Communication from the Commission to the European Parliament pursuant to the second subparagraph of Article 251(2) of the EC Treaty concerning the common position of the Council on the adoption of a Regulation of the European Parliament and of the Council withdrawing Regulation (EC) No 1775/2005 on conditions for access to the natural gas transmission networks
Date: 2009-01-12
Institutions: European Commission
Subjects: energy grid, energy transport, market access, natural gas, single market

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 12.1.2009 
COM(2008) 911 final 

2007/0199 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

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

concerning the 

common position of the Council on the adoption of a Regulation of the European 
Parliament and of the Council withdrawing Regulation (EC) No 1775/2005 on conditions 
for access to the natural gas transmission networks  

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2007/0199 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

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

concerning the 

common position of the Council on the adoption of a Regulation of the European 
Parliament and of the Council withdrawing Regulation (EC) No 1775/2005 on conditions 
for access to the natural gas transmission networks  

1. 

BACKGROUND 

Proposal transmitted to the European Parliament and the Council 
(document COM(2007) 528 - 2007/0195/COD) on: 

19.09.2007 

European Economic and Social Committee opinion delivered on: 

22.04.08 

Committee of the Regions opinion delivered on: 

10.04.08 

European Parliament opinion (first reading) delivered on: 

9.07.2008  

Common position adopted by unanimity on: 

[09.01.2009] 

2. 

AIM OF THE COMMISSION PROPOSAL 

This  proposal  is  part  of  the  third  legislative  package  for  an  internal  EU  gas  and  electricity 
market ("Third Package"), which includes two Directives and three Regulations. 

The main objective of the package is to put in place the regulatory framework needed to make 
market opening fully effective and create a single EU gas and electricity market in the interest 
of the citizens and of the industry of the European Union. This will help to keep prices as low 
as possible and increase standards of service and security of supply. 

This is done through the following main measures: 

– 

– 

more effective regulatory oversight by independent national regulators; 

establishment  of  an  Agency  to  ensure  effective  cooperation  between  national 
regulators and take decisions on all relevant cross-border issues; 

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– 

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compulsory cooperation between network operators to harmonise all rules relating to 
the transport of energy across Europe and to coordinate investment planning; 

effective unbundling of the generation and transmission of energy so as to eliminate 
any conflict of interests, promote network investment and prevent any discriminatory 
behaviour; 

increased transparency and better functioning of the retail market; 

increased  solidarity  and  regional  cooperation  between  Member  States  to  ensure 
greater security of supply. 

3. 

COMMENTS ON THE COMMON POSITION 

3.1. 

General comments 

The  common  positions  adopted  by  the  Council  on  the  five  texts  that  make  up  the  Third 
Package contain all the essential components of the Commission's proposal that are needed to 
ensure the proper functioning of the internal gas and electricity market and, more generally, to 
achieve the essential objectives set out above. It can therefore be generally supported by the 
Commission (see 3.2 below). 

The  first  reading  focused  on  obtaining  agreement  within  the  Council.  The  amendments 
adopted  by  the  European  Parliament  were  therefore  not  formally  incorporated  into  the 
common  position.  Negotiations  to  this  end  will  take  place  during  the second  reading.  Some 
amendments  adopted  by  the  European  Parliament  are  however  taken  into  account  in  the 
common  position  (see  3.3  below).  The  Commission  considers  that  a  number  of  the 
amendments that are not covered should be taken into account in the second reading (see 3.4 
below).  

3.2. 

Specific comments 

The main changes from the Commission's proposal are as follows:  

3.2.1 

Establishment and change of network codes 

The common position changes the Commission proposal regarding the process of establishing 
and  changing  the  network  codes.  It  introduces  a  new  concept  of  framework  guidelines, 
prepared  by  the  Agency,  which  have  to  be  applied  by  the  TSOs  when  drafting  European 
network codes. (see 3.3 for Commission's assessment) 

3.2.2 Network Investment Plan 

The  Commission  proposed  that  ENTSOG  should  draw  up  a  network  investment  plan  every 
two years. The Council has changed this into a non-binding indicative network development 
plan. (see 3.3 for Commission assessment) 

3.2.3  Costs of ENTSO 

The  Council  adds  the  requirement  for  the  regulatory  authorities  to  approve  the  costs  of 
ENTSO if they are reasonable and proportionate. The Commission can accept this amendment 

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if it is added that this approval of costs is ex ante, so as to prevent regulatory uncertainty for 
the TSO regarding compensation of costs for participation in ENTSO. 

3.2.4 

Tariffs 

The Commission proposed that tariffs should be established independently for entry and exit 
points. The Council included a two-year implementation period for Member States to comply, 
which is acceptable to the Commission. 

3.2.5 

Transparency in the use of storage facilities 

The  Commission  proposed  full  transparency  in  the  use  of  storage  and  LNG  facilities.  The 
Council has amended the article, stating that storage system operators may be exempted from 
publishing information on storage use if there is only one storage user, if publication would 
damage  his  commercial  position  and  if  the  regulator  approves  non-publication.  (see  3.3  for 
Commission assessment) 

3.2.6  Guidelines  

The  Commission  proposed  an  extensive  list  of  guidelines,  which  covered  both  the  existing 
guidelines, a number of new topics, and guidelines that will be based on network codes.  

The  Council  has  first  of  all  deleted  all  explicit  references  to  guidelines  that  are  already 
mentioned in the list of network codes. The Commission can agree with this choice of legal 
drafting.  

However, the Council also deleted certain options in the guidelines: 

•  The Commission proposed the possibility of issuing guidelines on retail markets. Member 
States are asked to define procedures for data exchange and switching, but the Council has 
moved the article to the Directive. At the same time it has deleted the possibility of issuing 
guidelines. The Commission can agree to both. 

•  The Commission proposed the possibility of issuing guidelines on secondary markets for 
LNG  and  storage.  The  Council  has  deleted  this  option.  The  Commission  considers  this 
deletion  to  be  unacceptable  as  secondary  markets  play  an  important  role  in  optimising 
infrastructure use, both for transmission, storage and LNG, and therefore rules for all three 
could become necessary in the future. 

3.3. 

Aspects  of  the  common  position  reflecting  the  European  Parliament’s 
amendments 

A number of amendments of the European Parliament are reflected in the common position, 
either with the same wording or in substance. These are as follows:  

3.3.1 

Power of the Agency to develop framework guidelines and codes 

Both  the  common  position  of  the  Council  and  the  amendments  by  the  European  Parliament 
(amendment  50)  change  the  Commission  proposal  regarding  the  process  of  establishing 
network codes. It introduces a new concept of framework guidelines, prepared by the Agency, 
which have to be applied by the TSOs when drafting European network codes. 

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The  Commission  supports  a  more  clearly  defined  role  for  the  Agency  in  the  rule-making 
process.  Instead  of  giving  its  opinion  only  after  a  code  has  been  drafted  by  the  TSOs,  the 
Agency will define the requirements for codes ex ante in the form of framework guidelines in 
a specific area.  

The European Parliament also proposes that the Agency should adopt binding network codes 
(amendment 51/rev), whereas the Council maintains that only the Commission can make the 
codes  binding.  The  Commission  cannot  support  Parliament's  attempt  to  make  the  Agency 
stronger, since it is contradictory to the ruling of the European Court of Justice in the Meroni 
case, which stated that the Commission cannot delegate discretionary powers to another body. 

3.3. 

Consultation and monitoring by ENTSO 

Both  the  common  position  and  an  amendment  of  the  European  Parliament  change  the 
Commission  proposal  regarding  consultation  by  ENTSO  for  gas.  The  common  position 
clarifies  the  role  of  ENTSO  compared  to  consultation  by  the  Agency.  Parliament’s 
amendment  (amendment  22)  is  in  the  same  direction  but  it  is  too  restrictive  to  maintain 
sufficient scope for ENTSO consultation and monitoring. 

3.3.3 Transparency and confidentiality 

The  Commission  proposed  full  transparency  in  the  use  of  storage  and  LNG  facilities.  The 
Council has amended the article, stating that storage system operators may be exempted from 
publishing information on storage use if there is only one storage user, if publication would 
damage his commercial position and if the regulator approves non-publication. Parliament has 
proposed  the  inclusion  of  an  article  (amendment  42)  that  allows  storage  and  LNG  system 
operators not to publish data if this would be in breach of confidentiality.  

In the Commission's view the amendment by Parliament is not restrictive enough and gives 
preference  to  confidentiality  over  transparency,  whereas  a  competitive  market  requires 
transparency  to  be  the  rule  and  confidentiality  the  exception.  The  Council's  amendment  is 
acceptable  for  this  particular  case  of  single  users  of  storage  facilities,  as  these  are  usually 
small  storage  facilities  that  system  operators  manage  primarily  for  their  own  use.  The 
possibility  of  being  exempted  from  transparency  obligations  is  rightly  limited  to  cases  of 
single storage users, as the market can be assumed to know that some of these (small) storage 
sites have only one user. Publication could therefore damage their commercial position of the 
capacity-holder  of  the  storage,  especially  if  competitors  develop  storage  facilities  in  new 
markets. 

3.4. 

European  Parliament  amendments  approved  by  the  Commission  but  not 
endorsed by the Council 

The Commission can accept – in some cases subject to more precise wording or redrafting - in 
full or at least in part the majority of the amendments adopted by Parliament. This concerns 
the following main issues. 

3.4.1 Power of the Agency regarding Investment Plans 

Under the common position, ENTSO adopts an indicative 10-year network development plan. 
This  plan  is  reviewed  by  the  Agency,  which  can  propose  changes  to  the  plan  to  the 
Commission and ENTSO. The European Parliament proposes that the Agency should adopt a 

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binding network investment plan, to be prepared by ENTSO. The Commission cannot agree 
to  the  Agency’s  being  granted  discretionary  power  to  adopt  a  binding  investment  plan.  The 
Commission could however support the Agency’s adopting a non-binding investment plan, or 
playing a role in monitoring consistency between the national investment plans as approved 
by the national regulators and the 10-year network development plan of ENTSO.  

3.4.2 Powers of the national regulatory authorities 

Parliament  has  proposed  extending  the  powers  of  regulatory  authorities,  by  increasing  their 
role  in  control  over  capacity  allocation  and  congestion  management  for  storage  and  LNG 
(amendment 41), as well as their role in enforcement of the Regulation (amendments 39, 46). 

4. 

CONCLUSIONS 

The  Commission  takes  the  view  that  the  common  position  maintains  the  key  points  of  the 
Commission's  proposal.  The  Commission  finds  that,  on  substantive  issues,  the  common 
position generally strikes a good balance and makes a viable compromise, which will enable 
the  internal  gas  and  electricity  market  to  operate  smoothly.  The  Commission  considers, 
however, that a number of amendments adopted by the European Parliament on first reading 
should be only be incorporated on second reading. 

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