with the non-binding
Community-wide 10-year network development plan
referred to in Article 8(3)(b) of Regulation (EC) No …/2009;

(g) monitoring compliance with network security and relia-
bility rules and monitoring standards and requirements for
quality of network service;

(h) monitoring the level of transparency and ensuring compli-
ance of natural gas undertakings with transparency
obligations;

(i) monitoring the level of market opening and competition at
wholesale and retail
including on natural gas
levels,
exchanges, prices for household customers, switching rates,
disconnection rates and complaints by household custo-
mers, as well as any distortion or restriction of competi-
tion,
information, and
bringing any relevant cases to the attention of the relevant
competition authorities;

including providing any relevant

(j) monitoring the time taken by transmission and distribution

system operators to make connections and repairs;

(k) monitoring and reviewing the access conditions to storage,
linepack and other ancillary services as provided for in
Article 32. In the event that the access regime to storage is
defined according to Article 32(3), that task shall exclude
the reviewing of tariffs;

(l) publishing recommendations, at least annually, in relation

to compliance of supply tariffs with Article 3;

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(m) ensuring access to customer consumption data, the provi-
sion for optional use, of a harmonised format at national
level for consumption data and the access to data under
point (h) of Annex I;

(n) monitoring the implementation of rules relating to the
roles and responsibilities of transmission system operators,
distribution system operators, suppliers and customers and
other market
to Regulation (EC)
pursuant
No …/2009;

parties

(o) monitoring the correct application of the criteria that deter-
mine whether a storage facility falls under Article 32(3)
or (4); and

(p) monitoring the implementation of safeguards measures as

referred to in Article 45.

2. When a Member State has so provided, the monitoring
duties set out in paragraph 1 may be carried out by other autho-
rities than the regulatory authority. In such a case, the informa-
tion resulting from such monitoring shall be made available to
the regulatory authority as soon as possible.

While preserving their independence, without prejudice to their
own specific competencies and consistent with the principles of
better regulation, the regulatory authority shall, as appropriate,
consult
transmission system operators and, as appropriate,
closely cooperate with other relevant national authorities when
carrying out the duties set out in paragraph 1.

Any approvals given by a regulatory authority or the Agency
under this Directive are without prejudice to any duly justified
future use of its powers by the regulatory authority under this
Article or to any penalties imposed by other relevant authorities
or the Commission.

3.
In addition to the duties conferred upon it under para-
graph 1 of this Article, when an independent system operator
has been designated under Article 14, the regulatory authority
shall:

(a) monitor the transmission system owner's and the indepen-
dent system operator's compliance with their obligations
under this Article, and issue penalties for non compliance in
accordance with point (d) of paragraph 4;

(b) monitor the relations and communications between the
independent system operator and the transmission system
owner so as to ensure compliance of
the independent
system operator with its obligations, and in particular
approve contracts and act as a dispute settlement authority
between the independent system operator and the transmis-
sion system owner in respect of any complaint submitted by
either party pursuant to paragraph 9;

(c) without prejudice to the procedure under Article 14(2)(c),
for the first 10-year network development plan, approve the
investments planning and the multi-annual network devel-
opment plan presented annually by the independent system
operator;

(d) ensure that network access tariffs collected by the indepen-
dent system operator include remuneration for the network
owner or network owners, which provides for adequate

remuneration of the network assets and of any new invest-
ments made therein, provided they are economically and
efficiently incurred; and

(e) have the powers to carry out inspections, including unan-
nounced inspections, at the premises of transmission system
owner and independent system operator.

4. Member States shall ensure that regulatory authorities are
granted the powers enabling them to carry out
the duties
referred to in paragraph 1, 3 and 6 in an efficient and expedi-
tious manner. For this purpose, the regulatory authority shall
have at least the following powers:

(a) to issue binding decisions on natural gas undertakings;

(b) to carry out investigations into the functioning of the gas
markets, and to decide upon and impose any necessary and
proportionate measures to promote effective competition
and ensure the proper functioning of the market. Where
appropriate,
the regulatory authority shall also have the
power to cooperate with the national competition authority
or the Commission in conducting an investigation relating
to competition law;

(c) to request any information from natural gas undertakings

relevant for the fulfilment of its tasks;

(d) to impose effective, proportionate and dissuasive penalties
on natural gas undertakings not complying with their obli-
gations under this Directive or any relevant legally binding
decisions of the regulatory authority or of the Agency, or to
propose to a competent court to impose such penalties.
This shall
include the power to impose or propose the
imposition of penalties of up to 10 % of the annual turn-
over of the transmission system operator or of up to 10 %
of the annual turnover of the vertically integrated under-
taking on the transmission system operator or on the verti-
cally integrated undertaking, as the case may be, for non
compliance with their respective obligations pursuant to this
Directive; and

(e) appropriate rights of investigations, and relevant powers of
for dispute settlement under paragraphs 9

instructions
and 10.

5.
In addition to the duties and powers conferred on it under
paragraphs 1 and 4 of this Article, when a transmission system
operator has been designated in accordance with Chapter IV, the
regulatory authority shall be granted at
the following
duties and powers:

least

(a) to issue penalties in accordance with point (d) of paragraph 4
for discriminatory behaviour in favour of the vertically inte-
grated undertaking;

(b) to monitor communications between the transmission
system operator and the vertically integrated undertaking so
as to ensure compliance of the transmission system operator
with its obligations;

(c) to act as dispute settlement authority between the vertically
integrated undertaking and the transmission system operator
in respect of any complaint submitted pursuant to para-
graph 9;

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(d) to monitor commercial and financial relations including
loans between the vertically integrated undertaking and the
transmission system operator;

(e) to approve all commercial and financial agreements between
the vertically integrated undertaking and the transmission
system operator, on the condition that they comply with
market conditions;

(f) to request justification from the vertically integrated under-
taking when notified by the compliance officer in accord-
ance with Article 21(4). Such justification shall in particular
include evidence to the end that no discriminatory beha-
viour to the advantage of the vertically integrated under-
taking has occurred;

(g) to carry out

inspections,

including unannounced inspec-
tions, on the premises of the vertically integrated under-
taking and the transmission system operator; and

(h) to assign all or specific tasks of the transmission system
operator to an independent system operator appointed in
accordance with Article 14 in case of a persistent breach by
the transmission system operator of its obligations under
this Directive, in particular in case of repeated discrimina-
tory behaviour to the benefit of the vertically integrated
undertaking.

The regulatory authorities shall be responsible for fixing
6.
or approving prior
the
methodologies used to calculate or establish the terms and
conditions for:

to their entry into force at

least

for

access

(a) connection and access to national networks, including trans-
mission and distribution tariffs, and terms, conditions and
tariffs
tariffs or
methodologies shall allow the necessary investments in the
networks and LNG facilities to be carried out in a manner
allowing those investments to ensure the viability of the
networks and LNG facilities;

to LNG facilities. Those

(b) the provision of balancing services.

In fixing or approving the tariffs or methodologies, the
7.
regulatory authorities shall ensure that transmission and distri-
bution system operators are granted appropriate incentive, over
both the short and long term, to increase efficiencies, foster
market
the
related research activities.

integration and security of supply and support

8.
Regulatory authorities shall have the authority to require
transmission, storage, LNG and distribution system operators, if
necessary, to modify the terms and conditions, including tariffs
and methodologies referred to in this Article, to ensure that
they are proportionate and applied in a non-discriminatory
manner. In the event that the access regime to storage is defined
according to Article 32(3), this task shall exclude the modifica-
tion of tariffs.

9.
Any party having a complaint against a transmission,
storage, LNG or distribution system operator with respect to the
issues referred to in paragraphs 1 to 8 may refer the complaint
to the regulatory authority which, acting as dispute settlement
authority, shall issue a decision within a period of two months

after receipt of the complaint. That period may be extended by
two months where additional information is sought by the regu-
latory authorities. That extended period may be further extended
regulatory
with the
authority's decision shall have binding effect unless and until
overruled on appeal.

complainant. The

agreement of

the

Any party who is affected and who has a right

to
10.
complain concerning a decision on methodologies
taken
pursuant to this Article 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 deci-
sion or proposal for a decision, submit a complaint for review.
Such a complaint shall not have suspensive effect.

shall create appropriate and efficient
11 Member States
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.

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

Complaints referred to in paragraphs 9 and 10 shall be
13.
without prejudice to the exercise of rights of appeal under Com-
munity and/or national law.

Decisions

14.
reasoned and justified to allow for judicial review.

taken by regulatory authorities

shall be

15. Member States shall ensure that suitable mechanisms
exist at national level under which a party affected by a decision
of a regulatory authority has a right of appeal to a body inde-
pendent of the parties involved.

Article 41

Regulatory regime for cross-border issues

1.
Regulatory authorities shall closely consult and cooperate
with each other, and shall provide each other and the Agency
with any information necessary for the fulfilment of their tasks
under this Directive. In respect of the information exchanged,
the receiving authority shall ensure the same level of confidenti-
ality as that required of the originating authority.

2.
Regulatory authorities shall cooperate at least at a regional
level to foster the creation of operational arrangements in order
to enable an optimal management of the network, promote
joint gas exchanges and the allocation of cross-border capacity,
and to enable a minimum level of interconnection capacity,
including through new interconnections, within the region and
between regions to allow for development of effective competi-
tion and improvement of security of supply.

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3.
The actions referred to in paragraph 2 shall be carried out,
as appropriate, in close consultation with other relevant national
authorities and without prejudice to their specific competencies.

not to have raised objections to the decision of the regulatory
authority.

4.
The Commission may adopt guidelines on the extent of
the duties of the regulatory authorities to cooperate with each
other and with the Agency. Those measures, designed to amend
non-essential elements of this Directive by supplementing it,
shall be adopted in accordance with the regulatory procedure
with scrutiny referred to in Article 50(3).

Article 42

Compliance with guidelines

1.
Any regulatory authority and the Commission may
request the opinion of the Agency on the compliance of a deci-
sion taken by a regulatory authority with the guidelines referred
to in this Directive or in Regulation (EC) No …/2009.

2.
The Agency shall provide its opinion to the regulatory
authority which has requested it or to the Commission, respec-
tively, and to the regulatory authority which has taken the deci-
sion in question within four months from the date of receipt of
the request.

3. Where the regulatory authority which has taken the deci-
sion does not comply with the Agency's opinion within four
months from the date of receipt of that opinion, the Agency
shall inform the Commission accordingly.

Any regulatory authority may inform the Commission
4.
where it considers that a decision relevant for cross border-trade
taken by another regulatory authority does not comply with the
guidelines referred to in this Directive or in Regulation (EC)
No …/2009 within two months from the date of that decision.

5. Where the Commission, within two months of having
been informed by the Agency in accordance with paragraph 3,
or by a regulatory authority in accordance with paragraph 4, or
on its own initiative, within three months from the date of the
decision, finds that the decision of a regulatory authority raises
serious doubts as to its compatibility with the guidelines referred
to in this Directive or in Regulation (EC) No …/2009, the
Commission may decide to examine the case further. In such a
case, it shall invite the regulatory authority and the parties to
the proceedings before the regulatory authority to submit
observations.

6. Where the Commission takes a decision to examine the
case further, it shall, within four months of the date of such
decision, issue a final decision:

(a) not to raise objections against the decision of the regulatory

authority; or

(b) to require the regulatory authority concerned to withdraw
its decision on the basis that the guidelines have not been
complied with.

8.
The regulatory authority shall comply with the Commis-
sion decision to withdraw its decision within a period of two
months and shall inform the Commission accordingly.

9.
The Commission may adopt guidelines setting out the
details of the procedure to be followed by the regulatory autho-
rities, the Agency and the Commission as regards the compli-
ance of decisions taken by regulatory authorities with the guide-
lines referred to in this Article. Those measures, designed to
amend non-essential elements of
this Directive by supple-
menting it, shall be adopted in accordance with the regulatory
procedure with scrutiny referred to in Article 50(3).

Article 43

Record keeping

1. Member States shall require supply undertakings to keep
at the disposal of the national authorities, including the regula-
the national competition authorities and the
tory authority,
Commission, for the fulfilment of their tasks, for at least five
years, the relevant data relating to all transactions in gas supply
contracts and gas derivatives with wholesale customers and
transmission system operators as well as storage and LNG
operators.

2.
The data shall include details on the characteristics of the
relevant transactions such as duration, delivery and settlement
rules, the quantity, the dates and times of execution and the
transaction prices and means of
identifying the wholesale
customer concerned, as well as specified details of all unsettled
gas supply contracts and gas derivatives.

3.
The regulatory authority may decide to make available to
market participants elements of this information provided that
commercially sensitive information on individual market players
or individual transactions is not released. This paragraph shall
not apply to information about financial instruments which fall
within the scope of Directive 2004/39/EC.

this Article,

To ensure the uniform application of

the
4.
Commission may adopt guidelines which define the methods
and arrangements for record keeping as well as the form and
content of the data that shall be kept. Those measures, designed
to amend non-essential elements of this Directive by supple-
menting it, shall be adopted in accordance with the regulatory
procedure with scrutiny referred to in Article 50(3).

5. With respect to transactions in gas derivatives of supply
undertakings with wholesale customers and transmission system
operators as well as storage and LNG operators, this Article
shall apply only once the Commission has adopted the guide-
lines referred to in paragraph 4.

7. Where the Commission has not
taken a decision to
examine the case further or a final decision within the time-
limits set in paragraphs 5 and 6 respectively, it shall be deemed

6.
The provisions of this Article shall not create additional
obligations towards the authorities referred to in paragraph 1
for entities falling within the scope of Directive 2004/39/EC.

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7.
In the event that the authorities referred to in paragraph 1
need access to data kept by entities falling within the scope of
Directive 2004/39/EC, the authorities responsible under that
Directive shall provide them with the required data.

3.
The Commission shall act on the notification referred to
in paragraph 2 within two months of the receipt of the notifica-
tion. That period shall begin on the day following receipt of the
complete information. In the event that the Commission has
not acted within that two-month period, it shall be deemed not
to have raised objections to the notified measures.

CHAPTER IX

Retail markets

Article 44

Retail markets

In order to facilitate the emergence of well functioning and
transparent retail markets in the Community, Member States
shall ensure that the roles and responsibilities of transmission
system operators, distribution system operators, supply under-
takings and customers and if necessary other market parties are
defined with respect to contractual arrangements, commitment
to customers, data exchange and settlement rules, data owner-
ship and metering responsibility.

Those rules shall be made public, be designed with the aim to
facilitate customers' and suppliers' access to networks and they
shall be subject to review by the regulatory authorities or other
relevant national authorities.

CHAPTER X

Final provisions

Article 45

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 be no wider in
scope than is strictly necessary to remedy the sudden difficulties
which have arisen.

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

Article 46

Level playing field

Article 47

Derogations in relation to take-or-pay commitments

1.
If a natural gas undertaking encounters, or considers it
would encounter, serious economic and financial difficulties
its take-or-pay commitments accepted in one or
because of
more gas-purchase contracts, it may send an application for a
temporary derogation from Article 31 to the Member State
concerned or the designated competent authority. Applications
shall,
in accordance with 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 undertaking the choice of presenting an application either
before or after refusal of access to the system. Where a natural
gas undertaking has refused access, 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 under-
taking to solve the problem.

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

to the derogation. That

2.
The Member State, or 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
information may be
submitted to the Commission in an aggregated form, enabling
the Commission to reach a well-founded decision. Within eight
weeks of its receipt of this notification, the Commission may
request that the Member State or the designated competent
authority concerned amend or withdraw the decision to grant a
derogation.

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
referred to in
Article 50(2).

advisory procedure

The Commission shall preserve the confidentiality of commer-
cially sensitive information.

1. Measures that the Member States may take pursuant to
this Directive in order to ensure a level playing field shall be
compatible with the Treaty, notably Article 30 thereof, and with
the legislation of the Community.

3. When deciding on the derogations referred to in para-
the designated competent
graph 1,
authority, and the Commission shall take into account, in par-
ticular, the following criteria:

the Member State, or

The measures referred to in paragraph 1 shall be propor-
2.
tionate, non-discriminatory and transparent. Those measures
may be put into effect only following the notification to and
approval by the Commission.

(a) the objective of achieving a competitive gas market;

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

security of supply;

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(c) the position of

the natural gas undertaking in the gas

market and the actual state of competition in this market;

conditions referred to in this subparagraph no longer applies.
Any such derogation shall be notified to the Commission.

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

(e) the dates of signature and terms of the contract or contracts
including the extent to which they allow for

in question,
market changes;

(f) the efforts made to find a solution to the problem;

(g) the extent

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

(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 market in natural gas.

A decision on a request for a derogation concerning take-or-pay
contracts concluded before … (*) should not lead to a situation
in which it is impossible to find economically viable alternative
outlets. Serious difficulties shall in any case be deemed not to
exist 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 of this Article 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 VII namely Articles 31 to 44 are complied with.

5.
Any derogation granted under the above provisions shall
be duly substantiated. The Commission shall publish the deci-
sion in the Official Journal of the European Union.

6.
The Commission shall, within … (**), submit a review
report on the 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.

Article 48

Emergent and isolated markets

Cyprus may derogate from Articles 4, 9, 36 and/or 37. This
derogation shall expire from the moment when Cyprus is not
qualifying as an isolated market.

Articles 4, 9, 36 and/or 37 shall not apply to Estonia, Latvia
and/or Finland until any of those Member States is directly
connected to the interconnected system of any Member State
other than Estonia, Latvia, Lithuania and Finland. This sub-para-
graph is without prejudice to derogations under the first sub-
paragraph of this paragraph.

2.
A Member State, qualifying as an emergent market, which,
because of the implementation of this Directive, would experi-
ence substantial problems may derogate from Articles 4 and 9,
Article 13(1) and (2), Articles 14 and 24, Article 25(5), Arti-
cles 26, 30 and 31, Article 36(1) and/or Article 37. This deroga-
tion 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.

Cyprus may derogate from Articles 4 and 9, Article 13(1)
and (2), Articles 14 and 24, Article 25(5), Articles 26, 30
and 31, Article 36(1) and/or Article 37. This derogation shall
expire from the moment when Cyprus is not qualifying as an
emergent market.

3.
On the date at which the derogation referred to in the first
subparagraph of 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, Article 36(1)(b) shall apply,
and three years thereafter, Article 36(1)(c) shall apply. Until
Article 36(1)(b) applies the Member State referred to in para-
graph 2 of this Article may decide not to apply Article 31 as far
as ancillary services and temporary storage for the re-gasifica-
tion process and its subsequent delivery to the transmission
system are concerned.

4. Where the 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 Articles 4
and 9, Article 13(1) and (2), Articles 14 and 24, Article 25(5),
Articles 26, 30 and 31, Article 36(1) and/or Article 37 for
developments within this area.

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, 36
and/or 37. A supply undertaking having a market share of more
than 75 % shall be considered to be a main supplier. Any such
derogation shall automatically expire when at least one of the

The Commission may grant the derogation referred to in
in particular, the following

5.
paragraph 4, taking into account,
criteria:

— the need for infrastructure investments, which would not be
economic to operate in a competitive market environment;

(*) Date of entry into force of Directive 2003/55/EC.
(**) Five years after the entry into force of Directive 2003/55/EC.

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

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— the size and maturity of

the gas system in the area

concerned;

— the prospects for the gas market concerned;

— the geographical size and characteristics of

the area or
region concerned, and socio-economic and demographic
factors.

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

For distribution infrastructure a derogation may be granted for a
period not exceeding 20 years from when gas is first supplied
through the said infrastructure in the area.

Article 9 shall not apply to Cyprus, Luxembourg and/or

6.
Malta.

7.
The Commission shall inform the Member States of appli-
cations made under paragraph 4 prior to taking a decision
pursuant to paragraph 5, taking into account respect for confi-
dentiality. 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, 24, 25, 26, 31, 36
and/or 37 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 devel-
opment and exclusive exploitation of distribution networks in
certain geographical areas.

Article 49

Review procedure

proposals to the European Parliament and to the Council to
amend the relevant provisions of this Directive. The Commis-
sion may propose, in the proposals to amend this Directive, to
exempt the Member State concerned from specific requirements
subject to that Member State implementing equally effective
measures as appropriate.

Article 50

Committee

1.

The Commission shall be assisted by a committee.

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.

3. Where reference is made to this paragraph, Article 5a(1)
to (4), and Article 7 of Decision 1999/468/EC shall apply,
having regard to the provisions of Article 8 thereof.

Article 51

Reporting

The Commission shall monitor and review the application
1.
of this Directive and submit an overall progress report to the
European Parliament and the Council for the first time by … (*),
and thereafter on an annual basis. The progress report shall
cover at least:

(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

implementation of
for
Article 26(2) with a view to a possible revision of
threshold;

the

this Directive,
derogation provided

including
in
the

In the event that in the report referred to in Article 51(3), the
Commission reaches the conclusion that, given the effective
manner in which network access has been carried out in a
Member State — which gives rise to fully effective, non-discri-
minatory and unhindered network access — certain obligations
imposed by this Directive on undertakings (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 to the Commission for
exemption from the requirement in question.

Such request shall be notified, without delay, by the Member
State to the Commission, together with all the relevant informa-
tion necessary to demonstrate that the conclusion reached in
the report on effective network access being ensured will be
maintained.

Within three months of
the
Commission shall adopt an opinion with respect to the request
by the Member State concerned, and where appropriate, submit

its receipt of a notification,

(c) the extent to which the unbundling and tarification require-
ments contained in this Directive have been successful
in
ensuring fair and non-discriminatory access to the Commu-
nity's gas system and equivalent levels of competition, as
well as the economic, environmental and social conse-
quences 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, and
in particular the existing and projected balance between
demand and supply, taking into account the physical capa-
city for exchanges between areas and the development of
storage (including the question of the proportionality of
market regulation in this field);

(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;

(*) 31 December of the year following the entry into force of Directive

2003/55/EC.

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

transport natural gas,

including progress

(g) the need for possible harmonisation requirements which are

not linked to the provisions of this Directive.

Where appropriate, the progress report may include recommen-
dations and measures to counteract
the negative effects of
market dominance and market concentration.

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

the effectiveness of

3.
The Commission shall, by … (*), submit, as part of the
general review, to the European Parliament and the Council, a
to which the
detailed specific report outlining the extent
unbundling requirements under Chapter IV have been successful
in ensuring full and effective independence of
transmission
system operators, using effective and efficient unbundling as a
benchmark.

4.
For the purpose of its assessment under paragraph 3, the
Commission shall take into account, in particular, the following
criteria: fair and non-discriminatory network access, effective
regulation, the development of the network to meet market
needs, undistorted incentives to invest, the development of inter-
connection infrastructure, effective competition in the energy
markets of the Community and the security of supply situation
in the Community.

5. Where appropriate, and in particular in the event that the
detailed specific report referred to in paragraph 3 determines
that the conditions referred to in paragraph 4 have not been
guaranteed in practice, the Commission shall submit proposals
to the European Parliament and the Council to ensure fully
effective
transmission system operators
by … (**).

independence of

6.
The Commission shall, no later than 1 January 2006,
forward to the European Parliament and Council, a detailed
report outlining progress in creating the internal market in
natural gas. That report shall, in particular, consider:

— 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,

(*) Two years after the date referred to in the first subparagraph of
Article 53(1), i.e. 42 months after the entry into force of this Directive.
(**) Three years after the date referred to in the first subparagraph of
Article 53(1), i.e. 54 months after entry into force of this Directive.

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

— the extent to which markets are in practice open to effective
competition, including aspects of market dominance, market
concentration and predatory or anti-competitive behaviour;

— 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;

— the experience gained in the application of this Directive as
far as the effective independence of system operators in
vertically integrated undertakings is concerned and whether
other measures in addition to functional independence and
separation of accounts have been developed which have
effects equivalent to legal unbundling.

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

Where appropriate, the Commission shall submit proposals to
the European Parliament and the Council,
to
ensure full and effective independence of distribution system
operators before 1 July 2007. When necessary, those proposals
in conformity with competition law, also concern
shall,
measures
issues of market dominance, market
concentration and predatory or anti-competitive behaviour.

in particular

to address

Article 52

Repeal

Directive 2003/55/EC is repealed from … (***) without preju-
dice to the obligations of Member States concerning the dead-
lines for transposition and application of the said Directive.
References to the repealed Directive shall be construed as refer-
ences to this Directive and shall be read in accordance with the
correlation table in Annex II.

Article 53

Transposition

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
Directive by … (***). They shall forthwith inform the Commis-
sion thereof.

They shall apply these provisions from … (***) with the excep-
tion of Article 11, which they shall apply from … (****).

(***) 18 months after entry into force of this Directive.
(****) 42 months after entry into force of this Directive.

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

2. Member States shall communicate to the Commission the
text of the main provisions of national law which they adopt in
the field covered by this Directive.

Article 55

Addressees

This Directive is addressed to the Member States.

Article 54

Entry into force

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

Done at, …

For the European Parliament

The President

…

For the Council

The President

…

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ANNEX I

MEASURES ON CONSUMER PROTECTION

Without prejudice to Community rules on consumer protection,
the European
Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts (1) and
Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (2), the measures referred to in
Article 3 are to ensure that customers:

in particular Directive 97/7/EC of

(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 exis-

tence 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 information
relating to the matters set out in this point 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) are not 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, wherever possible, be in line with the principles set out in Commission Recom-
mendation 98/257/EC of 30 March 1998 on the principles applicable to the bodies responsible for out-of-court settle-
ment of consumer disputes (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;

(h) have at their disposal their consumption data, and shall be able to, by explicit agreement and free of charge, give any
undertaking with a supply license access to its metering data. The party responsible for data management is obliged to
give those data to the undertaking. Member States shall define a format for the data and a procedure for suppliers and
consumers to have access to the data. No additional costs shall be charged to the consumer for this service;

(i) are properly informed of actual gas consumption and costs frequently enough to enable them to regulate their own
gas consumption. That information shall be given by using a sufficient time frame, which takes account of the
capability of customer's metering equipment. Due account shall be taken of the cost-efficiency of such measures. No
additional costs shall be charged to the consumer for this service;

(j) may change supplier at any time in the year and shall be entitled to a final invoice no later than three months

following the last supply by the previous supplier.

(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 II

CORRELATION TABLE

Directive 2003/55/EC

This Directive

Article 1

Article 2

Article 3

Article 4

Article 5

—

—

Article 6

Article 9

Article 7

—

Article 7

Article 8

—

—

Article 10

—

—

—

—

—

—

—

Article 11

Article 12

Article 13

Article 14

Article 15

Article 16

Article 17

Article 18

Article 19

Article 20

Article 21

Article 1

Article 2

Article 3

Article 4

Article 5

Article 6

Article 7

Article 8

Article 9

Article 10

Article 11

Article 12

Article 13

Article 14

Article 15

Article 16

Article 17

Article 18

Article 19

Article 20

Article 21

Article 22

Article 23

Article 24

Article 25

Article 26

Article 27

Article 28

Article 29

Article 30

Article 31

Article 32

Article 33

Article 34

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Directive 2003/55/EC

This Directive

Article 22

Article 23

Article 24

Article 25(1) (first and second sentence)

—

Article 25 (rest)

—

—

—

—

Article 26

—

Article 27

Article 28

Article 29

Article 30

Article 31

Article 32

Article 33

Article 34

Article 35

Annex A

Article 35

Article 36

Article 37

Article 38

Article 39

Article 40

Article 41

Article 42

Article 43

Article 44

Article 45

Article 46

Article 47

Article 48

Article 49

Article 50

Article 51

Article 52

Article 53

Article 54

Article 55

Annex I

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STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

1. On 19 September 2007, the Commission presented a proposal for a Directive amending Directive
2003/55/EC, based on Articles 47(2), 55 and 95 of the Treaty, together in a package with four other
proposals concerning the internal energy market.

2. The Committee of the Regions and the European Economic and Social Committee delivered their

opinions on the complete package on 10 (1) and 22 April 2008 (2) respectively.

3. The European Parliament adopted its Opinion (3) at

first reading on 9 July 2008, approving

122 amendments. The Commission did not present a modified proposal.

4. On 9 January 2009, the Council adopted its Common Position in accordance with Article 251 of the

Treaty, in the form of a recast directive.

II. OBJECTIVE OF THE PROPOSAL

5. The proposal is part of the third internal energy market package, together with the Regulation on
conditions for access to the natural gas transmission networks, the Directive concerning common
rules for the internal market in electricity, the Regulation on conditions for access to the network for
cross-border exchanges in electricity, and the Regulation establishing an Agency for the Cooperation
of Energy Regulators. It aims at completing the internal market in natural gas by introducing in par-
ticular:

— provisions regarding the effective separation of

transmission from generation and supply
including a procedure for the certification of transmission system operators of the

activities,
Community as well as from third countries;

— provisions aiming at improving the independence of national energy regulators and at harmo-

nising their powers at Community level;

— provisions aiming at improving regional solidarity and cooperation;

— provisions improving transparency and the functioning of the energy market.

III. ANALYSIS OF THE COMMON POSITION

6. General Remarks

6.1. The Council has considered it more effective, more transparent and coherent with Directive
2003/55/EC as well as more reader friendly to recast the provisions of the Directive. Moreover, the
Council has as a general principle fully respected the amending proposal of the Commission in the
sense that it has not opened any other provision not being part of the Commission proposal,
unless changes were necessary following from the changes introduced by the Council to the
proposal, changed references resulting from the renumbering of the Articles etc. To the extent
possible the Council has followed the Commission's approach regarding an identical treatment of
the electricity and gas sectors.

The Commission has accepted all the changes introduced by the Council to its proposal.

6.2. Concerning the 122 amendments adopted by the European Parliament, the Council has followed the

Commission in

— accepting the following 20 amendments:

fully (sometimes with redrafting): 50, 98 and 103;

partly/in principle/in spirit: 11, 12, 63, 64, 68, 78/125/135/138, 91-96, 98, 101, 104,
and 107;

and

— rejecting the following 44 amendments: 1, 4, 10, 14, 15, 18, 19, 22, 30, 37-39, 41, 43, 47,
54, 57-59, 62, 65-67, 70-72, 82, 83, 89, 90, 97, 105, 106, 108-110, 113, 114, 116/137,
123, 126, 128, [129],131, and 133, on grounds of substance and/or of form.

(1) OJ C 172, 5.7.2008, p. 55.
(2) OJ C 211, 19.8.2008, p. 23.
(3) Not yet published in the Official Journal.

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6.3. The Council has deviated from the Commission position in

— accepting one amendment: 79

and

— rejecting the following 59 amendments: 2, 3, 5-9, 13, 16, 17, 20, 21, 23-29, 31-36, 40, 45,
46, 48, 49, 51-53, 55, 56, 60, 61, 69, 73-77, 80, 81, 84-88, [93/129 + 94-96] (partly), 99,
100, 102, 111, 112, 118, 120, 132, 136.

7.

Specific Remarks

7.1. Regarding the EP amendments where the Council has deviated from the Commission position:

a) The Council has accepted amdt 79 because it is as the EP of the opinion that it is not appro-
priate to take decisions through committee procedure on DSO activities and independence.

b) The Council has rejected the 59 amdts listed above (point 6.3) on the following grounds:

i) The amendments concern provisions which are not part of the Commission proposal; those
amendments have been rejected as a question of principle (see above under 6.1): amdts 6,
13, 21, 23, 25, 31, 32, 33, 34, 35, 40, 45, 46, 48, 49, 51, 69, 73, 74, 75, 76, 77, 111
(first part), 118, 120, 132.

ii) The amendments do not have added value, mainly because the issues are (partly) sufficiently
covered by other parts of the text: amdt 2 would weaken the emphasis given in recital 6;
amdt 7 is repetitive; amdt 87 is partly covered by recital 15; amdt 20 is already (partly)
covered by recitals 29 and 31; amdt 26 is not necessary; amdt 60: the issue is sufficiently
covered by Art. 9; amdt 61: the issue is covered by Art. 51 on reporting; amdt 81 would
make Art. 35(1) less clearly defined; amdt 85 adds confusion to Art. 35 para. 3; amdt 87:
the level of detail is not necessary; amdt 88 would weaken too much the text in Art. 35(8)
subpara. 5; amdt 136 is (partly) sufficiently covered by Art. 40(15).

iii) The amendments introduce text which is not appropriate or necessary in this Directive or
which is not in line with the scope of the Directive: 5, 9, 16, 17, 36, 53, 56, 80, 81, 85,
86, 96 (partly) not appropriate in Art. 40, 99, 100, 111 (second part), 112.

iv) The amendments are introducing a recital which does not have a corresponding Article:

amdts 24 and 29.

v) The Council considers that the list of duties and powers of the regulatory authorities as in
Art. 40 of the Common Position is sufficient; the following amendments go (partly) beyond
the tasks the Council is attributing to the regulators: amdts 93-95.

vi) The amendments introduce text which does not correspond to the role which the Council

is giving to the Agency: 28, 55 (second part), 84.

vii) The Council

is of the view that the Common Position reflects sufficiently the aim of
regional solidarity/cooperation: amdts 3, 27, 52, and 55(first part) are therefore not
necessary.

7.2 Concerning the Commission proposal, the Council has introduced certain other modifications (of

substance and/or of form); the main ones are set out below.

a) Effective separation of network operation from generation and supply activities

In addition to the two options proposed by the Commission (ownership unbundling (OU) and
the Independent System Operator (ISO)), the Council,
in agreement with the Commission,
considered it appropriate to introduce a third option, the Independent Transmission Operator
(ITO), for the case a transmission system operator is part of a vertically integrated undertaking
(VIU) at the entry into force of
the Directive (new Chapter IV with the Articles 17-23,
corresponding recitals 13, 15 and 16). The three options are on equal footing and will be avail-
able for both the electricity and the gas sector.

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The ITO-provisions will ensure the effective independence of the operator (Arts. 17 and 18), its
management (Art. 19) and the supervisory body (Art. 20) and that conflicts of interest are
avoided. The setting up of a compliance programme and compliance officer (Art. 21) is also
contributing to this aim. Moreover, undistorted investment incentives and the development of
interconnection infrastructure (Art. 22) as well as fair and non-discriminatory network access
(Art. 23) will be ensured.

the regulatory authorities have been added in
Additional powers and competences for
Art. 40(5) in order to ensure compliance with the provisions of Chapter IV. In addition, a para-
graph has been added to Art. 7 regarding regional cooperation where ITOs are involved. Finally,
Art. 51 on reporting provides in paragraphs 3 to 5 that the Commission will assess, as part of a
general review, the implementation of the ITO option against certain criteria two years after the
date of transposition of the Directive.

The ITO provisions of the Common Position aim at balancing concerns on the scope, timeframe
interest of the VIU and
and enforceability of the ITO-option with preserving the financial
keeping it workable. That is one of the reasons why the Council has not considered it appro-
priate to introduce provisions on a trustee.

In order to take account of cases where arrangements are in place for a transmission system
belonging to a VIU which guarantee more effective independence of the TSO than the provi-
sions of Chapter IV, an additional provision has been introduced in Article 9(9).

b) Level playing field

Linked to the future presence of three different unbundling models on the Community market
is the introduction of a so-called level playing field clause in Article 46, together with the
corresponding recital 17. It gives notably a number of criteria for measures which Member
States have the possibility to take in order to ensure a level playing field.

c) Certification of TSOs of the Community and of third countries

The Common Position has two Articles on certification of TSOs: a general one (Article 10), and
one on certification in relation to third countries (Article 11) which has replaced Article 7a of
the Commission proposal. Article 11 ensures on the one hand that TSOs of third countries
have to respect the same unbundling rules as Community TSOs; on the other hand, it intro-
duces the criterion of security of energy supply of the Member States and the Community
which has to be taken into account when certification is granted.

In addition, the Council has considered it appropriate to transfer the part of the certification
procedure which sets out the role of the Commission in this procedure to a new Article 3 of
the gas Regulation. Moreover, the main decision on certification will remain with the national
regulatory authorities while the Commission is requested to give its opinion on the certification.
National regulators must take utmost account of that opinion.

d) Regulatory authorities

The Council has introduced two additional paragraphs to Article 38 which ensure that the prin-
ciple of a single regulator at national level combined with unique representation (e.g. at the
Agency)
is compatible with the current existence in some Member States of regulators at
regional level or for small and isolated parts of the territory (Art. 38(2 + 3)).

While ensuring the independence of the regulatory authorities, the text of the Common Position
also clarifies that this does not mean that regulators are free from judicial control or parliamen-
tary supervision (recital 26) or can ignore broader objectives e.g. on environmental sustainability
or on public service obligations (Art. 38(4)).

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The Common Position also ensures that, when carrying out their duties, regulators have the
possibility to act, where relevant, in close cooperation with other authorities, such as competi-
tion ones, while preserving their independence and without duplicating the tasks (e.g. moni-
toring) usually carried out by other authorities (Art. 40(2)).

e) Regulatory regime for cross-border issues

The paragraphs setting out the role of the Agency (Article 41, paragraphs 3 and (partly) 4)
have, for legal reasons, been transferred to the Agency Regulation (new Article 8). The Agency
will be involved in cross-border issues as a last resort, at the request of national regulators or if
national regulators don't reach an agreement within a certain time frame.

f) Exemptions for new infrastructure

In regard to granting exemptions for new cross-border infrastructure (Art. 35), the Council has
considered it appropriate to involve the Agency only in those cases where the national regula-
tory authorities concerned do not find an agreement or submit a joint request to the Agency
(para 4). Moreover, Member States should have the possibility to provide, if they so wish, that
the formal decision on the exemption is taken by another relevant body of the Member State, on
the basis of the opinion of the regulator (para 6).

g) Retail markets

The Council has considered it appropriate to redraft the Article on retail markets, taking i.a. out
the cross-border reference, and transfer it from the gas Regulation (Art. 8a of the Commission
proposal) to the Directive (new Article 44).

h) Derogations

In the light of the recast, the Council considered it appropriate to update Article 48, in particu-
lar regarding a derogation from the unbundling provisions for Member States with emergent or
isolated markets.

i) Other points

— The Council

considered it

shareholding of
producer/supplier in ownership unbundled TSOs as long as this does not entail any control
or any influence of one on the other and cannot lead to a conflict of interest (Article 9(2)).

to exclude minority

appropriate not

— The Common Position contains, with respect to public ownership, the possibility to achieve
ownership unbundling with two separate public bodies through a provision recognising that
two distinct public bodies can be considered as two persons for the purpose of imple-
menting ownership unbundling (Article 9(6)).

— Some technical drafting changes have been made to clarify the provision on combined opera-
tors (Article 28). This provision allows that a combined operator can be operated, alterna-
tively, either as an ownership unbundled operator, as an independent System Operator or as
an Independent Transmission Operator.

— Recital 29 introduces and explains the notion of gas release programmes as one of the possible

measures to promote effective competition.

— Finally, in line with the recast format, the Council has introduced a new Article to repeal the

current legislative act (Art. 52).