COMMISSION STAFF WORKING DOCUMENT Report on the implementation of Regulation (EU) 994/2010 and its contribution to solidarity and preparedness for gas disruptions in the EU Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the short term resilience of the European gas system Preparedness for a possible disruption of supplies from the East during the fall and winter of 2014/2015
Date: 2014-10-16
Institutions: European Commission
Subjects: cross-border cooperation, electricity supply, energy cooperation, energy storage, energy supply, natural gas, security of supply













EUR-Lex - 52014SC0325 - EN











|



52014SC0325

COMMISSION STAFF WORKING DOCUMENT Report on the implementation of Regulation (EU) 994/2010 and its contribution to solidarity and preparedness for gas disruptions in the EU Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the short term resilience of the European gas system Preparedness for a possible disruption of supplies from the East during the fall and winter of 2014/2015 /* SWD/2014/0325 final */









1. Introduction
Regulation (EU) 994/2010 was adopted following
the 2009 gas crisis. It repealed and replaced Directive 2004/67/EC on measures
to safeguard security of natural gas supply. 
The lessons learnt from the implementation
of Directive 2004/67/EC had shown that it was necessary to harmonize national
measures in order to ensure that all Member States are prepared at least on a
common minimum level. It was felt that, if all Member States were to comply
with minimum standards, this would enhance solidarity between them in case of
crisis, since no one could be seen "to take a free ride" on the
efforts made by others. At the same time, the legislator considered that
excessive protection of own gas consumers in some Member States could leave
consumers in other Member States more exposed and/or could disproportionally
restrict trade. 
Against this background, Regulation 994/2010
aims to ensure that each Member State puts in place appropriate tools to
prepare for and to manage the effects of a gas shortage caused by either a
supply disruption or exceptionally high demand. The responsibility for security
of gas supply is defined by a three-tier approach. Natural gas undertakings,
based on market mechanisms, are primarily responsible to ensure gas supplies.
In case the market mechanisms fail to deliver gas in a country, Member State measures kick in to ensure gas to protected customers. The European Commission
provides general coordination and ensures the consistency of national measures.
Four years after the adoption of Regulation
994/2010, the issue of security of gas supply is very relevant again in light
of the tensions between Ukraine and Russia. Efforts are made at national and
European level to enhance the security of gas supplies for the winter of 2014/2015
and beyond[1].
The present report is prepared in line with
the obligation on the Commission in Article 14 of the Regulation[2]. It is aimed at feeding
into the wider discussion on upcoming improvements to the security of supply
framework announced in the European Energy Security Strategy[3]. 
The report is organized along the main
elements of the Regulation: (1) the supply standard and protected customers, (2)
the infrastructure standard including the N-1 rule and the obligation to
install bi-directional capacity, (3) the Risk Assessment, Preventive Action
Plan and Emergency Plan, (4) the notification of intergovernmental agreements
and details of commercial agreements and (5) responsibilities and coordination
in case of an emergency. For each issue, a short description of the main
provisions of the Regulation is followed by a state of play on its
implementation and an assessment of its impact. For some points possible
improvements are suggested.
2. The
identification of protected customers and the common supply standard
a.) Description 
Regulation
994/2010 provides for an obligation to ensure a minimum degree of gas
deliveries to a specifically identified group of "protected
customers" in times of scarce gas supplies and/or exceptionally high gas
demand[4]
(the "supply standard"). The Regulation also prescribes that
protected customers should be supplied as long as possible and can only be curtailed
last. In case of a disruption or extreme demand increase, authorities have to
put in place initially market based and later non-market based measures to free
up gas supplies to protected customers.
Member
States have a margin of discretion to define the group of "protected
customers" in their jurisdiction, but the Regulation prescribes that,
as a minimum, all households must be included. In addition, Member States may
include (1) SMEs and essential social services provided that they do not
represent more than 20% of the final gas use in the country and/or (2) district
heating installations to the extent that they deliver heating to households or
other protected customers and are not able to switch to other fuels[5]. 
The
supply standard foresees that uninterrupted gas supplies to protected
customers is guaranteed for a minimum of 7 or 30 calendar days depending on the
defined scenario, even in case of scarce gas supplies and/or exceptionally high
demand. 
The legislator recognized the concerns of
those Member States that had in place stronger protection in their national
standards than those prescribed by the Regulation. The Regulation thus foresees
the possibility of an "increased" supply standard, provided
that it is clearly defined and based on well-identified risks. However, Member
States which have an increased supply standard are required to identify in
their Preventive Action Plans and Emergency Plans how the national standard may
be temporarily reduced to the default standard of Regulation 994/2010 in the
event of a regional or Union emergency, in order to provide solidarity and help
at regional and EU level. In other words, higher national standards should not
stand in the way of regional solidarity.
The supply standard is binding in its result[6]. As such, the
Regulation does not prescribe how and through what tools it should be fulfilled.
Competent Authorities must require the natural gas undertakings which they
identify in a non-discriminatory way[7]
to take measures – e.g. have valid capacity and supply contracts, deposit gas
in underground gas storage facilities etc. – to ensure gas supply to the
protected customers. The supply standard can hence not be considered as a gas
storage obligation.
The ways to enforce the supply
standard (including penalties for undertakings that fail to comply) are also left
for Member States to be developed. Member States should describe in their
Preventive Action Plans how they intend to implement and enforce the supply
standard.
b.) Implementation
Whereas the goal of the Regulation is to harmonize
to a certain extent the national protection standards existing in the Member
States, the first years of implementation experience show that large
discrepancies continue to exist and that there are fundamentally different
concepts in Member States regarding the implementation of the supply standard. 
As
regards the definition of protected customers, the majority of Member
States go beyond the category of households and use the flexibility of the
Regulation to include either or both of the possible additional categories
(SMEs and social services and/or district heating). 
A few Member States indicate that they encounter
technical difficulties in differentiating protected from non-protected
customers and in selectively curtailing the latter when they are linked to the
same distribution network. As a result, the Competent Authorities concerned often
include all consumption at the distribution network level as protected. 
Other Member States used an annual
consumption threshold to define protected customers. In one case, gas
deliveries to a neighbouring market – which receives all of its gas from the
country in question – is also qualified as protected. 
Member States' definition of protected
customers:
Categories of protected customers as notified by Competent
Authorities. The ranking does not reflect the absolute quantity in gas
consumption or the share of protected customers within national gas demand.

The tools and instruments chosen to
implement the supply standard are equally diverse. 
Some Member States have set up extensive ex
ante monitoring systems, whereby gas supply companies must present their supply
plans for the coming winter to the Competent Authority, which examines the
plans and continuously monitors their implementation. Other Member States
require gas supply companies to store minimum volumes in an underground gas
storage, or to have booked sufficient capacities on interconnectors to bring
the necessary volumes of gas to supply protected customers into the country. 
Although the obligation to guarantee a
minimum supply standard to protected customers is a key element of Regulation
994/2010, information about the methodology for controlling and enforcing
the implementation of the supply standard is missing from several
Preventive Action Plans. Some Member States consider the supply standard rather
as a general obligation on the selected natural gas undertakings, without
specifying any further enforcement rules. It remains unclear in these cases if
concrete measures have been taken to ensure gas supply to protected customers (capacity
and supply contracts, storage options or contracts, etc.) or whether
governments just rely on the fact that the market is sufficiently liquid to
deliver without further precautionary measures. Even where enforcement is in
place, it is sometimes restricted to mere ex post penalties in case a natural gas
undertaking fails to serve a protected customer. 
 
Very often basic information to verify
the fulfilment of the standard is missing – in particular the level of consumption
of protected customers within the total gas demand (e.g. for SMEs, where a 20%
cap applies[8]).
Information on the legal rules to implement the standard remains rudimentary[9]. Data on the final use
of gas and demand variations in different temperatures – is often absent as
well. 
Member States have pointed to difficulties
in interpreting the supply standard as one of the reasons for the missing
information.
Discussions in the Gas Coordination Group have
highlighted that some Member States struggle with the practical implementation
and enforcement of the supply standard. Member States have inter alia raised
the following questions: How can I put obligations to individual suppliers in a
"hub-based" gas world where a large number of domestic and foreign
companies buy and sell gas? In what way could contracts from the spot market be
taken into account? How should the ability of undertakings to supply protected
customers be checked? What tools/measures could the Competent Authority accept
as appropriate guarantees to fulfil the standard in the three scenarios? What
happens if several undertakings count on the same batch of gas for an
emergency? 
c.) Assessment – contribution to solidarity
and preparedness
Most Member States have clearly identified
the group of protected customers under their jurisdiction and most have
done so in line with the Regulation. Some Member States have explained to have technical
difficulties in distinguishing protected from non-protected customers which led
them to include a broader group (i.e. all customers connected to the
distribution grid) to the protected customers. It is true that the
possibilities to implement selective supply cuts only for the relevant customers
in an integrated gas network should be taken into account when calculating the
actual gas need for protected customers in a realistic manner. However, experience
in many Member States has shown that in fact there are existing technical and administrative
possibilities to focus the supplies on the most vulnerable customers groups in
case of a crisis. The Commission services are of the view that further exchanges
of best practices for the selective supply of protected customers should be
developed and intend to pursue this matter further in the Gas Coordination
Group, bilaterally with the Member States concerned and in a possible reform of
Regulation 994/2010. 
More generally problematic is the lack
of information, or the lack of detail and precision thereof, on the
consumption volumes and patterns (i.e. seasonality, fuel switching
possibilities, etc.) of the protected customers in many Risk Assessments, Preventive
Action Plans and Emergency Plans. Detailed information on the amounts of gas
which is needed to protect the most vulnerable customers in an emergency is
important to allow for efficient and fair cooperation between Member States in
cases of gas supply problems. The information on the "protected" gas
volumes is not only necessary for the assessment whether the legal limits of
Regulation 994/2010 concerning protected customers are met. The recent energy stress
test exercise[10]
showed that precise information on the necessary volumes in each Member States
is crucial to organise cross-border cooperation and emergency supplies in a gas
crisis. The Commission services therefore call upon the Member States to update
the information regarding protected customers in the first revision of the
Plans which need to be submitted under Regulation 994/2010 by December 2014. Member
States may use the detailed information submitted on protected customers during
the Energy Stress Test exercise for the update of their plans. 
Some Member States apply an increased
supply standard, which is possible under regulation 994/2014 under certain
conditions[11].
However, the justification for the increased standard was not always complete.
Also information on how the increased national standard can be temporarily
reduced in the event of a regional or Union emergency was sometimes missing. As
a significantly increased supply standard in single Member States may unnecessarily
limit cross-border flows and aggravate the security of supply situation in a
neighbouring Member State, the information on ways to temporarily reduce the
supply standard to the EU default level should be provided in the next revision
of the plans.
The main weakness in the implementation of
Regulation 994/2010 is in the Commission services view, however, the unclear
enforcement of one of the key element of Regulation 994/2010, the supply
standard. It appears that Regulation 994/2014 has failed to bring about a clear
system in which the supply standard is monitored and enforced in a systematic
manner. As a result thereof, it appears that customers remain unequally
protected across the EU. 
Who appears to be well protected on paper,
may be much less so in reality in the absence of an effective monitoring and
enforcement system. Where no or weak ex ante monitoring tools are in place to
ensure that companies can comply with the supply standard, earlier resort may
have to be taken to emergency measures in case of crises which might have
negative spill over effects on neighbours, being less market-based and more
costly. 
The lack of harmonization in the
implementation and enforcement of the supply standard implies in other words
that the contribution of the supply standard to the EU's emergency preparedness
is today suboptimal and may endanger solidarity. The Commission services are of
the opinion that the provisions on the supply standard in Regulation 994/2010 should
be reviewed with respect to the existing implementation deficits in terms of
enforcement. 
3. Creating an
infrastructure that allows to make gas available where it is needed
During the 2009 gas supply crisis the
necessary amounts of gas were available on the EU internal market but it was physically
impossible to ship them to the affected Member States in Eastern Europe. 
Against this background, the Regulation aims
to improve cross-border capacities by pursuing the development of new infrastructure
which may not necessarily be commercially feasible but is essential in terms of
security of supply[12].
The two tools chosen are the implementation of the so-called N-1 rule
and the implementation of permanent bi-directional capacity (physical
"reverse flows").
3.1 The N-1 rule
a.) Description
This rule – based on the example from the
electricity sector – obliges those Member States who are dependent on a single
import pipeline, underground storage facility or other type of essential infrastructure,
to make sure that demand on extremely cold days can be covered even if the main
infrastructure fails. The N-1 rule must be fulfilled from 3 December 2014
onwards. 
It is also possible to fulfil the N-1 rule on
a regional level if relevant Member States establish a joint Risk Assessment
and a joint Preventive Action and Emergency Plan.
b.) Implementation
The number of Member States who comply with
the N-1 rule has been increasing over the years and currently stands at 20. Three
Member States with small and isolated gas markets – Sweden, Luxembourg and Slovenia – are exempted from the N-1 rule. 
            
Source: European Commission
In those Member States which in 2013 did
not fulfil the obligation yet – Greece, Bulgaria and Lithuania – short and
mid-term investment projects are foreseen to ensure compliance with the N-1
rule. This is notably the case for Lithuania where the Klaipeida LNG terminal
with a capacity of 2-3 bcm/year is foreseen to become operational in December
2014 and works on the expansion of the bi-directional capacity with Latvia have increased capacity from 1 mcm/d to 6 mcm/d. For Bulgaria, the limited 1 mcm/d reverse
flow capacity on the Greece-Bulgarian interconnector alleviates the situation
to some extent, but Bulgarian dependency on the Negru Voda entry point remains
highly problematic. Bulgaria remains vulnerable because the difficulties in the
implementation of Bulgaria-Romania interconnection delay the project, and because
the Bulgaria-Greece interconnection is expected to be in place only in 2016. For
  Greece, the Southern Gas Corridor could provide a new gas source on the
medium term, while additional LNG import and storage capacities could provide a
higher level of flexibility in case of peak demand or a temporary disruption of
flows.
The EU Infrastructure Regulation of 2013[13], which provides for a
detailed process to define and implement infrastructure priority projects
("Projects of Common Interest" or "PCIs"), is an important
complement to the infrastructure obligations in Regulation 994/2010. Compliance
with the N-1 rule is one of the key benchmarks in the attribution of "PCI"
status) under the EU Infrastructure Regulation. 
c.) Assessment - contribution to enhanced
security of supply 
The Commission services are of the view
that the N-1 infrastructure standard is a crucial indicator to test whether the
entry capacities into a gas transmission system are sufficiently balanced and
are not overly-concentrated on a single trunk pipeline or underground gas
storage facility. The N-1 standard is a useful benchmark in the PCI selection
process. It has also not become obsolete, as the identification of an
"N-1" relevant PCI will not in itself ensure that the projects are actually
implemented as scheduled. As the highest degree of commitment and
prioritization from Member States, planning and regulatory authorities and
companies involved is needed to ensure success, it appears justified to
maintain the legal obligation to comply with the N-1 standard in Regulation
994/2010.
Moreover, Member States have effectively
made use of the N-1 standard in their Risk Assessments to examine the
resilience of their network in various disruption scenarios. The same is true
for other such as ENTSOG and the International Energy Agency.  
It is important to note that the N-1
standard is an evolutionary concept. Its value is subject to constant changes
in light of evolving circumstances, such as additional infrastructure being
developed, changes in national production and changes in peak demand. Although
Regulation 994/2010 stipulates 3 December 2014 as date by which the N-1 must be
complied with, it is hence important that Competent Authorities, the EU and
others involved in security of gas supply continue monitoring and ensuring
compliance with the standard also beyond that date.  
At the same time, the N-1 standard is only
one factor in testing accurately the resilience of a gas system. Compliance
with the N-1 rule, when considered in isolation, can give a false impression of
security if not combined with other indicators such as the flexibility value of
the infrastructure (e.g. daily withdrawal rates from storages under various
filling scenarios), the question whether alternative routes allow to tap into
various sources of supply and the risk of congestion. The Commission services
therefore intend to examine in the context of a review of the Regulation
whether additional benchmarks should be included in the Risk Assessments and
Plans in order to obtain a more refined and accurate picture of the individual
position of Member States.
3.2 Enabling permanent bi-directional
capacity
a.) Description
Physical bi-directional gas flows on
existing cross-border pipelines can be an efficient and cost effective way of
increasing entry capacity and potentially to have access to new sources. It can
also help the shippers to rapidly and massively reroute gas deliveries within
internal market and change the direction of traditionally one-way transport routes
in case one of the Union's major supplies becomes unavailable. The Regulation put
an initial obligation on transmission system operators to enable permanent
bi-directional capacity on all relevant cross border points[14] by 3 December 2013,
and after that on Competent Authorities to regularly check the need for reverse
flows when they update their risk assessments and plans. The necessity and
justification for each reverse flow is determined by a procedure involving neighbouring
Member States who express their need for the new capacity. Competent
Authorities may grant an exemption in case the bi-directional capacity would
not significantly enhance the security of supply of any Member State or region, or if the investment costs would significantly outweigh the prospective
benefits for security of supply. The Commission has the power to require the
amendment of the Competent Authority's decision in case there is a discrepancy
with the opinions of the other Competent Authorities concerned. The procedure
may be repeated on the request of a transmission system operator, a Member State or the Commission when the security of supply situation changes.
Virtual
and physical reverse flows
The
development of the internal energy market has brought about the need for
cost-effective and flexible ways of transporting gas via the infrastructure. Virtual
reverse flows – or backhaul – is a service provided by the
transmission system operator whereby the actual physical gas flow is a result
of collecting, summing and netting the individual transport orders
(nominations) across the concerned interconnection point in both directions. If
the nominations in one direction are equal to the nominations in the opposite
direction, then no physical gas flow takes place. Backhaul services enable gas to
contractually flow in both directions also at those interconnection points,
which are physically impossible to reverse. In these cases however, the
potential level of reverse flows may be only smaller or maximum equal to the
prevailing forward flows.
In
the case of physical reverse flows gas may transported in both
directions across the interconnection point – up to the available technical
capacity –, independently from the quantity of the gas coming from the
prevailing forward direction. In the field of security of supply the physical
possibility of transporting gas in both directions counts, and hence the
permanent bi-directional capacity stands for such capacity.
b.) Implementation
The share of bi-directional cross-border
interconnection points within the EU has increased from only one-quarter (24%)
in 2009 to almost half (40%) of all points by 2014. This means that the gas
flows via almost every second interconnection point between Member States can
physically be turned around. Looking at the possibility to transport gas in
both directions not on the level of interconnection points but on the level of
borders between Member States, compared to 2009, four more borders (Germany-Denmark;
Italy-Austria, Greece-Bulgaria and Romania-Hungary) have become bi-directional
in 2014. This improvement can certainly be regarded as an important success[15].
The majority of this development has come
from commercial projects incentivized by the market demand. Nevertheless, Regulation
994/2010 has been instrumental in putting in place or speeding up physical reverse
flows on some interconnections where voluntary market developments did not
bring about the necessary results on time although reverse flows are crucial for
security of supply reasons, such as on the Yamal pipeline between Poland and
Germany, on the interconnection between Romania and Hungary and between Greece
and Bulgaria. At the same time, the Regulation did not bring about changes in
other, major interconnection points such as at Obergailbach (France-Germany),
Waidhaus (Czech Republic-Germany) or on the BBL pipeline (Netherlands-UK).
   || 2009 || 2014 
 Number of cross-border interconnection points in the EU[16] || 49 || 53 
 Number of bi-directional interconnection points || 12 || 21 
 Number of unidirectional interconnection points || 37 || 32 
The majority of interconnection points
which were unidirectional in 2009 remain so. Analysis shows that exemptions
requested by TSOs were granted by Competent Authorities and were not contested
by other Member States in the consultation period. There was only one case where
the cross-border consultation resulted in the implementation of reverse flows
requested by the country which benefits from it. In the rest of the
consultations Competent Authorities did not provide remarks that have
substantially changed the original decision. The Commission is not aware of any
Competent Authority that expressed an opinion for reversing an interconnection
point other than those at its direct borders.
Several reasons have been invoked to grant exemptions
from the obligation to install bi-directional capacity. In some cases, reverse
flows do not make sense since the pipeline connects a Member State at the end of the supply route (cul-de-sac) and there is no gas available in the
country concerned (e.g. no gas in storage) that could be shipped in the reverse
direction. In other instances, the pipeline connects directly with a
distribution network or connects a production field. Thirdly, the
specificities of the L-gas system with few production sources that are
moreover depleting, render it unnecessary to make investments for ensuring reverse
flows of L-gas into areas where L-gas may be supplied by H-gas converted into
L-gas. Technical barriers have also been pointed to as a reason for not
implementing reverse flows in the case of different odorization practices on
both sides of the border. 
In other cases, even though no or little
specific technical arguments were raised, Competent Authorities agreed on the
two sides of the border that reverse flow investments would not enhance
security of supply in the target market and that the estimated costs would
outweigh the potential benefits. 
c.) Assessment - contribution to enhanced
security of supply
Even if the number of interconnection
points with reverse flow capability has increased significantly, the Commission
services are of the view that the flexibility of the EU gas grid is not fully
satisfactory yet. 
In particular the flexibility of the EU gas
grid could still be substantially enhanced – when looked at on a wider scale
than purely the flows between the two neighbouring Member States concerned – if
the major trunk pipelines between France and Germany, between the UK and the
Netherlands, and between Germany and the Czech Republic would become
bidirectional at Obergailbach, on the BBL pipeline and at Waidhaus
respectively. The stress test exercised recently carried out by the Commission
in cooperation with the Member States shows that in a scenario where gas
supplies from the East are disrupted, Member States from Central-Eastern Europe
massively start to draw on gas from Western markets such as Germany. In such a scenario the entry capacities to Germany and to the North-West European
markets, and exit capacity from these countries towards the East would need to
be maximized. In this respect the physical reversal of the BBL pipeline between
the UK and the Netherlands, the reversal of the interconnection between France and Germany at Obergailbach or the reversal of the Waidhaus interconnection point could be
instrumental to secure the necessary supplies to Central-Eastern Europe. The
absence of bi-directional flows on these points implies that gas can today not,
or only to a limited extent, be physically transported from the North-West
European and the French and Iberian markets to the East. The EU hence misses
out on the potential for Eastern Europe to tap into the LNG sources available
on the Iberian Peninsula and in France and on the full access to Norwegian
deliveries in the case of a security of supply crisis.
The assessment carried out so far under
Regulation 994/2010 has in the Commission's view focussed too much on the
direct benefits for the neighbour only. In this regard, it is true that the Netherlands, Germany and the Czech Republic all fulfil the N-1 standard also without additional
reverse flow capabilities. It is recommended that in the future more attention
is paid to possible beneficial effects for security of supply along the whole
transportation corridor. 
The Regulation provides for a minimum
frequency of reviewing the necessity for reverse flows every two years when the
Risk Assessments are updated.  The Commission services call upon Competent
Authorities to engage actively with all those Member States along the wider
potential supply routes. Various disruption scenarios – such as those included in
the recent stress test exercise – identify the scope of possibly concerned
Member States for each currently unidirectional interconnection point, with
special regard to the ability to transport massive amounts of gas from
North-West and South-West Europe to Central-Eastern and South-Eastern Europe. 
The obstacle represented by different
odorization practices will have to be addressed in this context and possible
costs related to de-odorization techniques may have to be included in the
cost-benefit analysis. Odorization issues, however, should not make reverse
flows impossible per se. 
4. Harmonized
analysis of risks, preventive and crisis management measures
a.) Description
 In order to ensure that all Member States
analyse the threats and hazards to their security of supply, and draw up preventive
and emergency measures in a coherent and comparable manner, each Member State
has to prepare and notify to the Commission three separate documents (see the
graph below). These must be updated every two years or if necessary even more
frequently[17].

The Risk Assessment serves to analyse
exceptionally high gas demand and supply disruption scenarios and to categorize
the threats and hazards into high-, medium- and low-risks while taking into account
national specificities[18].
It also examines the fulfilment of the infrastructure and supply standards, and
it should identify the interaction and correlation of risks with other Member
States in a cross-border dimension.
The Risk Assessment is the basis for both the
Preventive Actions Plan and the Emergency Plan, because the specific measures
described in the latter must address the various threats and hazards
identified. 
The Preventive Action Plan aims to
collect those measures that may help to avoid or at least reduce the
probability or impact of various risks. The measures included in the Preventive
Action Plan must be market-based as they cover the pre-crisis period and those
situations when the market is still functioning and is able to supply customers[19].
The Emergency Plan focuses on those
situations when the amount of gas provided by the market is not enough to cover
all demand[20].
It governs the roles and responsibilities, the information exchange schemes and
the course of action to be taken by the authorities, gas supply companies,
transmission system operators, consumers and other players. The Emergency Plan must
be based on the three crisis levels, and it has to describe the mechanisms that
are used to cooperate with other Member States at each crisis level.
The Plans must be exchanged and consulted
between Member States to ensure that the national measures are not inconsistent
with each other. The final Plans must also be published. 
Member States have the possibility, and the
Commission strongly encourages that Competent Authorities establish joint
Risk Assessments and Plans on regional level. These documents focus on the
region as a whole, and should identify both the common and the correlated risks
which each participating Member States is facing. Joint or coordinated actions
in the Plans can show the efficiencies gained by this joint approach and the
potentially lower burden to reach an adequate level of security on national
level. So far the Baltic States and the United Kingdom and Ireland have prepared joint Risk Assessments. The Baltic States and Finland are currently working on a joint Preventive Action Plan and an Emergency Plan. 
In its function to ensure consistency on
Union level and foster solidarity among Member States, the European Commission assesses
the Plans, and it has the power to recommend or request changes in certain
cases[21].
b.) Implementation
The development of the Risk Assessment and
the Preventive Action Plan was a new exercise and this may explain why there is
still room for improvements regarding the quality and compatibility of these analyses.
The Commission's Joint Research Centre provided guidance documents and a
collection of international practices, and furthermore gave recommendations on
the possible elements and the structure[22].
In the absence of a template in the Regulation, the recommendations were not
always taken into account. This resulted in diverse approaches, structure and
findings for the assessments and the plans.
Regarding the legal status the same
diversity is visible. The plans are often regular working papers published by
the Competent Authority, but some Member States chose to adopt them as a law or
a decree. Occasionally, such a long administrative process was the reason why
the plans were submitted to the Commission with a significant delay. In these
cases, the Commission launched "EU Pilot" enquiries to the Member
States about the state of play of fulfilling their obligation.
The Commission prepared and shared with the
Gas Coordination Group its main findings about the Risk Assessments and the
Plans in September 2013. 
(i)    
Evaluation of the
Risk Assessments:
The assessments represent a good overview
of national circumstances. In spite of the informal guidance provided by the Joint
Research Centre, the structure, the standard and the nature of the assessments
considerably differ among Member States.
Some Competent Authorities established a
risk assessment focusing predominantly on the transmission system and examining
the probability and impact of a cut on each individual entry and exit point. Others
drew up a more policy-oriented analysis with more qualitative information.
While both approaches have their merits, a balanced combination of both would
be ideal. A purely physical and technical approach can give exact figures both
on the impact and probability but it does not look further into the potential causes
that may trigger a disruption. This way, the early signs that could indicate a
future supply problem will remain hidden, and it will be impossible to look
into correlated and common risks shared with other Member States. The purely
policy-oriented analysis concentrates more on these qualitative issues (e.g.
nature of geopolitical, economic risks etc.) but it often fails to provide
concrete figures on the occurrence and impact of a disruption. 
The worst case scenarios in the Risk
Assessments are based on events that have already occurred. The 2012 Cold Spell
demonstrated that a combination of several adverse conditions (extreme high gas
demand and supply problems occurring simultaneously on several entry points) is
a realistic scenario. Threats related to previously unforeseen events such as
strikes, cybercrime, Sun flares etc. are rarely included. The assumptions in
the Risk Assessments must include more pessimistic scenarios as well as new
threats.
The assessments seldom take into account
the impact of risks on their exit points and thus the potential impact on gas
flows from their territory into neighbouring Member States. Furthermore, Risk
Assessments – unlike the Plans – are rarely exchanged between Member States. An
exchange of at least parts of the assessments could contribute to identifying
correlated risks, harmonizing risk scenarios, realizing additional risks[23].
In some cases, relevant stakeholders such
as natural gas undertakings or consumer organizations were not well involved in
the development of the Risk Assessment, even though their experience could
provide valuable input to the exercise.
Estonia, Lithuania and Latvia in the framework of the BEMIP
Focus Group on Regional Cooperation decided to set up a joint Risk
Assessment, which was completed in 2012. The joint Risk Assessment of the United Kingdom and the Ireland in 2014 is another example of successful regional cooperation.
(ii)  
Evaluation of the
Preventive Action Plans and Emergency Plans
Almost all Competent Authorities have
exchanged and consulted their draft Plans with each other and the Commission. In
the Gas Platform and the Baltic region the cooperation went beyond a mere
formal exercise and contributed to a better consistency among national plans.
In several other instances however, the consultation was carried out in order
to "tick the box" and no substantial dialogues took place among Member
States. In some cases practical difficulties (language difficulties,
significant time difference in the establishment of the plans) hindered the
cooperation.
Consequently, there is little focus in the
plans on common or coordinated actions in the preventive stage or in the case
of a disruption. 
The self-centered approach in the Plans also
does not take into account the cross-border impact of national measures. The
majority of Member States do not seem to pay attention to the consequences of their
own actions on the neighbours. They equally fail to consider the impact of
their neighbours' measures on them. This makes it impossible to adequately check
whether there are no measures introduced that are likely to endanger seriously
the gas supply situation in another Member State and whether cross-border
access to infrastructure is maintained as far as possible.
The results of the Risk Assessment and the
Plans are usually not linked. In most cases it is not clear which measure is
supposed to neutralize a certain risk. As the impacts of neither the risks, nor
the measures are quantified, it is not possible to assess the efficiency and
effectiveness of certain actions.
In some cases the obligatory elements as
prescribed in the Regulation, are only formally mentioned in the Plans without real
analysis. The missing description of the fulfilment of the supply standard or a
superfluous listing of various crisis prevention measures – such as increasing
gas imports or buying gas on the spot market – considerably reduce the value of
the Plans.
In particular in the Emergency Plan, roles
and responsibilities and the exact measures should be clearly defined for each
crisis level.
Positive examples for regional cooperation are
the joint Plans of the Baltic region and Finland, which are being
established. There are indications that in the course of the second iteration
of the Plans, some others for instance the United Kingdom and Ireland are also planning to prepare joint Preventive Action and Emergency Plans.
c.) Assessment – contribution to enhanced
security of supply
The Risk Assessments and Plans have no
doubt had a positive impact on security of supply. Some Member States engaged
in similar exercises already before, but this was not the case for all Member
States, at least not in such a structured and visible manner. The exercise has
hence raised awareness and systematized national security of supply
assessments.
The depth of analysis, level of data and
robustness of the Risk Assessments and Plans varies significantly. The
Commission services count on this report providing guidance to Member States
and are committed to continue working with the Member States on improving the
quality by facilitating the exchange of best practices and to give concrete
feedback on individual Assessments and Plans. In addition, in order to ensure
better comparability and enable the Commission to better assess the documents
and thus security of supply on a Union level, the Joint Research Centre – based
on its experience of having evaluated the first iteration of the Risk
Assessments and Plans – shall develop templates which could be consulted with
the Gas Coordination Group. In the context of a review of the Regulation, it could
be considered whether to make those templates mandatory for Member States by
annexing them to the (revised) Regulation. The correlation between the gas and
electricity sectors must be addressed more extensively as well. 
The main weakness so far, however, has been
that Risk Assessments and Plans have remained nationally focussed only and that
the co-ordination between Member States has overall been poor. 
As regards the Risk Assessments, they
should evolve to include – in addition to the national dimension – also impacts
of a threat or hazard outside the concerned Member State. Currently
there is no formal obligation for Competent Authorities to exchange Risk
Assessment. A certain level of consultation however, would be instrumental for
all participating sides to recognize the shared and correlated risks and to
identify those threats and hazards which are posed by them on each other. 
In their Preventive Action Plans and
Emergency Plans, Member States must pay attention to the cross-border impact of
their policies and factor in the impact of neighbouring countries' measures. This
can be done effectively only through real exchanges of information and consultations
between Member States. In this context, Member States should actively explore
the possibility of joint actions, both in preparing for emergencies and in
responding to emergencies. Uncoordinated national measures to maintain a
sufficient level of supply security are likely to be less effective and more
expensive than exploiting the advantages or strengths of several cooperating
countries and putting in place concerted measures. Furthermore, without
coordination, several national policies may aim at the very same source or
route of gas in a supply shortfall which could lead to overly optimistic plans
and/or rivalry and political tensions between Member States in the face of a
crisis. 
The Commission's tools to co-ordinate
actions are under the existing Regulation limited and the absence of Risk
Assessments and Plans co-ordinated between Member States at regional level
further complicate it overall co-ordination task at EU level significantly. 
In the context of a review of the Security
of Supply Regulation, the Commission services intend to explore how the
regional cooperation between Member States can be fostered, for example by
replacing national Risk Assessments and Plans by regional ones. The lack of
exchange on the Plans so far suggests that mandatory consultations between
Member States may not be sufficient in this regard.  
The feasibility of carrying out risk
assessments and establishing Preventive Action Plans and Emergency Plans at
Union level
The
establishment of Risk Assessments, Preventive Action Plans and Emergency Plans on
Union level may be considered as an option for a future amendment of
Regulation 994/2010. The establishment of centralised plans may indeed have the
advantage to avoid information asymmetries and frictions between national plans
as observed today. At the same time, the Commission would need to make sure
that the information on which the plans are based is sufficiently accurate,
which implies a close involvement of the national competent authorities and possibly
ENSTO-G in the establishment of the plans. An alternative to EU-wide plans at 
Union level could be to further align the national plans in a legally binding manner
(e.g. by more detailed provisions on the required content and cooperation
requirements in the plans). 
5. Notification of
inter-governmental agreements and details of commercial contracts with Third
Countries
a.) Description
Pursuant to Article 13 of the Regulation, in
order to allow the Commission to assess the situation of security of supply on
Union level, Competent Authorities were obliged to communicate those
existing inter-governmental agreements (IGAs) with third countries, which
have an impact on the development of gas infrastructures and gas supplies by
December 2011. Member States are also requested to inform the Commission when
concluding such IGAs.
For the sake of assessing the long-term
supply outlook of the Union and the flexibility of commercial measures, natural
gas undertakings were requested to notify the Competent Authorities certain
details[24]
of those contracts with suppliers from third countries, which have
duration of more than one year. Competent Authorities then had to notify the
information in an aggregate form to the Commission by the same deadline of
December 2011, and provide an update on a regular basis.
b.) Implementation
In the process of notification, 11 Member
States submitted the texts of 32 IGAs, and 12 Member States indicated
that they do not have any relevant IGAs with Third Countries. Those agreements
which were sent in full to the Commission are published in the national
official journals. Three Member States notified only the title and the
existence of 9 IGAs without submitting the text of the agreements.[25]
For the information regarding the commercial
contracts, the Commission prepared and circulated a template for Competent
Authorities so that the information can be collected and evaluated in an
effective way. Ten Member States provided information according to the template[26] and five Member States
provided detailed information in non-aggregated manner[27]. In 2014 the Netherlands and Germany submitted an update based on the Commission template. As the contracts are of
different length, cover various volumes and the information was submitted in an
aggregate form the following findings are rough estimations to give information
on the main parameters of long-term contracts reported to the Commission:

 The notified quantities of average
     annually contracted volumes have exceeded the actual yearly demand in the
     last three years in cca. 10 Member States, showing that earlier
     expectations foresaw a steady increase in consumption.
 The share of long-term contracted gas
     in the annual consumption[28]
     varies from as low as 10% to as high as 150%. The high share of gas
     contracted on long-term is a usual feature of isolated markets with low
     level of diversified sources and/or those who have LNG as a significant
     supply source. There are however also well-connected markets with access
     to various gas sources, where the share of long-term contracted gas is
     dominant in the annual supply volumes.
 Approximately 300 long-term contracts
     exist in the EU. Regarding the duration of these agreements, a balanced
     distribution is visible: 31% of them run for 1-10 years; 33% run for 10-20
     years and 36% is in force for more than 20 years.
 Some Member States (6 out of 20) have
     very few (less than 5) long-term contracts, while others (5 out of 20)
     have more than 30 contracts each. Those Member States who have less
     long-term contracts tend to have almost their whole consumption covered by
     them. This could be the sign of high market concentration and exposure to
     a small number of external suppliers.      
 Almost half of the long-term contracts
     currently in force, are going to expire in the coming 10 years while the
     other half expires within 20 years.

c.) Assessment
The obligation to communicate IGAs
to the Commission pursuant to Article 13 of the Regulation became obsolete with
the adoption of Decision No 994/2012/EU of the European Parliament and of the
Council[29].

The provisions of the Decision go beyond the
Regulation, and oblige Member States to submit all existing intergovernmental
agreements and new IGAs following their conclusion, including annexes and
amendments to those agreements which have an impact on the operation or the
functioning of the internal energy market or on the security of energy supply
in the Union. The Commission carries out a detailed compliance check of the
IGAs with the EU acquis and follows up in the form of letters to the concerned
Member States.
As concerns the requirement to submit
long-term commercial supply contracts, it has to be noted that the importance
of such contracts for the gas market has overall decreased in the last years.
Often the information provided on the long-term contracts has given just a
broad overview. Because the data is aggregated it is not possible to match the
contracted quantities to the contracts expiring, and to the delivery points. Because
of the possibility to resell the contracted gas on the European market and the
changing portfolio of gas suppliers with decreasing share of long-term
contracts within, it will be more and more difficult to assess the impact of
long-term contracts on security of supply in many parts of the "hub-based
western gas markets.
However, in many vulnerable Member States
without supply diversification and gas hubs, long-term contracts remain an
important element for security of supply. It should therefore be considered to
introduce a more flexible and focused reporting obligation for long-term
contracts, e.g. by exploring strengthened tools of data collection on contracts
– e.g. by replacing the general reporting obligation by giving powers to the Competent
Authorities to request data from natural gas undertakings already in the stages
of Early Warning and Alert, and impose fines in case of refusal also outside
the context of an Emergency. 
6. Coordinated emergency measures 
a.) Description
Emergency management represents another
basic pillar of security of supply beside prevention. The Regulation developed the
general coordinative activities which were in the precursor Directive and – in
the spirit of enhancing solidarity – introduced new elements aiming at i.)
avoiding premature declaration of emergency and imposing barriers on
cross-border trade and ii.) giving stronger powers to the Commission to monitor
the situation and to ensure that the national measures do not undermine
security of supply in other Member States.
The definition and number of possible national
"crisis levels" is now harmonized[30],
with three different levels indicating the severity of the crisis in each Member State. The declaration of early warning and alert level before an emergency level is
meant to put citizens and industry on alert, which by itself can have the
effect to bring more gas to the affected market and thus prevent further
deterioration of the situation. The Regulation, however, does not define
precise thresholds or indicators determining when and which level of emergency
can and/or must be declared.
The Commission is tasked to monitor the
security of supply situation on Union level. This is done on the one hand
via strategic analyses based on the input from various sources (e.g. Member
State Risk Assessments and Plans, the Summer and Winter Supply Outlooks and the
Ten-Year Network Development Plans prepared by ENTSOG and the information
provided in the course of the PCI exercise). On the other hand, in potential pre-crisis
and in crisis situations[31],
the Commission services carry out daily monitoring of flows, underground gas
storage levels and political and technical developments that affect supplies to
 Europe. They disseminate information on the situation, most importantly to the
Gas Coordination Group.
Competent Authorities are requested to
immediately inform the Commission once they declare any of the crisis levels,
and provide details of the measures that they plan to take. If the Competent
Authority declares emergency, it should follow the pre-defined actions as
defined in its Emergency Plan and it may deviate from those only in justified
cases. This is to ensure predictability and proper preparation for the affected
market players. It also ensures that no arbitrary and unexpected actions are
taken.
The Commission has five days at its
disposal to verify whether a declaration of emergency is justified and
whether the measures do not breach the relevant principles[32] and they follow
closely the actions listed in the Emergency Plan. The Commission may request
the Competent Authority to lift the declaration of emergency or to amend its
measures but this is not binding. 
Upon the request of several Competent
Authorities that face a gas crisis simultaneously, the Commission can
declare a Union emergency or a regional emergency for a
specifically affected geographical area. The Commission has some discretion to
decide which of the two emergency levels it wishes to declare. The declaration
of a Union or regional emergency triggers the possibility to use non-market
based measures and confers a coordination function to the Commission. However,
beyond the coordinative role and the ability to give recommendations,
Regulation 994/2010 does not provide the Commission with direct powers to order
Member States to take particular decisions in case of a Union or regional
emergency. The Gas Coordination Group is convened in such cases without delay. The
Commission has an important role to coordinate the actions of Competent Authorities
and to ensure the exchange of information, the consistency and effectiveness
of actions at Member State and regional levels. It also coordinates the
actions with regards to third countries. In a Union or regional emergency several
markets are impacted in parallel, however, it is a likely scenario that only a
few Member States are in a state of national emergency (i.e. the market is not
working) while the others are still in the early warning or alert phase (i.e.
the market mechanisms are still operational, there are no non-market based
measures in place).
b.) Implementation
Since the entry into force of the
Regulation the national crisis levels have been declared on the occasion of two
events (national emergency was declared only in one Member State) and for this reason experience is limited. There was no example for declaring either Union or regional emergency.
In the Cold Spell in February 2012, Greece, Italy and Poland declared "Alert" level because of peak gas demand. In the case of
 Italy and Greece, the exceptionally high gas demand was triggered by
exceptionally high demand in electricity and was coupled with disturbances in
gas supply[33].
The deterioration of the situation led in Greece to the declaration of
"Emergency" which lasted for five days. 
The second instance took place in December
2013, when Greece declared an "Early Warning" because of the loss
of more than 20% of gas supplied via Turkey for two consecutive days. 
Measures in the "Alert" level included curtailment
of interruptible customers, call for suppliers to procure additional LNG and
invitation to voluntarily reduce gas demand. Poland released part of its
strategic gas stocks. Greece introduced load-shedding to some of the gas-fired
power generation plants in the "Emergency" stage.
No Competent Authority informed the
Commission officially about actions of neighbouring Member States that were
disruptive to their security of supply, however some natural gas undertakings
alleged difficulties in ensuring cross-border gas flows due to public service
obligations on national level.
In order to allow the Commission to carry
out its assessment regarding the declaration of emergency as per Article
10(8) of the Regulation, the relevant Competent Authority submitted a detailed
explanation about the supply-demand situation and the measures taken. The
Commission found that the declaration of emergency was justified and informed
the Competent Authority accordingly.
As neither regional, nor Union emergency
has been declared by the Commission since 2010, there is no experience on
how the actions of the Competent Authorities and actions towards third
countries are coordinated, and how the consistency and effectiveness of
measures on national, regional and Union level is ensured. 
c.) Assessment
The national and Commission's
capacities to monitor the development of gas supplies and demand in an
emergency have developed since the 2009 gas crisis.
The high level of transparency regarding
cross-border capacities and gas flows, underground gas storage levels and the
information provided in the Risk Assessments and Plans (e.g. daily peak
consumption) enable Member States and the Commission to identify anomalies or
weaknesses in gas supply on a daily basis. The transparency platforms
established by the industry (such as the ENTSOG database[34] and GSE's AGSI –
Aggregated Gas Storage Inventory) give a summarized overview of the situation
in the whole Union. The input from Member States in the Energy Stress Test
exercise provided valuable insight into to the national conditions and planned
measures in certain scenarios. The gradually improving transparency in the
Ukrainian gas sector is expected to provide a clear picture about the situation
in this important gas transport corridor.
The Commission is rapidly able to contact
Member States via an emergency contact list, and since 2013 a web- and
audio-conferencing tool is available through which it is possible to convoke
an online meeting of the Gas Coordination Group within hours. These
capabilities provide an adequate platform to exchange important information on
a short notice. It does not enable however true crisis management at EU level.
The implementation of the provision
requiring that the Commission verifies within five days the justification of
the declaration of an emergency is in practice necessarily limited to a
marginal check on the evidence and arguments produced by the Competent
Authority, due to the limited time available and the limited tools that the
Commission has at hand to verify the information provided. Revising the
timelines or providing the Commission and Member States with more sophisticated
information tools and investigatory powers both within and before an emergency should
therefore be considered.
It should be re-examined whether the
Commission can truly ensure consistency of national measures without the power
to impose binding requests on Member States in an emergency.
National emergency
The few cases when a crisis level was
declared show that Competent Authorities refer to this tool as a last resort
and are prudent in using it. Although the declaration of "Early
Warning" or "Alert" could very well function as a signal to
suppliers and traders to bring more gas to the affected market, and could send
a political signal as well, it is not fully used to fulfil this function. In
some Member States (such as in France of in the United Kingdom) the
transmission system operators have their own alert mechanisms through which they
signal to market participants if the planned consumption is not expected to be
covered from the planned gas deliveries.
There is no benchmark or indicator which
would show at which point a Competent Authority should activate either of the
crisis levels. Further analysis of Competent Authorities' reactions is needed
to gain a clear picture whether the crisis levels are used in their full role when
needed.
"Emergency" was declared only in Greece, which is located at the end of the interconnected European gas system, hence the
national measures did not affect gas flows to other markets – there was no
"domino effect" towards other Member States. Experience with the
Plans shows that most Member States do not analyse the impact of their
national emergency measures on other neighbouring countries. Competent
Authorities need to make it explicit in their updated Emergency Plans which are
those measures which may affect security of supply in other Member States.
The declaration of the crisis levels in
some Member States is carried out by the transmission system operators. The
Regulation is firm that the actual declaration must be carried out by the
Competent Authority, even if it is done on the basis of the TSO's input. 
Only few Member States have pre-defined
actions for an emergency as the nature and impact of a crisis may vary. This
problem could be overcome by uniform indicators for which Member States should define
concrete measures (e.g. measures in case a certain share of the demand is not
covered). As regards the impact on neighbours, those concrete actions should be
identified for each potential emergency situation, which would affect the
security of supply of another Member State. Stronger scrutiny of the national
measures from neighbouring Competent Authorities would contribute to better
self-constraint if national measures harm other Member States. 
Union and regional emergency
The Regulation currently foresees the
possibility to declare only an emergency on regional or Union level, but not the
other crisis levels notably early warning and alert. In certain situations such
as the current gas dispute and political conflict between Ukraine and Russia,
or when a Europe-wide cold spell takes place, the Commission – provided it is in
possession of the relevant information, including where appropriate relevant
commercially sensitive information, on the basis of exchanges with Member
States – could formally highlight the vulnerability of certain countries while
continuing to promote the use of market based measures by declaring regional
or Union early warning or alert. 
Apart from the political weight of such a
move, this could help to send signals to the market about the potential lack of
gas in certain areas[35].
Today, infrastructure constraints in cross-border capacities and the dominance
of single suppliers in some markets make it impossible for price signals to fulfil
their function and attract gas to certain countries and regions, even if a
potential disruption is on the horizon. This may lead to a premature
introduction of non-market based measures such as curtailments, instead of taking
advantage of the internal market for instance by maximizing imports from other
Member States. As long as such deficiencies exist, an instrument to draw
attention to weaknesses in gas supplies and to indicate more market-based
remedies is important.
In order to be able to identify the
proximity and probability of an immediate crisis, the Commission's monitoring
capabilities and its access to certain commercially sensitive information would
need to be improved. Real-time alerts about technical problems (drops in
pressure, extraordinary TSO actions to balance the system etc.) or about abnormalities
in the supply conditions (e.g. repeated failure of a supplier to procure the
necessary amounts of gas) could enable the Commission to – in cooperation with
Competent Authorities – mobilize and incentivize market players to channel gas
to the regions in need.
Although there is no reference case for a
regional or Union emergency, it would be important to clarify the exact
allocation of responsibilities and tasks among the Commission, the Member States, the Competent Authorities and the natural gas undertakings in such a
situation. It remains to be decided whether a regional or Union emergency would
automatically make it possible to introduce non-market based measures – or EU
solidarity mechanisms in case such are created – in those Member States where
the market is still working. It also needs clarification who would have the
authority to directly instruct natural gas undertakings in a regional or Union
emergency. The hierarchy and priority of national vs. Union interest would need
to be better defined in order to ensure smooth decision making.
Specific analysis should cover the main
guidelines of allocating gas in a Union or regional emergency and how the
principle of solidarity would apply in these cases. Certain questions that
could be examined are inter alia:

 Is national emergency automatically
     triggered in each Member State when a Union emergency is declared?
 Is it a prevailing rule that supplies
     to protected customers should be provided in all Member States (even at
     the expense of other, non-protected customers)? Should one Member State curtail its non-protected customers to enable supplies to the protected customers
     of another Member State?
 Should there be financial compensation
     mechanisms?
 What should be the principle of
     distributing gas among the protected customers of several affected markets
     (pro rata, price, optimization e.g. taking into account fuel switch and
     concrete impact on households)?

d.) Possible next steps
The example from the Cold Spell of 2012
shows how closely peak electricity demand and gas demand are linked. A better
integrated assessment of risks and measures in both sectors should ensure that
correlated risks are identified in an early stage and cross-sectoral impacts of
a disruption are minimized. Further work could be done, in close cooperation
between the Commission, Member States and the ENTSOs to deepen the cross-sector
assessments of risks and response measures.
The interdependence and the dynamics of
an emergency and national measures (national actions and reactions) could
be further analysed. Emergency exercises and scenario analyses could
explore what happens if a Member State, which is not at the end but in the
middle of the transport chain, declares emergency. Such exercises could also
shed light on impact on physical gas flows of concrete disruption scenarios.
Efforts are ongoing from ENTSOG and others to step up the modelling capacity
but this does not include so far actual tests or exercises.
The question whether it is appropriate to
set up new facilities to monitor gas flows in the EU in real time and possibly
to play a role as Crisis Coordination Centre at EU level could be
considered. The aim would be to provide appropriate premises with the necessary
equipment to ensure:
1.      live monitoring of gas flows across the EU
(based on the data of TSO dispatching centres) 
2.      secure communication and information
exchange channels between the Commission, Member States, TSOs and where
appropriate supplier representatives 
3.      informed advise on emergency measures in
the case of crisis, possibly even going as far as the possibility to give
binding instructions to TSOs;
7. Conclusions
Regulation 994/2010 has been instrumental
in putting in place the basic building blocks of gas supply security on
national level and thus improving the resilience of Member States in a gas
crisis. It also took the first steps in creating links and consultations among
Member States in order to start developing a cross-border conscious approach
instead of an isolated national one, and in introducing stronger coordination
on European level.
However, this
Report shows that there is scope to strengthen the EU's preparedness and
capacity to respond effectively to gas supply crises further. The Commission
services are of the view that the lessons of recent risks to security of supply
in the EU, i.e. risks caused by extreme weather conditions such as the
prolonged cold spell in 2012 or geopolitical risks having an impact on EU
energy security such as the 2014 crisis in Ukraine, should be pulled together
in a review of possible improvements to Regulation 994/2010. In order to
underline the cross-sector interaction, it is recommended that such a review
exercise is undertaken in parallel with a review of the legislative framework
covering security of supply in the electricity sector. 

Annex I. – Map of aggregated cross-border capacity
[1] The European Council endorsed on 27 June 2014 the Commission
proposal to launch a so-called stress test exercise with the purpose of
assessing the robustness and the ability of Europe's energy systems to cope
with a severe disruption of gas supply to the EU.
[2]
…the Commission […] after consulting the Gas Coordination Group shall:
a)      
draw conclusions as to possible means to enhance
security of supply at Union level, assess the feasibility of carrying out risk
assessments and establishing Preventive Action Plans and Emergency Plans at
Union level and report to the European Parliament and the Council on the implementation
of this Regulation, including, inter alia, the progress made on market
interconnectivity; and
b)      
report to the European Parliament and the
Council on the overall consistency of Member States' Preventive Action Plans
and Emergency Plans as well as their contribution to solidarity and
preparedness from a Union perspective.
[3] COM(2014) 330 final
[4] Competent Authorities require the natural gas undertakings, that
they identify, to take measures to ensure gas supply to protected customers of
the Member State in three scenarios (1.) extreme temperatures during a 7-day
peak period occurring with a statistical probability of once in 20 years; 2.)
any period of at least 30 days of exceptionally high gas demand, occurring with
a statistical probability of once in 20 years; and 3.) for a period of at least
30 days in case of the disruption of the single largest gas infrastructure
under average winter conditions.).
[5] In the case of district heating facilities there is no cap defining
their maximum level in the form of a percentage of the final gas use.
[6] as opposed to the infrastructure standard
[7] The scope of relevant undertakings is defined by the Competent
Authority. It may include inter alia end-suppliers, transmission system
operators, traders, suppliers of last resort or suppliers who have protected
customers in their portfolio.
[8]
See Article 2(1)(a) of Regulation 994/2010.
[9]
Information on legal implementation of the supply standard is important as
sometimes the domestic law provisions were not fully in line with the
description in the plans. 
[10] Report on the short-term resilience of the
European gas system – Preparedness for a possible disruption during the winter
2014/2015
[11]    See Article 8(2) of Regulation 994/2010.
[12]    The Regulation was one of the several
instruments to promote infrastructure development. Other tools included the
TEN-E Programme, the European Energy Programme for Recovery and later the
Projects of Common Interest.
[13] REGULATION (EU) No 347/2013 OF THE EUROPEAN PARLIAMENT AND OF THE
COUNCIL of 17 April 2013 on guidelines for trans-European energy infrastructure
[14] Certain points were automatically exempted from this obligation
such as connections to production facilities, to LNG facilities and to
distribution networks or where bi-directional capacity already existed or was
under construction and no Member State asked for enhancement of the capacity.
[15] A map with aggregated cross-border capacities and directions is
available in Annex 1 of this report.
[16] Not taking into account low-pressure
pipelines which cross the border to serve local demand and which are not part
of the high-pressure transmission network.
[17] The Risk Assessments were updated in June 2014, and the Plans are
to be updated by the end of 2014.
[18] Network and gas demand characteristics with special regard to
protected customers and district heating, the role of gas in the energy mix,
contribution of different sources such as domestic production, storage and
imports, safety and gas quality considerations
[19] On the description of the crisis levels please see Chapter 6 on
Coordinated Emergency Measures.
[20] In case of a supply disruption or an extreme increase in demand,
market players attempt to bring more gas to the affected market(s) via using
their existing contracts or purchasing gas on the wholesale market. Depending
on the magnitude of the disturbance, such measures may be adequate and enough,
and may not impact consumers at all. When undertakings are no longer able to
procure and transport enough gas to the market, the Competent Authority must
declare an emergency and put in place "non-market based" measures
which administratively reduce gas consumption to the level of available supply.
[21] "where the Commission, based on these consultations:
(i) assesses that a Preventive Action
Plan or an Emergency Plan is not effective to mitigate the risks as identified
in the risk assessment, it may recommend to the Competent Authority or
Competent Authorities concerned to amend the relevant Plan;
(ii) considers that a Preventive Action
Plan or an Emergency Plan is inconsistent with the risk scenarios or with the
Plans of another Competent Authority, or that it does not comply with the
provisions of this Regulation or other provisions of Union law, it shall
request that the relevant Plan be amended;
(iii) considers that the Preventive
Action Plan endangers the security of gas supply of other Member States or of
the Union as a whole, it shall decide to require the Competent Authority to
review that Preventive Action Plan and may present specific recommendations for
amending it. The Commission shall give detailed reasons for its decision."
[22] The documents are available on the European Commission's website
at: http://ec.europa.eu/energy/gas_electricity/secure_supply/legislation_en.htm
[23] For instance a disturbance in electricity production in one Member State causing a curtailment of electricity exports, could trigger a gas crisis in
another Member State, because the missing electricity would need to substituted
by gas.
[24] These include i.) contract duration; ii.)
contracted volumes in total, on an annual basis and the average volume per
month; iii.) contracted maximal daily volumes in the event of an emergency;
iv.) contracted delivery points.
[25]  Further information and IGAs have in the meantime been provided to
the Commission in accordance with Decision 994/2012/EU.
[26] Austria, Belgium, Finland, France, Greece, Italy, Lithuania, the
Netherlands, Spain and UK
[27] Bulgaria, Czech Republic, Germany, Latvia,
Lithuania, Slovenia
[28] On the basis of 2013 consumption.
[29] Decision No 994/2012/EU of the European Parliament and of the
Council of 25 October 2012 establishing an information exchange mechanism with
regard to intergovernmental agreements between Member States and third
countries in the field of energy
[30] Before the Regulation, the number of
national crisis levels varied between 3 and 12. Currently, Member States may
declare either of the following three levels: i.) early warning level; ii.)
alert level; iii.) emergency level. Non-market based measures may be applied only
on emergency level. In the other two instances, the market should be still
fully able to cover the demand. There is no need to gradually follow the steps
– for instance in the case of a sudden, large-scale disruption, emergency may
be declared immediately without declaring early warning and alert first.
[31] For instance during the Cold Spell in 2012,in the winter of
2013/2014 and during the 2014 Ukraine-Russia conflict.
[32] i.) no measures are introduced which unduly restrict the flow of
gas within the internal market at any time;
    ii.)no measures are introduced that
are likely to endanger seriously the gas supply situation in another Member State; and
   iii.)cross-border access to
infrastructure in accordance with Regulation (EC) No 715/2009 is maintained as
far as technically and safely possible, in accordance with the Emergency Plan.
[33] These included technical difficulties in unloading LNG into the
terminals in Italy and difficulty in procuring cargoes on a short notice in Greece. Greece also suffered from a disruption of pipelines gas supplies from Turkey.
[34] ENTSOG updated and enriched with new functionalities its
Transparency Platform in October 2014.
[35] The existing Early Warning Mechanism with Russia and the ones in preparation with other supplier and transit countries could serve as
a trigger for the declarations.