COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL concerning measures to safeguard security of gas supply and repealing Council Regulation 994/2010
Date: 2016-02-16
Institutions: Directorate-General for Energy, European Commission
Subjects: EU Member State, action programme, gas, gas industry, gas pipeline, gas supply, security of supply, self-sufficiency in energy, third country

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 16.2.2016  SWD(2016) 25 final   COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT  Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL concerning measures to safeguard security of gas supply and repealing Council Regulation 994/2010  {COM(2016) 52 final} {SWD(2016) 26 final}  
 
 
Table of Contents 

Introduction ..................................................................................................................... 3 
1. 
2.  Procedure ......................................................................................................................... 5 
2.1. 
Identification ............................................................................................................ 5 
2.2.  Organization and timing .......................................................................................... 5 
2.3.  Consultation and expertise ....................................................................................... 6 
2.4.  External expertise ..................................................................................................... 6 
3.  Problem Description ........................................................................................................ 7 
3.1.  Nature and extent of the problem ............................................................................. 7 
3.2.  What has been done so far with the implementation of Regulation 994/2010? .... 11 
3.3.  Baseline scenario ................................................................................................... 14 
3.4.  Subsidiarity ............................................................................................................ 16 
4.  Objectives ...................................................................................................................... 17 
4.1.  General objectives .................................................................................................. 17 
4.2.  Specific objectives ................................................................................................. 18 
5.  Policy options ................................................................................................................ 19 
5.1.  Option 0: No further action at EU level ................................................................. 19 
5.2.  Option 1: Enhanced implementation and soft law measures ................................. 19 
5.3.  Option 2: Enhanced coordination and tailor made solutions ................................. 21 
5.4.  Option 3: Enhanced coordination with some principles/standards set at EU level 24 
5.5.  Option 4: Full harmonisation ................................................................................. 27 
6.  Analysis of the impacts of the various policy options .................................................. 29 
6.1     Option 1: Enhanced implementation and soft-law measures ................................. 30 
6.2  Option 2: Improved coordination and tailor made solutions ................................. 33 
6.3  Option 3: Enhanced coordination with some principles/standards set at EU level 37 
6.4.  Option 4: Full harmonisation ................................................................................. 41 
7.  Comparison of the options ............................................................................................ 49 
8.  Monitoring and evaluation ............................................................................................ 53 
Annex 1: Public consultation ............................................................................................... 56 
Annex 2: Provisions under the current Regulation  ............................................................. 57 
1. The infrastructure standard: N-1 and reverse flow ..................................................... 57 
2. Risk assessment, Preventive Action Plan and Emergency Plan ................................... 59 
3. Supply Standard and protected customers ................................................................... 60 
4. Competent Authorities .................................................................................................. 61 
5. Gas Coordination Group  ............................................................................................ 61 
Annex 3: Summary of the set of measures included in the options proposed ..................... 62 
Annex 4: Background information ....................................................................................... 63 
Annex 5: Possible regions for the joint risk assessments and plans ................................... 633 
Annex 6: Model for the evaluation of the revised Regulation ............................................. 63 
Annex 7: Glossary ................................................................................................................ 63 
Annex 8: Minutes of the last meeting of the Steering Group ............................................... 67 

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1.  INTRODUCTION 

Secure, sustainable, competitive and affordable energy to EU consumers is the main goal of 
the Energy Union Strategy1 adopted on 25 February 2015. Achieving this goal will require a 
fundamental transformation of Europe's energy system, based on a vision of an Energy Union 
"where Member  States see that they depend  on each  other to  deliver secure energy to  their 
citizens, based on true solidarity and trust, and of an Energy Union that speaks with one voice 
in global affairs". 

The  Energy  Union  Strategy,  built  on  five  mutually-reinforcing  and  closely  interrelated 
dimensions,  has  identified  fifteen  action  points  to  achieve  the  goal  pursued  by  the  Energy 
Union.  The  revision  of  the  Regulation  on  Gas  Security  of  Supply  (EU)  No.  994/2010 
(hereafter,  'the  Regulation')  is  one  of  the  actions  identified  and  framed  in  the  dimension  of 
"energy security, solidarity and trust". With the revision, the Energy Union pursues to make 
the EU more resilient to supply disruptions. 

The Ukraine Crisis has been yet another reminder of Europe's increasing import dependence 
on foreign supplies of natural gas. On 16 October 2014, the Commission published its Stress 
Test Communication analysing the effects of a possible partial or complete disruption of gas 
supplies  from  Russia2.  One  of  the  key  conclusions  of  the  stress  test  exercise  was  that 
increased cooperation and coordination can substantially mitigate the impacts of a disruption. 

The stress test exercise also demonstrated that security of supply risks are not the same in all 
parts of Europe. Europe's most vulnerable areas are often those that often first and foremost 
suffer from a lack of infrastructure needed to enjoy diversification of supply and to develop a 
functioning market. The extent to which the market can be relied upon to ensure security of 
supply  determines  to  a  very  large  degree  the  need  for  and  the  nature  of  security  of  supply 
measures.  In  order  to  secure  gas  supply  in  the  most  effective  and  efficient  way,  Member 
States and regions need to take account of the different level of exposure to a supply crisis and 
need to define appropriate measures both in advance and during a crisis. The current text of 
the  Regulation  leaves  room  for  such  description.  Moreover,  it  acknowledges  the  central 
importance of a functioning market as most reliable instrument in ensuring secure supplies in 
a cost-efficient manner, and consequently seeks to limit interventions to the energy market to 
what is absolutely necessary.   

As  part  of  the  stress  test  publication  a  report  on  the  implementation  of  the  Gas  Security  of 
Supply  Regulation  (EU)  No.  994/2010  was  adopted3.  The  report  demonstrated  that  the 
Regulation  has  already  produced  important  beneficial  effects  on  Europe's  gas  security  of 
supply situation, both in terms of preparation and mitigation. For instance, Member States are 
now better prepared to face a supply crisis thanks to the need to prepare plans and they are 
better protected thanks to the need to meet a determined supply and infrastructure standard. At 
the  same  time,  the  Report  also  highlighted  areas  in  which  improvements  to  the  Regulation 
could further bolster Europe's supply security, whereby it was made evident that a potential 

1  
2  
3  

http://ec.europa.eu/priorities/energy-union/index_en.htm 

http://ec.europa.eu/energy/stress_tests_en.htm  
implementation  of  Regulation  (EU)  994/2010  for  a  more  detailed  assessment. 
See  report  on 
https://ec.europa.eu/energy/sites/ener/files/documents/SWD%202014%20325%20Implementation%20of%20the%2
0Gas%20SoS%20Regulation%20en.pdf 

the 

3 

 
 
 
 
                                                 
revision of the Regulation would not mean that implementation of the existing Regulation can 
be  suspended:  the  Commission  will  continue  to  push  for  better  implementation  of  the 
provisions by assessing notified plans as well as the effects of implemented measures.  

The  Report  pointed  at  several  sections  to  be  improved  in  the  Regulation  with  a  view  to 
ensuring a more effective management of supply crises. The Report concludes 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."4  

The  revision  of  the  Regulation  should  be  seen  in  the  context  of  the  Commission's  overall 
efforts  to  ensure  open,  competitive  and  well-connected  gas  markets.  Regulation  (EU)  No 
994/2010  is  about  preventing  gas  supply  disruptions  and  mitigating  their  effects,  but 
contributing  at  the  same  time  to  a  well-functioning  and  well-connected  market.  In  fact,  the 
Regulation is complementary to other initiatives designed to improve the gas infrastructure in 
Europe and to secure a fair regulatory framework that fosters trade rather than hinders it.5 In 
terms  of  infrastructure  a  Union-wide  network  development  plan,  as  well  as  the  TEN-E 
Regulation  (EU)  No.  347/2013,  are  now  in  place,  indicating  those  pipelines,  storages  and 
LNG terminals that need to be built most urgently. And there is EU funding available within 
various  financial  instruments,  most  notably  the  Connecting  Europe  Facility.  In  terms  of 
regulatory  developments,  the  implementation  of  the  Third  Energy  Package  has  been  an 
important step towards the completion of the internal market. In this context, the Commission 
has adopted a number of network codes6 that significantly facilitate cross-border trade of gas 
with impressive results in the North-West part of the continent, where liquid hubs have started 
to appear that contribute considerably to secure supplies at a cost-effective price. In particular 
the Balancing Network Code, where implemented, enables and incentivizes market players to 
ensure security of supply on the basis of market functioning as long as possible.  

Moreover,  with  diminishing  indigenous  conventional  gas  production,  the  EU's  import 
dependency  is  expected  to  remain  at  least  stable  or  increase  over  the  next  two  decades.7 
Improving  energy  efficiency  and  the  share  of  renewable  energy  and  stimulating  demand 
response,  in  line  with  the  vision  of  the  Energy  Union  as  a  sustainable,  low-carbon  and 
climate-friendly  economy,  could  help  to  counterbalance  further  increases.  In  any  case,  the 
EU's objective is to enhance energy efficiency and diversify supplies of gas imports in order 
to reduce the dominance of suppliers in gas markets and hence the EU's overall vulnerability.  

4  
5  

6  
7  

See report on the implementation of Regulation (EU) 994/2010, page 25. 

Substantial  benefits  are  already  being  realized  from  increased  market  integration.  See:  IEM  Communication, 
October 2014, http://ec.europa.eu/energy/en/topics/markets-and-consumers/single-market-progress-report  
https://ec.europa.eu/energy/en/topics/markets-and-consumers/wholesale-market/gas-network-codes 
In 2013, indigenous EU production represented about 35% (157 bcm) of total EU gas consumption of ca. 450 bcm. 
About 290 bcm were imported through pipelines from Russia (27%), Norway (21%), and Algeria (8%) and Qatar 
(5%).  Consequently,  with  total  EU  production  expected  to  decrease  by  2030  to  about  110  bcm  per  year  (while 
conventional  gas  production  is  projected  to  diminish  from  currently  ca.  140  bcm  to  about  80  bcm  in  2030,  any 
increases  in  non-conventional  and  biogas  production  will  not  be  able  to  make  up  for  that  decline  with  expected 
contributions of respectively about 15 bcm and 13 bcm in 2030) and overall EU demand in 2030 expected to lie in 
a range between 380 and 450 bcm (in line with the different PRIMES scenarios), EU import needs are likely to be 
within  a  range  between  270  and  340  bcm  in  2030.  See  also  intermediate  scenarios  in  2015  ENTSOG's  10  year 
network development plan, http://user-30078157.cld.bz/ENTSOG-TYNDP-2015  

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A complete overhaul of the Regulation appears disproportionate and that is why this Impact 
Assessment is based on an assessment of the measures that are currently in place. Where the 
current rules are not sufficient or no longer fit for purpose, various alternative and additional 
policy options are proposed and assessed. As explained below, the assessment of the current 
measures draws heavily upon the research carried out in 2014 in the context of the review of 
Regulation  (EU)  No  994/2010,  on  the  stress  test  exercise  of  mid-2014  and  on  the  public 
consultation held in 2015. 

It should be noted, finally, that the revision of Regulation (EU) No 994/2010 will go at pair 
with other, complementary measures to enhance security of supply. The on-going revision of 
the  Commission's  Decision  on  Intergovernmental  Agreements  (IGAs)  will  ensure  full 
compliance of agreements related to the buying of energy from third countries with EU law. 
While the LNG and storage strategy notably sets out what needs to be done to improve access 
to LNG and storage, with the aim of diversifying gas sources across Europe. The cross-sector 
interaction between gas and electricity will be also taken into account, both in the revision of 
Regulation (EU) No 994/2010 and in the framework of the electricity market design reform 
currently under preparation.  

2.  PROCEDURE 

2.1. 

Identification  

(1) Lead DG: DG ENER 

(2) Associated DGs: SG, LS, DG CLIMA, DG COMP, DG GROW, DG ECFIN, DG ENV, 
DG HOME, DG NEAR, DG TRADE, EEAS, JRC, JUST, FISMA  

(3) Agenda planning/WP references: 2015/ENER/006 

2.2.  Organization and timing  

2.2.1.  Drafting process 

This Impact Assessment analyses the effects of the new measures considered to be proposed 
in the Amendment of the Regulation on Gas Security of Supply. 

Building  on  the  outcome  of  the  Report  on  the  implementation  of  the  Regulation  (EU)  No 
994/2010,  the  Public  Consultation,  the  results  of  the  Stress  Test  conducted  in  2014,  the 
directions set by the European Energy Security Strategy (EESS) as well as the key initiatives 
identified  in  the  Energy  Union  package  of  February  2015,  the  work  on  this  Impact 
Assessment started in April 2015. Key dates in the process were: 

  May 2014 
  16 October 2014 
  16 October 2014 
  2014 - 2015 
  2014 - 2015 

European Energy Security Strategy 
Stress Test communication 
Report on the implementation of Regulation 994/2010 
Gas Coordination Group meetings 
Madrid Forum 

5 

 
 
 
 
 
 
 
 
 
 
 
CEER8 report on storage related measures 

  2015 
  15 January – 8 April 2015      Public consultation 
  27 Apr 2015 
  4 May 2015 
  22 May 2015   
  18 June 2015   
  7 July 2015 
  31 July 2015 
  16 September 2015 
  9 November 2015                   5th meeting of the ISG 
  13 November 2015                 Resubmission of the Impact Assessment to the RSB 

1st meeting of the Inter-service Steering Group (ISG) 
Stakeholders meetings – Gas Coordination Group 
2nd meeting of the ISG 
3rd meeting of the ISG 
4th meeting of the ISG 

            Submission of the Impact Assessment to the RSB9 

RSB meeting date 

2.3.  Consultation and expertise 

As  described  in  section  2.2.1,  DG  ENER  repeatedly  solicited  input  to  the  review  of  the 
Regulation  from  all  segments  of  the  gas  sector  from  the  outset,  including  on  problem 
definition and specific technical elements.  

A public consultation was organized between January 15th and April 8th 2015 and produced 
106  responses  from  stakeholders.  The  non-confidential  responses  and  a  summary  document 
have been published on the Commission website.10 (See Annex 1 for further information).  

In addition to the public consultation, dedicated workshops and meetings, including as part of 
the Gas Coordination Group, were organized to consult stakeholders.  

An  inter-service  steering  group  has  also  been  established  early  in  the  process  and  has  been 
consulted regularly. 

2.4.  External expertise 

External consultants were used for different topics during the preparation of this proposal. A 
study was conducted on potential measures in the area of underground gas storages and their 
impact11, as well as input from JRC in order to support with analyses contained in this Impact 
Assessment. A further study comparing approaches to increase the EU's bargaining power in 
natural  gas  markets12  has  also  served  as  input  for  specific  policy  options  related  to  how  to 
meet the supply standard (common purchasing schemes). This Impact Assessment makes use 
of and points to the conclusions drawn from these reports.  

8  
9  
10    

11  

12  

Council of European Energy Regulators (CEER) 
Regulatory Scrutiny Board (RSB) 
https://ec.europa.eu/energy/en/consultations/consultation-revision-regulation-eu-no-9942010-concerning-measures-
safeguard-security  

Study  on  the  role  of  gas  storage  in  internal  market  and  in  ensuring  security  of  supply,  prepared  by  REF4E, 
Mercados,  E-Bridge 
https://ec.europa.eu/energy/sites/ener/files/documents/REPORT-
Gas%20Storage-20150728.pdf 
"Economic analysis of costs and benefits of different approaches to enhancing the bargaining power of EU buyers 
in the wholesale markets of natural gas" 

for  DG  Energy. 

6 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.  PROBLEM DESCRIPTION 

3.1.  Nature and extent of the problem 

In  the  current  geo-political  context,  such  as  the  situation  in  Ukraine,  the  EU  gas  system 
remains vulnerable to external shocks. In December 2009 gas supplies through Ukraine were 
disrupted  for  15  days.13  As  a  result  of,  among  others,  the  adoption  and  implementation  of 
Regulation  (EU)  No  994/2010,  the  level  of  preparation  of  the  EU  has  been  improved,  but 
there are still serious reasons for concern.  

The  stress  test  exercise  showed  that  a  severe  disruption  of  gas  supplies  from  the  east  (i.e. 
Russia) would still have large impacts across the whole EU. Some areas, notably in the East 
of Europe, would still suffer now severe economic and social impacts as a result of missing 
volumes  of  gas.  Already  in  2009  the  estimated  loss  in  GDP  of  Bulgaria  reached  9%14  as  a 
result of the gas crisis and the stress tests exercise showed that missing gas volumes could put 
at stake more than 80% of the gas consumption of some Member States.  

Map 1: Most likely supply disruption in February after a 6-month Russian gas disruption scenario. 

Share of 
disrupted demand 

<10% 

10-20% 

20-60% 

60-80% 

80-100% 

Source: ENTSOG. 

Western  Member  States  would  also  feel  the  impact  of  such  disruptions  in  the  form  of 
increased  gas  prices  as  a  result  of  gas  scarcity  in  the  East.  For  example,  during  the  gas 
disruption in 2009, wholesale gas prices in the UK were affected. The UK authorities estimate 
that  if  the  supply  cut-off  had  been  prolonged,  further  price  increases  would  have  been 
expected15.  Furthermore,  during  the  cold  spell  of  2012  wholesale  day-ahead  gas  prices 
increased by more than 50% on the European hubs compared to levels registered before the 
cold  weather.  Notably  in  Italy  prices  reached  65€/MWh  from  38€/MWh,  while  in  UK, 
Germany and Austria prices kept aligned and reached 38€/MWh from levels of 23€/MWh16. 

13  

14  
15  
16  

European  Commission,  The  January  2009  Gas  Supply  Disruption  to  the  EU:  An  assessment,  SEC(2009)  977 
http://ec.europa.eu/danmark/documents/alle_emner/energi/2009_ser2_autre_document_travail_service_part1_ver2.
pdf 
Christie, E. H. et al: Vulnerability and Bargaining Power in EU-Russia Gas Relations. 
UK's Risk Assessment from 2012 
Source: European Commission 

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The current situation is the result of a number of problems of different nature and magnitude, 
including behavioural biases, external factors and technical issues: 

- Behavioural biases (purely national approaches to security of supply) 

The  first  and  most  significant  problem  is  related  to  behavioural  biases,  i.e.  the  fact  that 
Member  States  only  think  national  when  designing  their  security  of  supply  policies. 
Behavioural  biases  are  widespread  across  Member  States  and  therefore  lead  to  significant 
negative effects overall.  

The  approach  applied  by  Member  States  in  the  design  of  their  security  of  supply  policy 
remains  almost  purely  national,  as  evidenced  by  the  stress  tests  and  the  Commission's 
assessment17  of  the  Preventive  Action  Plans  and  Emergency  Plans  prepared  by  Member 
States.  The assessment  of  the  second  cycle  of  Plans  confirms  this  trend,  which  was  already 
observed in the first cycle prepared in 2012.  

National approaches lead to sub-optimal measures, in particular for the compliance with the 
supply  standard,18and  make  the  impacts  of  crises  more  acute  than  they  could  be.  The  stress 
test  exercise  has  shown  how  a  cooperative  approach  among  Member  States  would 
significantly dampen the impacts of  very severe disruption  scenarios in the  most  vulnerable 
Member States.  

Maps  2  and  3:  Likely  supply  interruptions  –  before  further  national  measures  –  in  February  at  the  end  of  a  6-month 
Russian gas supply disruption scenario in cooperative and non-cooperative scenarios during a cold spell. 

Cooperative Scenario 

Non-cooperative scenario 

Source: ENTSOG.  

Purely national approaches are not very effective in case of a severe disruption, given their, by 
definition,  reduced  scope.  This  is  particularly  problematic  for  Member  States  with  specific 
historic  dependence  backgrounds  and/or  particular  geographical  positions  and  without 
diversified and fully functioning markets. Moreover, their situation can be further exacerbated 
as  a  result  of  national  over-protective  measures  in  other  Member  States  that  reduce  the 
liquidity of the markets (i.e. by hoarding certain gas volumes) and consequently the ability of 

17  
18  

https://ec.europa.eu/energy/sites/ener/files/documents/opinions_SoS%20Plans.pdf 

The supply standard refers to the obligation on gas undertakings to ensure the  gas supply to certain categories of 
consumers even under demanding conditions such as severe winter conditions or supply disruptions. See Annex 2 
for further details.  

8 

 
 
  
 
 
 
 
 
 
 
 
 
                                                 
shippers  to  deliver  gas  to  those  vulnerable  Member  States  where  it  is  most  needed.  The 
negative  spill-over  effects  of  such  over  protective  measures,  particularly  when  they  are  not 
fully transparent, also affect Member States in well-connected and fully-functioning markets, 
although to a lesser extent.19Another weakness of purely national approaches is the fact that 
the  impacts  of  simultaneous  emergencies  in  neighbouring  Member  States  are  hardly  ever 
factored in, which may likely make envisaged measures inadequate in practice. 

Synergies  also  tend  to  be  overlooked  or  disregarded  by  purely  national  approaches. 
Consequently, the use  of existing and/or  envisaged resources  can  be sub-optimal (e.g. cross 
border use of storages, LNG terminals) and result in higher costs. In line with this, industry 
expressed  concerns  during  the  public  consultation  process  about  the  costs  associated  with 
security of supply measures and overall advocated for increased transparency and justification 
of new measures, in particular regarding the supply obligations20. Costly measures can have a 
negative  impact  in  gas  prices  for  European  households  as  well  as  the  industry,  whose 
international competitiveness may thus be negatively affected. It must be borne in mind that 
wholesale gas prices in Europe are still more than twice as high as in the US21. 

The reasons behind these national approaches can be several and of diverging nature. Some 
Member  States  underestimate  risks  of  supply  disruptions,  for  example  due  to  historic 
relationships with main suppliers, and therefore they focus on national measures even though 
their  scope and  effectiveness  is  necessarily  limited.  Such  underestimations  can  have  serious 
consequences in case of an emergency. Moreover, they nourish mistrust from other Member 
States,  who  will  be  inclined  to  concentrate  on  their  own  policies  for  fear  that  others  might 
free-ride  on  their  efforts.  Mistrust  is  also  fuelled  by  Member  States'  fears  that  actions  that 
other Member States may undertake in the case of an emergency could negatively affect their 
security of supply.  

As a result of these behavioural biases, Member States are less likely to cooperate in a spirit 
of  solidarity  with  other  more  vulnerable  Member  States.  Solidarity  is  however  needed  to 
ensure  security  of  supply  across  Europe  and  to  keep  overall  costs  at  a  minimum,  as 
demonstrated by ENTSOG in the context of the Stress Test Exercise. Effects will be spread 
out more evenly and the overall negative effects of a severe disruption would be smaller. 

- External factors (notably the behaviour of third country suppliers)  

The second largest problem stems from the fact that external risks are not properly factored in 
the  design  of  security  of  supply  policies,  given  that  the  relevant  information  is  not  always 
available.  Under  the  current  Regulation,  Member  States  (and  the  Commission)  have  only 
access to some, limited, commercial information out of emergency situations. This makes it 
difficult for them to assess the nature and extent of some very important risks.  

This  type  of  problems  is  more  acute  in  Member  States  with  less  developed  and  less 
competitive  markets.  Those  markets  are  exposed  to  additional  security  of  supply  risks 

19  

20  
21  

According  to  the  "Gas  Security  of  supply  Report"  prepared  by  Ofgem  in  November  2012  the  uncertainty  in  the 
honouring of Public Service Obligations by market participants or surprise interventions by Governments without 
warning  can  make  the  market  struggle  to  manage  these  risks  effectively.  This  increases  the  uncertainty  around 
whether gas would flow from continental Europe in response to price signals from a gas emergency in GB. 
See for example the replies of EFET, IOGP, Eurogas, Eurelectric to the public consultation. 
Calculations of DG Energy based on Platts markets reports and IEA data for first half of 2014. 

9 

 
 
 
 
 
 
 
 
                                                 
stemming from large contracts, mainly in the hands of only a few gas companies, with third 
country suppliers. Preparations ahead of and for a crisis  in such Member States may not  be 
optimal  due  to  the  existence  of  clauses  in  contracts  that  can  jeopardize  the  reaction  by 
European shippers or the Member State. Further to the external risks, market players active on 
less developed gas markets claim that lack of transparency on long-term gas prices of other 
bilateral contracts puts them in a difficult position in price negotiations with an up-stream gas 
producer. 

Overall, situations of potential supply tightness, e.g. a modification of gas supply patterns to a 
given buyer or buyers in a Member State beyond what would be expected under the normal 
functioning  of  the  market,  cannot  be  fully  assessed  in  advance  due  to  the  limited  access  to 
information provided for in the Regulation22. The lack of information prevents early reaction 
by market players and public bodies, if needed. As an example, due to a lack of information, it 
was not possible to fully assess the  observed deviations in gas flows to a certain number of 
European shippers during the autumn/winter 2014/2015, nor their potential implications. The 
deviations at issue forced some Member States to resort to storage withdrawals at an unusual 
period  of  the  year,  which  could  have  had  negative  consequences  towards  the  end  of  the 
heating season if the winter  had been more severe. Many  Member States  explained that the 
lack of a legal basis to require certain information ahead of a crisis hampered their ability to 
access  to  information  that  would  otherwise  improve  their  assessment  of  the  magnitude  of 
potential threats. 

- Technical issues (infrastructure not sufficiently available or not sufficiently protected) 

The third type of problems in terms of its magnitude and impact is related to infrastructures. 
Physical connection between production and consumption areas is a prerequisite for satisfying 
demand. 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. Thanks to the implementation of the Security of Supply Regulation, 
the  situation  has  improved  but  it  is  still  not  optimal.  The  stress  test  exercise  demonstrated 
clearly that in a crisis situation when the EU is cut off from its Eastern supply route, countries 
in Central and Eastern Europe start to draw on gas from western markets. In such scenario, 
missing reverse flow capabilities on some major interconnection points are limiting factors. It 
was  concluded  that  the  EU  misses  out  on  the  potential  for  Eastern  Europe  to  tap  into  LNG 
sources available in Western Europe and on the full access to Norwegian deliveries.   

One reason for such missing capacities, despite the obligation contained in the Regulation, is 
the  fact  that  decisions  to  build  capacity  or  to  agree  on  an  exemption  from  the  obligation  to 
build  such  reverse  flow  capacity  are  taken  by  the  two  Member  States  at  both  sides  of  the 
interconnection23 point and it does not necessarily take into account the potential benefits of 
building the infrastructure for other Member States along the whole supply corridor.  

22  

23  

See report on the implementation of Regulation (EU) 994/2010 for a more detailed assessment. 
https://ec.europa.eu/energy/sites/ener/files/documents/SWD%202014%20325%20Implementation%20of%20the%2
0Gas%20SoS%20Regulation%20en.pdf 
The capacity for the Commission to intervene in such decisions is limited to the cases where there is a discrepancy 
between the Member States concerned, irrespective of the benefits for other Member States or the accuracy of the 
assessment carried out by the concerned Member States. 

10 

 
 
 
 
 
 
                                                 
Moreover, from a pure capacity point of view, a Member State's ability to react in case of an 
emergency  or  to  prevent  its  occurrence  cannot  be  considered  fully  satisfactory  yet.  The 
introduction of the N-1 standard24 was a very positive first step in the aftermath of the 2009 
crisis. It obliges Member States to have a certain capacity margin in their gas systems to face 
the  situation  of  failure  of  their  largest  infrastructure.  However,  the  N-1  standard  does  not 
capture other aspects of security of supply such as the benefits of infrastructure variety or the 
identification  of  missing  infrastructures  (such  as  internal  bottlenecks).  Consequently  those 
aspects are hardly ever addressed as part of the Risk Assessments prepared by Member States 
and,  more  importantly,  improvements  in  the  networks  are  not  undertaken  as  part  of  the 
preventive  measures.  A  number  of  replies  to  the  public  consultation25,  from  both  Member 
States  and  industry,  confirm  such  problem  as  they  ask  to  specifically  address  with  this 
standard other elements, such as for example other infrastructures that due to their utilisation 
rate can be more critical.   

Finally,  Member  States  currently  take  a  rather  narrow  approach  when  considering  risks 
affecting their infrastructures. They tend to focus on physical aspects only, whilst overlooking 
'newer'  types  of  risks  such  as  risks  relating  to  cybersecurity  or  risks  relating  to  a  change  of 
ownership.  The  Energy  Security  Strategy  identified  a  need  to  better  protect  key  energy 
infrastructure  against  the  risk  of  a  take-over  by  a  foreign  entity,  which  aim  at  penetrating 
European  markets  or  hampering  diversification  rather  than  developing  an  integrated  EU 
network  or  infrastructure.  Experience  with  recent  take-overs  (and  planned  take-overs)  of 
strategic energy assets in Europe shows that the risks are serious, notably where the buyer is 
controlled by a third country, which may exercise political influence on the owner/operator of 
the  infrastructure  and  require  the  latter  not  to  respect  EU  law  or  to  take  decisions  that  go 
against the strategic interests of the countries or regions concerned.  

- Limited scope of application of the current Regulation  

Another external risk is the lack of proper involvement of the Energy Community Contracting 
Parties  in  the  EU  security  of  supply  policy.  This  is  particularly  important  as  relations  with 
Ukraine and Balkan countries i.e. Contracting Parties of the Energy Community, are vital for 
the gas supply. Ukraine is the major transit country for the EU and the EU is the sole transit 
geographical area for Balkan countries. The EU has a vital interest in expanding the common 
regulatory space between the EU and the Energy Community Contracting Parties by creating 
a functioning regulatory framework in the field of security of supply. Not only would such a 
common approach help to ensure that principles of the internal energy market are exploited to 
the fullest in times of a supply crisis, but it would also allow for a better risk assessment and 
more efficient crisis management at the EU level. 

3.2.  What has been done so far with the implementation of Regulation (EU) No 

994/2010? 

Since  Regulation  994/2010  ("the  Regulation")  entered  into  force,  the  Commission  has 
facilitated  its  implementation  with  a  number  of  concrete  measures,  in  particular,  with  the 
publication  of  guidelines  for  conducting  the  risk  assessment  and  good  practices  for  the 
preparation  of  the  preventive  action  plans  and  emergency  plans  prepared  by  the  Joint 

24  
25  

See Annex 2 for a detailed description of the mechanism and provisions in place under the current Regulation 
Such as FNB Gas and CEER. 

11 

 
 
 
 
                                                 
Research  Centre  (JRC)26.    In  the  regular  meetings  of  the  Gas  Coordination  Group  (around 
four  per  year)  discussions  have  been  held  since  the  adoption  of  the  Regulation  between  the 
Commission,  Member  States  and 
the 
implementation  of  this  Regulation  as  well  as  best  practices  that  could  be  wide  spread.  In 
addition,  several  workshops27  were  organized  with  the  aim  to  assist  Member  States  in  the 
implementation.  The  regional  cooperation  in  the  most  vulnerable  regions  has  also  been 
enhanced with the preparation by the JRC of a joint risk assessment for the South-East region 
(Romania, Bulgaria and Greece).  

the  major  challenges 

industry  regarding 

in 

Some  of  the  deadlines  contained  in  the  Regulation  were  not  respected  by  a  number  of 
Member  States,  notably  with  regard  to  the  submission  of  their  Preventive  Action  Plans  and 
Emergency  Plans  in  2012  as  well  as  their  updates  in  2014  and  to  the  decisions  on  reverse 
flows. The Commission engaged in a close discussion with those Member States who had not 
complied with the deadlines and adopted, where appropriate, the necessary means to enforce 
the Regulation28.  

The Commission has assessed29 the Preventive Action Plans and Emergency Plans prepared 
by the Competent Authorities of the Member States and has presented its assessment, for its 
discussion, to the Gas Coordination Group30. Following this discussion, the Commission has 
adopted a set of opinions on the Plans reflecting its assessments and asking Member States, 
where appropriate, to amend their Plans in order to fully comply with the obligations of the 
Regulation. After the adoption of the opinions, the Commission has in many cases engaged in 
a fruitful discussion with Member States to assess and advice on possible options to amend 
the Plans. 

Additionally,  in  2014,  and  in  light  with  the  obligations  contained  in  the  Regulation31,  the 
Commission prepared a report32 assessing the implementation of the Regulation and possible 
means to enhance the security. The report assesses in detail the numerous tools contained in 
the  Regulation  focussing  on  how  they  have  been  implemented  by  Member  States  and  their 
performance, i.e. how each of them has contributed to enhancing the security of supply of the 

26  

27  

28  

29  

30  

31  
32 

Support  material  for  the  implementation  of  Regulation  994/2010  is  available  on  the  Commission's  website: 
http://ec.europa.eu/energy/en/topics/imports-and-secure-supplies/secure-gas-supplies 
With the aim to assist Member States in the preparation of the risk assessment and Plans and in the implementation 
of  other  relevant  provisions  of  Regulation  994/2010,  the  Commission  organized  several  workshops  since  the 
Regulation entered into force: in 2011 (9 November, 30 May), 2012 (19 April, 10 October) and 2013 (18 March). 
ENTSO-G, the Energy Community and ACER were also invited. 

In  total  there  have  been  30  instances  between  2012  and  2015  where  the  Commission  engaged  in  a  structured 
dialogue  with  the  Member  States  in  order  to  discuss  the  failure  to  comply  with  various  obligations  under  the 
Regulation  (e.g.  reverse  flow,  plans,  definition  of  protected  customers).  While  in  the  majority  of  the  cases  this 
structured dialogue  has led to compliance with the Regulation, so far in two cases formal infringement procedures, 
have been started, one of which is still ongoing. 
In accordance with Article 4(6)(b)(i) to (iii) of the Regulation. The Commission has already issued 23 opinions (1 
opinion per Member State for both plans and 1 opinion for the joint Preventive Action Plan for UK and Ireland) 
and  4  more  are  under  preparation,  following  the  notification  by  the  respective  Member  State.  The  opinions  are 
published in the Commission's website:  
https://ec.europa.eu/energy/sites/ener/files/documents/opinions_SoS%20Plans.pdf 

For  the  second  cycle  of  Plans  (submitted  in  December  2014  and  afterwards),  the  Commission  presented  its 
assessment of the Plans in the meetings of the Gas Coordination Group of 28 January, 4 May and 22 September 
2015. 
Article 14 of Regulation (EU) No 994/2010. 

https://ec.europa.eu/energy/sites/ener/files/documents/SWD%202014%20325%20Implementation%20of%20the%2
0Gas%20SoS%20Regulation%20en.pdf 

12 

 
 
                                                 
EU  and  its  preparedness.  The  implementation  report  evidenced  that  the  Regulation  has 
already  delivered  important  benefits  on  Europe's  gas  security  of  supply  situation,  both  in 
terms of preparation and mitigation. Member States are now better prepared to face a supply 
crisis  thanks  to  a  number  of  measures  introduced  following  the  Regulation.  First  of  all,  all 
Member States have now prepared and even updated a full assessment of risks affecting their 
security  of  supply.  Such  assessments  have  been  the  basis  upon  which  to  prepare  and  put  in 
place  Preventive  Action  Plans  and  Emergency  Plans.  These  Plans  constitute  already  a  very 
significant  improvement  compared  to  the  situation  in  2009,  where  the  crisis  revealed  that  a 
number of Member States did not have contingency plans to apply for this type of scenarios33. 
Furthermore,  Member  States  must  now  comply  with  standards  aimed  at  ensuring  the 
flexibility  of  their  gas  system  (in  the  event  of  failure  of  the  largest  infrastructure,  N-1 
standard) and the availability of gas even under demanding situations, such as a gas disruption 
or a significant increase in demand. 

The  Regulation  has  also  established  a  clear  system  of  responsibilities  via  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. 
Moreover,  Member  States  have  all  appointed  a  single  authority  responsible  for  the 
implementation  of  the  Regulation,  which  ensures  consistency  and  facilitates  the  necessary 
contacts between Member States.  

Finally, the Regulation has also contributed to a much more thorough discussion on security 
of  supply  measures  involving  not  only  Member  States  and  the  Commission,  but  also 
representatives from natural gas undertakings and gas consumers in Europe through the Gas 
Coordination Group.  

Overall, the Regulation has been instrumental in putting in place the basic building blocks of 
gas security of supply at national level and thus improving the resilience of Member States in 
case of a gas crisis. Nevertheless, and despite the efforts, a conscious cross-border approach to 
security of supply does not yet exist.. Furthermore, the implementation of the Regulation has 
evidenced a number of practical issues that were not foreseen initially but which hamper the 
cooperation process (e.g. language regime, heterogeneity of Plans). It seems clear at this stage 
that the design of the current Regulation has overall proven useful but it remains insufficient 
so that further improvements should be pursued. 

3.3.  Baseline scenario 

In  the  absence  of  any  action,  the  problems  identified  in  the  previous  section,  related  to 
behavioural  biases,  the  fact  that  external  elements  are  not  properly  factored  in,  and  the  fact 
that infrastructure is not sufficiently available or protected, will remain. This will continue to 
limit the scope for strengthening the EU's preparedness and capacity to respond effectively to 
a gas supply crisis. 

33  

European Commission, The January 2009 Gas Supply Disruption to the EU: An assessment, SEC(2009) 977 
http://ec.europa.eu/danmark/documents/alle_emner/energi/2009_ser2_autre_document_travail_service_part1_ver2.
pdf 

13 

 
 
 
 
                                                 
First of all, the preparation of the risk assessments, preventive action plans and emergency 
plans  will  continue  to  be  largely  national  and  uncoordinated.  The  implementation  has 
shown that they had very different focuses and paid little attention to common or coordinated 
scenarios  and  actions  in  the  case  of  a  supply  disruption  and  the  cross-border  impact  of 
national measures were not taken into account to the necessary extent.  

The current Regulation also foresees the possibility to adopt a regional approach and prepare 
regional  Plans  (on  a  voluntary  basis).  However,  this  possibility  has  been  hardly  used  until 
now  and  it  is  unlikely  that  the  existing  Regulation  in  its  current  form  would  trigger  further 
initiatives. At present regional Plans have only been prepared where they were necessary to 
comply with other provisions of the Regulation, i.e. the joint Preventive Action Plan prepared 
by  the  UK  and  Ireland,  which  was  mandatory  for  Ireland  in  order  to  comply  with  the  N-1 
standard  (at  regional  level).  The  Baltic  States  adopted  a  joint  Risk  Assessment  in  2012  and 
have since then worked, together with Finland, on the preparation of a Joint Preventive Action 
Plan  and  Joint  Emergency  Plan  within  that  region,  within  the  context  of  the  BEMIP  HL 
group. However, these plans are still unfinished. 

The  experience  gained  in  the  implementation  of  the  existing  Regulation  has  proven  that 
administrative issues, although in principle minor, can also play a relevant role and stand in 
the  way  of  proper  cooperation.  In  addition  to  the  difficult  comparability  of  Plans,  missing 
translation  rules  and  different  timings  in  the  submission  of  national  plans  will  continue  to 
make the exchange of plans with neighbours difficult in practice and will often lead to a very 
rudimentary consultation and merely to "tick the box".  

Additionally,  the  freedom  to  implement  certain  measures  (e.g.  supply  standard  and 
definition of protected customers) will likely continue as a patchwork of different groups of 
protected  customers,  rules  and  monitoring  systems  among  the  Member  States.  Indeed,  the 
group  identified  as  protected  customers  largely  differs  among  Member  States  and  some 
Member  States  go  also  beyond  the  limits  set  out  in  the  Regulation  by  including  other 
consumers  alleging  technical  reasons  (e.g.  impossibility  to  cut  gas  supply  to  non-protected 
customers  when  they  are  in  the  same  distribution  network).  Even  though  differences  in 
approaches can often be justified given the widely diverging situation of the gas market in the 
various  Member  States,  they  can  also  be  counterproductive  when  it  comes  to  cross-border 
solidarity measures. As an example, the larger is the group of protected customers more gas is 
needed  to  ensure  the  supply  standard  and  therefore  less  gas  would  be  available  to  help 
neighbouring countries in case needed.  

In  recent  years  important  efforts  have  been  taken  to  ensure  that  sufficient  infrastructure  is 
available34. Yet if no further action is taken under the Regulation, further improvements are 
unlikely. Whilst a majority of the stakeholders in the public consultation highlighted that the 
N-1 is a good indicator for "minimal level of infrastructure" in the event of a technical failure, 
they also pointed out there is scope for improvement underlining as main limitations of the N-
1 the fact that: 1) it only takes infrastructure into account, no gas volumes; 2) it could give a 
false impression of security of supply if not combined with other indicators such as the daily 
withdrawal rates from storages under various filling scenarios.  

34  

Thanks to the implementation of the Regulation (EU) No 994/2010 the number of interconnection points bi-
directional have almost duplicated between 2009-2014 (from 12 to 21). 

14 

 
 
 
 
 
 
                                                 
Regarding the reverse flow obligation, a number of major interconnection points are still not 
equipped  with  bi-directional  capacity  (32  interconnections  are  still  unidirectional)  and  this 
situation will not necessarily change under the existing decision's regime already mentioned 
in  the previous section. The TEN-E Regulation clearly contributes to the implementation of 
the reverse flow projects thanks to e.g., streamlined procedures, cross border coordination and 
guidance  for  cross-border  cost  allocation.  These  improvements  could  facilitate  enabling 
reverse  flow  capacity  in  existing  or  new  pipelines.  However,  this  is  not  sufficient  to  ensure 
that  Member  States  carry  out  on  a  regular  basis  feasibility  assessments  for  enabling  or 
increasing  bi-directional  capacity  in  line  with  the  results  of  the  risk  assessment.  For  new 
pipelines, the lack of obligation to assess the feasibility of bidirectional capacity in the very 
early stage of the project is a clear shortcoming, which is not addressed through the TEN-E 
Regulation.   

Table 1: Interconnection with bidirectional flow capability 

Number 
of 
interconnection points in the EU 

cross-border 

Number 
interconnection points 

of 

Number 
interconnection points 

of 

bi-directional 

unidirectional 

2009 

49 

12 

37 

2014 

53 

21 

32 

Source: Report on the implementation of Regulation (EU) 994/2010 [SWD (2014) 325 final, 16.10.2014)] 

Regarding  information  exchange,  implementation  has  shown  that  the  high  level  of 
aggregation  of  data  on  the  gas  supply  contracts  with  third  countries  makes  it  impossible  to 
conduct a proper security of supply assessment at EU level, as required under Article 13 of 
the  Regulation.  In  the  absence  of  further  action,  it  is  very  unlikely  that  a  better  access  to 
information  will  be  granted,  as  evidenced  during  the  autumn/winter  2014/2015  mentioned 
earlier.  

With regard to the Energy Community, there is no commitment yet to the implementation of 
the  Regulation  and  so  far  an  outdated  security  of  supply  Directive  (2004/67/EC)  has  been 
transposed. Moreover, if the Regulation were to be implemented in the Energy Community, a 
parallel  legal  regime  for  its  implementation  would  be  created  under  the  current  practice  of 
implementation of the EU energy acquis into the Energy Community legal order. As such, the 
obligations  would  apply  only  between  the  Contracting  Parties  and  not  between  the  EU 
Member States and the Contracting Parties, which would lack the necessary involvement of 
the Energy Community Contracting Parties in the EU security of supply policy. 

As  regards  risks  relating  to  foreign  take-overs  of  strategic  energy  assets,  it  should  be  noted 
that current EU law does not offer the tools necessary for tackling these problems. Article 11 
of the Electricity and Gas Directives requires National Regulatory Authorities (NRA) to make 
certification of a transmission system operator (TSO) acquisition by non-EU entity dependent 
on proof that the foreign owner complies with the unbundling rules and that 'the security of 
energy supply of the Member State and the Community' is not at risk. Before certifying, the 
NRA must seek an ex-ante assessment of the Commission, which is however not binding and 

15 

 
 
 
not always followed in practice either (e.g. DESFA case)35. In addition, the assessment under 
Article  11  applies  only  to  TSOs,  i.e.  it  does  not  cover  all  security  of  supply  relevant 
infrastructures  (e.g.  storage  or  LNG  terminals).  The  Commission  has  strong  investigative 
powers to screen merger and acquisitions with EU relevance in merger procedure, in which it 
also  takes  binding  decisions.  However,  the  objective  of  merger  control  is  to  prevent 
distortions of competition related to concentration of the market, and does not aim to address 
issues related to security of supply as such.  

At the national level, the situation is very diverse. Whilst some Member States exercise hardly 
any form of control, an increasing number of Member States36 have put in place or are putting 
in place measures to subject foreign investments to screenings, or to limit the participation by 
foreign  entities  in  the  capital  of  companies.  This  shows  that  foreign  ownership  of  strategic 
infrastructure, notably in the energy sector, is of increasing concern to Member States.   

Given  that  national  approaches  are  very  different  in  nature,  there  is  a  risk  that  in  some 
Member  States  foreign  ownership  risks  are  taken  too  lightly,  whilst  other  Member  States 
might 'over-react'. 

In  conclusion,  the  experience  gained  in  the  implementation  of  the  Regulation  shows  that, 
despite the important achievements, its design has proven insufficient to overcome a number 
of  problems.  Efforts  undertaken  by  Member  States  in  this  area  are  strictly  limited  to  the 
explicit  obligations  contained  in  the  Regulation.  Consultation  among  Member  States  has 
resulted in many cases in a "tick-in-the box" exercise rather than a thorough reflection process 
where issues such as the different perceptions of risks, mistrust and free-riding concerns (see 
section 3.1) could have been addressed. Additionally, existing tools have proven insufficient 
to  properly  factor  in  external  risks.  Therefore,  in  the  absence  of  any  action,  the  identified 
problems will remain damaging the EU's ability to efficiently prevent and react in case of a 
gas emergency. 

3.4.  Subsidiarity  

While the revision of the Regulation has been inspired primarily by the existence of a number 
of problems of different nature, behavioural biases are the most significant affecting the vast 
majority of Member States. Against this background, the necessity of EU action is based on 
the evidence that national approaches not only lead to sub-optimal measures, they make also 
the impacts of a crisis more acute. Additionally, the risk of a major disruption of gas supplies 
to the EU is not confined to national boundaries and could directly or indirectly affect several 
Member  States.  Therefore,  national  actions  in  terms  of  preparedness  and  mitigation  cannot 
only be defined nationally, given the potential impact on the level of security of supply of a 
neighbouring Member State and/or on the availability of measures to tackle scarcity situation. 

The  increasing  interconnection  of  the  EU  gas  markets  and  the  "corridor  approach"  in  gas 
supply  framed  in  the  Energy  Union  strategy,  require  a  coordination  of  measures.  In  the 
absence of such coordination, security of supply measures implemented at national level are 

35  

36  

Commission  opinion  C(2014)  7734  final  of  17  October  2014  correcting  Opinion  C(2014)  5483  final  of  28  July 
2014  pursuant  to  Article  3(1)  of  Regulation  (EC)  No  715/2009  and  Article  10(6)  and  11(6)  of  Directive 
2009/73/EC - Greece - Certification of DESFA,  
https://ec.europa.eu/energy/sites/ener/files/documents/2014_101_gr_en.pdf 
Austria, Denmark, Finland, France, Germany, Italy Lithuania, Poland, Portugal, Slovenia, Spain, UK. 

16 

 
 
 
 
 
                                                 
likely to jeopardize other Member States or the security of supply at EU level. Situations like 
the  cold  spell  of  2012  and  the  stress  test  of  2014  showed  that  coordination  of  action  and 
solidarity are of vital importance. An action in one country can provoke a shortage and risks 
of blackouts in neighbouring countries (e.g. electricity export limitations imposed by Bulgaria 
in  February  2012  had  an  impact  on  the  electricity  and  gas  sectors  in  Greece).  By  contrary, 
coordination may offer a wider range of solutions (e.g. swaps to deal with congestions).  

So far, the potential for more efficient and less costly measures thanks to regional cooperation 
has not being fully exploited, which is detrimental to EU consumers. While the stress test has 
shown  that  functioning  markets  are  key  to  secure  gas  supplies,  it  has  also  shown  that  well-
coordinated actions by Member States, in particular in case of an emergency, can significantly 
increase  supply  security.  This  concerns  not  only  better  coordination  of  national  mitigation 
actions in case of an emergency, but also of national preventive measures, such as proposals 
for  better  coordination  of  national  storage  or  LNG  policies,  which  can  be  of  strategic 
importance in certain regions. The cooperation should be also extended to specific measures 
to foster solidarity between Member States in security of supply matters.  

However, the regional approach to security of supply also requires paying special attention to 
the  divergences  that  could  appear  between  regions.  The  creation  of  regions  with  different 
levels of security of supply could seriously hamper the internal market and the benefits that 
the cooperation can bring. Such coordinated approach requires action at the EU level. 

Action  at  EU  level  could  be  also  needed  under  certain  situations  (e.g.  Union  and  regional 
emergency)  where  the  security  of  supply  in  the  EU,  cannot  be  sufficiently  achieved  by  the 
Member  States  alone  and  can  therefore,  by  reason  of  the  scale  or  efforts  of  the  action,  be 
better achieved at Union level. 

The EU action is framed under Article 194 of Treaty of the Functioning of the Energy Union 
(TFEU) which recognizes that certain level of coordination, transparency and cooperation of 
the  EU  Member  States'  policies  on  security  of  supply  is  necessary  in  order  to  ensure  the 
functioning of the energy market and the security of supply in the Union. 

4.  OBJECTIVES  

4.1.  General objectives 

As one of the 15 actions of the Energy Union, the revision of the Regulation aims at making 
the EU more resilient with the ultimate goal to give EU consumers –households and business- 
secure, sustainable, competitive and affordable energy.  

The revision of the Regulation aims at achieving an adequate level of preparedness in Europe 
to gas supply disruptions and to mitigate any effect which should occur, at the least possible 
cost for the EU consumers.  

The  general  objectives  pursued  by  the  revision  of  the  Regulation  are  in  line  with  the  EU 
Treaty goal to ensure security of energy supply in the Union (Article 194(1)(b) TFEU). The 
measures  proposed  also  ensure  the  proper  and  continues  functioning  of  the  internal  market 
and  well  interconnected  energy  markets,  in  line  with  the  EU  Treaty  goals  to  establish  a 
functioning  internal  market  in  gas,  in  the  spirit  of  solidarity  between  the  Member  States 

17 

 
 
 
 
 
 
 
(Article  3(3)  TEU;  Article  194(1)  TFEU)  and  to  promote  the  interconnection  of  energy 
networks (Article 194 (1)(d) TFEU). 

4.2.  Specific objectives 

The revision of the Regulation pursues four specific objectives: 

(1) Enhanced regional cooperation 

A  regional  approach  in  the  assessment  of  risks  and  in  the  definition  and  adoption  of 
preventive and mitigation measures could provide for a coordination of efforts that will bring 
significant  benefits  in  terms  of  the  effectiveness  of  measures  and  optimisation  of  resources. 
This  is  particularly  relevant  for  those  measures  aimed  at  ensuring  the  supply,  under  very 
demanding  conditions,  of  the  categories  of  consumers  considered  protected  (e.g.  the  supply 
standard).  As  result  of  this,  Member  States  could  be  better  prepared  ahead  of  a  crisis  (e.g. 
more  accurate  assessment  of  correlated  risks)  and  delay  the  resort  to  emergency  measures. 
Moreover, even if an emergency were declared, a coordinated approach to security of supply 
would  ensure  a  consistent  response  in  the  event  of  a  crisis.  This  could  reduce  the  potential 
negative  spill  over  effects  of  purely  national  measures  in  neighbouring  Member  States. 
Overall,  exploiting  synergies  could  lead  to  a  more  cost-effective  solutions  resulting  in  an 
increased  security  of  supply  with  a  less  cost  for  consumers  and  minimizing  any  negative 
impact. 

(2) Improved assessment and consideration of external factors 

More accurate assessments of the external aspects in the design of security of supply policies 
will be achieved, mainly, through improvements on information exchange ahead and during a 
crisis and the scrutiny of the gas supply contracts with third countries. 

(3) Improved infrastructure standard obligations 

Improved N-1 and reverse flow obligations could ensure more robust and resilient gas system 
and  flexible  EU  network,  which  is  a  pre-condition  to  ensure  that  gas  flow  where  it  is  most 
needed  without  physical  restrictions,  enhancing  the  security  of  supply  at  national,  regional 
and EU level.   

(4) Enlargement of the geographic scope  

The  enlargement  of  the  regulatory  framework  to  the  Contracting  Parties  in  the  Energy 
Community will allow for a better level of preparedness and more efficient crisis management 
in the whole European territory. 

The  specific  objectives  identified  will  be  achieved  while  respecting  the  functioning  of  the 
market and ensuring that market measures are used to respond to supply crisis situations for as 
long as possible. 

18 

 
 
 
 
 
 
 
 
 
5.  POLICY OPTIONS  

With  the  intention  to  meet  the  objectives  set  out  in  the  previous  section,  the  Commission 
services have identified five policy options ranging from an enhanced implementation of the 
existing Regulation to the full harmonization at EU level. Option 0 represents the baseline or 
the  measures  currently  in  place.  Each  policy  option  consists  of  a  package  of  measures 
combining existing tools, possible updated and improved, and new tools. In broad terms, the 
options could be described as follows:  

Option 0: No further action at EU level 
Option 1: Enhanced implementation and soft law measures  
Option 2: Enhanced coordination with an increased scope for tailor made solutions 
Option 3: Enhanced coordination with some principles/standards set at EU level 
Option 4: Full harmonisation at EU level 

For a summary of the measures contained in each of the proposed options see Annex 3. 

5.1.  Option 0: No further action at EU level 

This option implies that the measures in place will continue and no further measures will be 
introduced.  Member  States  will  produce  national  plans  based  on  the  outcome  of  their 
national risk assessments. The flexibility in the definition of protected customers and in the 
implementation of the supply standard will remain. The current mechanisms of information 
exchange  will  persist,  basically:  a)  information  on  gas  contracts  will  be  provided  in  an 
aggregated  manner;  b)  Member  States  should  report  certain  information  only  during  an 
emergency. Regarding the infrastructure standard, Member States will continue calculating 
the  N-1  standard  following  the  current  methodology,  while  for  the  reverse  flow  the  cross 
border consultations will remain limited to the physically neighbouring countries. 

With  regard  to  the  Energy  Community,  there  will  not  be  further  commitment  than  the 
implementation of the Regulation. 

5.2.  Option 1: Enhanced implementation and soft law measures  

This  option  introduces  a  set  of  measures  to  enhance  the  implementation  of  the  Regulation 
without introducing any amendment to the legislative act. Building on what has already been 
done  to  implement  the  existing  Regulation,  this  option  goes  one  step  further  proposing  soft 
law that could improve the enforcement of the legislation and the use of voluntary measures 
that have not been fully explored by Member States. 

As the possibility to prepare joint risk assessment and plans has been used only in a limited 
number  of  cases  (e.g.  UK-Ireland  and  Estonia-Lithuania-Latvia),  under  this  option  Member 
States would be encouraged to improve coordination and explore the regional approach with 
guidelines, prepared by the Commission, setting out how to prepare a regional assessment of 
risks  (e.g.  definition  of  common  scenarios,  structured  information  on  relevant  national  and 
regional  circumstances  such  as  market  size,  network  configuration,  flows).  Based  on  the 
outcome,  Member  States  would  be  encouraged  to  elaborate  coordinated  preventive  action 
plans  and  emergency  plans.  The  guidelines  would  facilitate  the  preparation  of  the  plans 
providing the minimum elements to be included in the plans in accordance with Articles 5 and 

19 

 
 
 
 
 
10 (e.g. mechanism for cooperation before and in the case of a crisis, preventive measures to 
enhance  diversification  of  sources  and  routes,  contribution  of  reverse  flows  to  mitigate  the 
impact of gas disruptions).   

Under this option, a more harmonised system for the compliance with  the supply standard 
would be proposed with the use of guidelines. The guidelines, prepared by the Commission 
and  based  on  best  practices  observed,  would  introduce  transparency  and  predictability  in 
certain aspects relevant for the fulfilment of the supply standard. For example, the guidelines 
would  provide  the  sequential  steps  for  the  Competent  Authorities  to  ensure  accurate  and 
timely compliance: 1)  the identification of the natural gas undertakings to  ensure the gas  to 
protected  customers,  2)  quantification  of  gas  needed  for  protected  customers  under  the 
scenarios  defined  in  Article  8,  3)  measures  taken  to  fulfil  the  standard,  4)  the  monitoring 
process  and,  5)  the  mechanisms  adopted  at  national  level  in  case  of  non-compliance  by  the 
natural gas undertakings.  

Both guidelines on the supply standard and on Plans and the Risk Assessment would be based 
on the numerous efforts carried out by the Commission37, including workshops and the Gas 
Coordination Group, but will also take into account the best practices observed in the second 
cycle of Plans prepared by Member States in 2014.  

Given  the  observed  issues  with  regard  to  the  definition  of  protected  customers,  the 
Commission  would  be  stricter  in  the  implementation  of  this  definition  ensuring  the 
enforcement  of  the  current  legal  text  and  initiating  infringement  procedures  when  the 
threshold is surpassed by Member States. No technical reasons or other type of reasons could 
justify  the  consideration  of  protected  consumers  beyond  the  limits  established  by  the 
Regulation.  

With regard to the infrastructure standard, the enforcement of the current legal text would 
require  initiating  infringement  procedures  immediately  against  three  countries  that  do  not 
fulfil  the  N-1  rule  today38.  Regarding  the  reverse  flow  obligation,  still  today  some  major 
interconnection  points  remain  not  equipped  with  bi-directional  capacity  as  they  have  been 
granted  exemptions.  Under  this  option,  the  Commission  would  re-examine  the  assessment 
carried out by Member States under Article 7 of the existing Regulation in the framework of 
the current biannual update of the Risk Assessments.  

For the improvement of the information exchange, the Commission will prepare a series of 
guidelines.  First  of  all,  instructions  would  be  prepared  for  the  collection  and  submission  to 
the  Commission  by  the  Competent  Authorities  of  the  data  required  under  the  new  current 
Regulation  with  regarding  to  commercial  contracts.  It  would  result  in  a  more  accurate  and 
better diagnosis of the situation. The system regarding commercial gas contracts would also 
be complemented by guidance with respect to the EU acquis, including security of supply 
and  competition  law  with  respect  to  clauses  in  gas  supply  contracts.  Such  guidance  would 
focus  on  illegal  or  possibly  anticompetitive  clauses  and  contract  frameworks  based  on  the 
experience  of  security  of  supply  analysis  and  competition  investigations.  Furthermore, 
guidance would be provided with respect to gas market pricing (e.g. hub pricing) and their 
relevance for long-term gas contracts. The latter could be tackled at least in two ways: a) by 

37  
38  

See section 3.1 
According  to  the  information  provided  by  these  three  Member  States  in  their  Preventive  Action  Plans,  the 
implementation of infrastructure projects currently under construction will enable them to fulfil the N-1.   

20 

 
 
 
 
 
 
 
                                                 
the  Commission's  recognition  that  competitive  and  not  distorted  gas  markets,  including  gas 
hubs,  are  relevant  for  pricing  of  long-term  gas  contracts  in  combination  with  increased 
transparency  of  price  quotations  on gas  hubs and  transport costs  from  production centres to 
markets  or,  b)  by  creating  an  aggregated  benchmark  price,  consisting  of  a  sufficiently large 
number  of  individual  prices  to  prevent  disclosing  price  of  individual  undertakings,  on  a 
regional level.  

Under this option, Member States could also assess the potential merits for crisis situations of 
collective purchasing of gas for offsetting or mitigating the impacts of supply shocks in very 
severe supply situations. To the extent such measures would be implemented or organized by 
commercial  entities,  their  benefits  should  be  weighed  against  potential  adverse  effects  on 
competition.  Any  assessment  of  such  collective  purchasing  schemes  would  be  without 
prejudice  to  the  possible  parallel  application  of  Article  101  to  horizontal  co-operation 
agreements.  In  this  context,  the  Commission  guidelines39  on  horizontal  co-operation 
agreements  provides  guidance  regarding  which  practices  are  allowed  and  which  could  be 
anticompetitive. 

5.3.  Option 2: Enhanced coordination with an increased scope for tailor made 

solutions 

This option introduces a series of changes in the Regulation aimed at improving coordination 
among  Member  States  while  leaving  them  flexibility  in  some  areas  to  decide  on  measures 
tailor-made for their security of supply needs. 

The starting point of this option is a mandatory regional Risk Assessment to be carried out 
jointly  by  the  Competent  Authorities  of  all  the  Member  States  included  in  a  concrete  area. 
Such  regional  Risk  Assessment  would  replace  the  current  national  Risk  Assessments  and 
should be based on common scenarios to de decided by Competent Authorities in each area 
on the basis of the existing criteria detailed in the Regulation (e.g. market size and network 
configuration,  supply  disruptions,  correlation  of  risks,  etc).  This  Risk  Assessment  would  be 
developed according to a mandatory template. 

On the basis of the results of the regional Risk Assessment, the Competent Authorities of the 
Member States will have to develop their national Preventive Action Plans and Emergency 
Plans. These Plans will remain national plans but should be prepared  following mandatory 
templates40  and  accompanied  by  a  courtesy  translation  into English41.  Additionally,  a  more 
far-reaching consultation process will apply in the form of a mandatory revision process (peer 
review). Thus, each national plan would be reviewed by peers from the Member States in the 
same area as well as other neighbouring Member States potentially impacted by the Plans42. 
Furthermore,  the  involvement  of  other  stakeholders  such  as  natural  gas  undertakings, 
industrial  gas  customers,  the  relevant  organisations  representing  the  interests  of  households 
and industrial gas customers, electricity transmission and distribution system operators could 
be considered in such a system, to provide further input to the peer review team.  

39  

40  

41  
42  

See  Chapter  5  of  the  Guidelines  on  the  applicability  of  Article  101  of  the  Treaty  on  the  Functioning  of  the 
European 
http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2011:011:0001:0072:EN:PDF   

co-operation 

agreements, 

horizontal 

2011/C 

11/01, 

Union 

to 

The majority of the responses to the public consultation favoured some type of guidance regarding the Plans and 
around half of the respondents preferred binding templates. 
See for example the reply of Eurogas to the public consultation. 
ENSTOG should also participate in the peer reviews. 

21 

 
 
 
                                                 
The Commission will be required again to assess and deliver an opinion on the Plans, as under 
the current Regulation, but under this option the Commission will take into account the peer 
review  carried  out  for  each  set  of  Plans.  Following  its  assessment,  the  Commission  may 
require the Competent Authority who prepared the Plans to review any or both of them and 
present specific recommendations for amending them. In the case the Member States do not 
take the Commission's opinion into account or do not duly justify the reasons why it does not 
agree  with  the  Commission's  opinion,  the  Commission  would  have  the  right  to  issue  a 
decision requiring the amendment of the Plans.  

The  Preventive  National  Plans  will  continue  to  serve  as  a  planning  and  transparency  tool 
where  preventive  measures  are  described  by  each  Member  State,  including  the  compliance 
with the supply standard. In this option the level of the supply standard would no longer be 
defined  at  EU  level.  Instead,  each  Member  State  will,  on  the  basis  of  the  regional  Risk 
Assessment,  define  the  necessary  level(s)  of  the  supply  standard  as  well  as  the  means  to 
ensure undertakings take measures to comply with it. 

The definition of the  protected customers, to be established by the Competent Authorities, 
will not change under this option but an  increased oversight of the implementation will be 
proposed.  In  their  Emergency  Plan  Competent  Authorities  will  have  to  define  measures  to 
ensure that, in the case of an emergency, non-protected customers would not use gas intended 
for the supply of the protected customers. The nature and type of the measures will be decided 
by  the  Member  States  (e.g.  technical  improvements  in  the  networks  to  enable  selective 
curtailments, deterrent sanctions for non-eligible consumptions, etc.). 

A new solidarity principle will be introduced in the system. According to such principle each 
Member  State  would  be  obliged  to  send  excess  gas  to  a  neighbouring  country  in  which  the 
supply  to  protected  customers  is  at  risk.  Excess  gas  would  be  defined  as  any  gas  that  is 
available  on  top  of  what  is  needed  for  the  protected  customers  in  that  Member  State.  The 
principle only takes effect in an emergency situation, i.e. when the amount of gas available in 
a  given  Member  State  is  insufficient  to  meet  the  gas  demand  of  protected  customers. 
Members States will have to identify and assess in their Emergency Plans ways to ensure the 
application  of  such  solidarity  principle  and,  provided  the  assessment  shows  positive 
outcomes, implement it. 

With  regard  to  infrastructures,  the  calculation  of  the  N-1  standard  would  be  amended  by 
focusing  on  the  most  critical  infrastructure43  instead  of  the  single  largest  infrastructure. 
Each Member State would have to identify the most critical infrastructure, on the basis of the 
Regional  Assessment,  and  explain  in  detail  in  the  Preventive  Action  Plan  the  measures, 
volumes  and  timing  needed  to  comply  with  the  N-1  standard  calculated  with  this  new 
approach.  

The infrastructure standard would be completed by considering in the implementation of bi-
directional  capacity  (reverse  flows)  a  cost-benefit  analysis  along  the  whole  transportation 
corridor44.  Thus,  Member  States  along  the  transportation  corridor  will  also  be  specifically 
consulted  ahead  of  the  adoption  of  a  decision  on  a  concrete  interconnection  point.  Such 
approach  would  be  required  for  the  request  of  any  exemption  as  well  as  for  the  decisions 
setting the level of the reverse flow capacity. The tools already developed under  Regulation 

43   
44  

See replies of FNB Gas and CEER to the public consultation. 
Most stakeholders (e.g. Spanish Government, Gas Terra, National Grid, ENTSOG, CEER, Gaz-System) expressed 
their  support  for  involving  in  the  exemption  decision-making  process  Member  States  located  along  the 
transportation  corridor  affected  by  the  interconnection,  even  if  they  are  situated  beyond  the  immediate  physical 
border. 

22 

 
 
                                                 
(EU)  No  347/2013  such  as  for  the  cost-benefit  analysis  and  cross-border  cost  allocation  for 
PCIs should be applied. 

In  order  to  improve  the  access  to  security  of  supply  relevant  information  and  facilitate 
information  exchange,  the  scope  of  the  reporting  obligations  under  the  current  Regulation 
for gas supply contracts with a duration of more than one year concluded with suppliers from 
third  countries  would  be  widened  by  adding  information  on  minimum  daily,  monthly  and 
yearly contracted quantities as well as conditions for the suspension of gas deliveries. Natural 
gas undertakings will continue to be responsible for sending the information to the Competent 
Authorities and the latter to the Commission. Furthermore, the data will be now notified to the 
Commission  in  a  non-aggregated  form  (i.e.  per  contract).  This  obligation  would  be 
complemented  by  a  more  flexible  and  focused  system  under  which  Competent  Authorities 
will also be legally enabled to request suppliers' security of supply relevant information under 
duly justified circumstances which could be in relation to but ahead of the declaration of an 
emergency.  Information  subject  to  this  request  could  cover  information  contained  in  gas 
supply  contracts  but  only  to  the  extent  needed  on  security  of  supply  grounds.  Such 
information  would  typically  cover  non-price  related  gas  delivery  information,  such  as  total 
maximum  and  minimum  contract  volumes,  delivery  points,  or  flexibility  margins.  The 
circumstances  under  which  this  information  could  be  requested  would  be,  for  example, 
unexplained modifications in the gas supply pattern to a given buyer or buyers in a Member 
State  which  would  not  be  expected  under  the  normal  functioning  of  the  markets  and  which 
could have a negative impact on the security of supply of the Union or its parts. In any case, 
the  Competent  Authority  would  have  to  duly  justify  its  request.  The  Commission  will  be 
entitled to request the information gathered by the Competent Authority in a non-aggregated 
form, and could also trigger the request of such information by the Competent Authority, in 
order  to  assess  the  overall  security  of  supply  situation  of  the  Union  or  its  parts.  The 
confidentiality of commercially sensitive information will be ensured. 

As  for  the  Energy  Community,  the  revised  regulation  would  be  adopted  into  Energy 
Community Contracting Parties' national legal orders following the standard procedure based 
on  the  Title  II  of  the  Treaty  establishing  the  Energy  Community.  Only  voluntary 
cooperation  on  cross-border  issues  between  the  Contracting  Parties  and  Member  States 
would  be  animated  by  the  Commission  in  a  similar  manner  to  the  existing  Commission 
Recommendation45 for internal market rules.  

For the approach presented in this option to be workable, a certain grouping of Member States 
is  necessary,  above  all  for  practical  reasons.  The  definition  of  the  groups  should  take  into 
account:  a)  supply  patterns,  b)  existing  and  planned  interconnections  and  interconnection 
capacity  between  Member  States,  c)  market  development  and  maturity,  d)  existing  regional 
co-operation  structures  and  e)  the  number  of  Member  States  in  a  region,  which  should  be 
limited  in  order  to  keep  it  workable  also  in  practice.  Finally,  Member  States  should  in 
principle not be in more than one region. In view of those criteria, annex 5 contains a possible 
regional  set-up  building  also  on  the  currently  operative  regions  in  the  framework  of 
Regulation (EU) No 347/2013 (TEN-E Regulation). 

45  

Recommendation  on  application  of  internal  energy  market  rules between  the  EU  Member  States  and  the  Energy 
Community Contracting Parties (2014/761/EU of 29 October 2014) 

23 

 
 
 
                                                 
5.4.  Option 3: Enhanced coordination with some principles/standards set at EU 

level 

Option 3 builds on option 2 and goes one step further towards harmonisation by increasing the 
regional  cooperation  as  a  tool  to  improve  security  of  supply  and  by  setting  at  EU  level  a 
limited  number  of  levels  and  principles  to  be  complied  with  by  all  Member  States  while 
leaving them flexibility to decide on the most appropriate measures. 

Under this option, the Competent Authorities of the Member States would also be required to 
prepare  regional  Risk  Assessments  as  described  in  option  2,  which  will  serve  now  as  the 
basis for regional Preventive Action Plans and Emergency Plans. Therefore, Plans would 
now be prepared on the same  regional basis as the Risk Assessment and would replace the 
national  Preventive  Action  Plans  and  Emergency  Plans.  These  Plans  should  be  prepared 
according to mandatory templates and will be subject as well to the peer review assessment 
already  described  under  option  2.  Additionally,  and  in  order  to  ensure  the  coherence  of  the 
different regional Plans as well as to assess the cross-regional effects of a gas emergency, the 
Gas  Coordination  Group  will  be  given  a  stronger  role.  The  Gas  Coordination  Group  will 
discuss the Plans and will advise the regions on how to ensure the coherence between all the 
regional  Preventive  Action  and  Emergency  Plans.  The  discussions  at  the  Gas  Coordination 
Group  will  be  taken  into  account  in  the  Commission's  decisions  on  the  Plans.  Such 
discussions  could  also  be  taken  into  account  by  the  Commission  when  addressing  the 
situation of security of supply in the EU in the Report on the State of Energy Union. 

The supply standard will remain a national obligation, as under the current Regulation, but, 
contrary to option 2, the current definition set at EU level will continue to apply46. This option 
would  also  retain  the  current  discretion  at  national  level  as  regards  the  means  to  ensure  the 
compliance with the supply standard47. The difference will be an increased oversight of the 
existing  measures  as  well  as  new  measures  to  comply  with  the  supply  standard  involving 
Member States  and the Commission.  New  measures envisaged by Member States would be 
subject  to  increased  scrutiny,  most  notably  a  thorough  impact  assessment48  covering  the 
impacts  on  the  national  energy  market,  the  EU  energy  market,  impacts  on  neighbouring 
Member  States,  proportionality  and  costs.  Such  assessment  should  be  carried  out  by  the 
Member State before implementation and made publicly available. The  Commission would 
assess the analysis submitted by the Member States focusing on  cross-border impacts and 
impacts on the internal market and may request the amendment or the removal of measures 
with negative impacts in a decision. 

46  

47  

48  

A majority of respondents to the public consultation, including Member States, regulatory authorities and industry, 
considered the scenarios defined in the  existing Regulation as still valid and fit for purpose 
An  overwhelming  majority  of  respondents  to  the  public  consultation,  from  all  sectors,  advocated  for  the  current 
results-oriented definition of the supply standard to be maintained, although the reasons underlying such support 
are  divergent.  A  high  number  of  respondents,  mostly  in  the  western  parts  of  the  EU,  do  not  want  to  resort  to 
prescriptive  measures  and  prefer  market  based  systems,  such  as  for  example  systems  based  on  incentives  (e.g. 
Belgium,  Denmark,  Germany,  The  Netherlands),  while  the  market  is  allowed  to  play  its  role  (e.g.  IOGP).  Other 
respondents however argued that Member States should retain the possibility to prescribe at national level measures 
tailor made to the specific needs (e.g. Slovakia, Hungary, GIE). 

The  idea  of  conditions  and  thorough  impacts  assessments,  particularly  in  the  context  of  non-market  based 
measures, was also proposed by some respondents to the public consultation (e.g. UK, EFET, EDF), including an 
stronger role for the Commission in such assessment (e.g. UK, EFET). 

24 

 
 
 
                                                 
Existing  measures  will  also  be  assessed  but  in  the  framework  of  the  assessment  of  the 
Preventive  Action  Plan49.  As  part  of  the  Plans  prepared  by  the  Competent  Authorities,  they 
will  be  subject  to  the  peer  review,  the  discussion  in  the  Gas  Coordination  group  and  the 
Commission's  decision  on  the  Plans.  In  this  regard,  the  criteria  for  the  Commission's 
assessment  of  the  Plan  will  be  widened  to  specifically  include  negative  effects  in  the 
functioning of the internal market or the distortion of competition. 

As  in  option  2,  the  current  definition  of  protected  customers  would  continue  to  apply, 
together  with  the  increased  oversight  already  described  under  option  2.  However,  a  priority 
will be given to certain subcategories of protected customers (i.e. households, essential social 
services  and  district  heating),  to  the  extent  they  exist,  for  the  application  of  the  solidarity 
principle described under option 2, which in this option will be mandatory and not only a best 
efforts obligation. Thus, the supply to non-protected customers in a Member State will not be 
able to continue for as long as the households, essential social services and district heating (to 
the extent they are considered protected customers) in any of the Member States to which its 
transmission  system  is  connected  are  not  supplied.  The  practical  arrangements  to  apply  this 
principle  will  have  to  be  agreed  between  Member  States  and  reflected  in  the  Emergency 
Plans, thus maintaining a high degree of flexibility. 

As regards  infrastructures, the calculation of N-1 would be improved by amending certain 
technical  aspects  of  the  N-1  formula.  The  changes  proposed  by  the  majority  of  industrial 
stakeholders  look  at  better  capturing  the  internal  bottlenecks  within  entry-exit  systems50, 
withdrawal rates from storages under various filling scenarios51 and the effectively available 
cross border capacity52. This approach is complemented by an increased transparency in the 
parameters  used  for  the  calculation  of  the  N-1,  both  in  terms  of  their  values  as  well  as  the 
underlying calculations, achieved through the templates for the Plans. 

Additionally, the pure capacity approach of the N-1 rule will be complemented by a national 
hydraulic  calculation  as  well  as  a  series  of  EU-wide  scenarios.  The  hydraulic  calculation 
would incorporate actual gas flows into the picture and will be explicitly included in the Risk 
Assessment prepared by the Competent Authorities53. Regarding the EU-wide scenarios and 
similarly  to  the  stress  test  exercise  carried  out  in  2014  or  the  ENTSOG  winter/summer 
outlooks,  the  European  Network  of  Transmission  System  Operators  for  Gas  (ENTSOG) 
would carry out such an EU-wide simulation in consultation with the Gas Coordination Group 
(e.g. scenarios to be modelled, duration, tie of the year, assumptions). Member States should 
then take into account the outcome of the simulation in their risk assessments, in order to take 
the appropriate measures to reduce the impact of a potential disruption (e.g. diversification of 
suppliers, routes, infrastructures). 

With regard to the reverse flow obligations, and in addition to the cost-benefit analysis along 
the whole transportation corridor introduced under option 2, the time duration of exemptions 
will be limited (although they can be renewed subject to the reassessment of the security of 

49  

50  
51  

52  
53  

As under the existing Regulation, the Preventive Action Plan should describe the measures adopted to comply with 
the supply standard. 
See for example RWE's reply to the public consultation. 
See for example the replies of E.ON Gas Storage, the Polish Government, Engie and the Czech NRA to the public 
consultation. 
See for example ENTSOG's reply to the public consultation. 
Competent Authorities may delegate such task to other entities, such as TSOs, in line with the exiting provisions of 
the Regulation. 

25 

 
 
 
 
                                                 
supply benefits and costs). There will also be a higher involvement of the Commission and, 
for the first time, the Agency for the Cooperation of Energy Regulators (ACER)54, in line with 
the  work  currently  being  carried  out  in  the  framework  of  the  PCIs  according  to  the  TEN-E 
Regulation.  The  national  decisions  regarding  the  exemptions  and  capacity  figures  would  be 
replaced  by  a  joint  decision  adopted  by  the  Competent  Authorities  on  both  sides  of  the 
interconnection point in question and would be subject to the opinion of the Agency as well as 
to  the  Commission's  final  decision,  which  would  no  longer  be  limited  to  the  cases  of 
disagreement among the Member States on both sides of the interconnection. 

As regards potential risks to security of gas supply stemming from  infrastructure take-overs 
by  third  country  companies,  the  current  EU  and  national  tools  do  not  allow  to  address  the 
situation in a satisfactory manner. Therefore we propose to introduce in the new regulation an 
obligation for the Member States as part of their overall obligation to make preventive action 
plans (at a regional level) to: identify in the Preventive Action Plans infrastructures relevant 
for  security  of  supply  (on  the  basis  of  criteria  defined  in  annex  to  the  regulation),  assess 
various risks, including risks relating to a change of ownership of such infrastructure and  if 
applicable  to  identify  mitigating  measures.  If  measures  are  proposed,  these  should  be 
compatible  with  the  EU  law,  including  the  free  movement  of  capital  and  the  freedom  of 
establishment. 

The provisions under option 2 to improve the exchange of information will remain under this 
option  as  well.  This  will  be  complemented  by  an  efficient  and  targeted  mechanism  for 
accessing key security of supply relevant gas supply contracts for the overall security of 
supply assessment of the Union and its parts ahead of an eventual emergency or unscheduled 
gas flows. The mechanism will consist of (i) mandatory ex-post notification of certain gas 
key security of supply relevant supply contracts55 and (ii) a right of the Commission to 
request certain gas contracts which could also be very important for security of supply.  

i. 

Parties  would  be  obliged  to  submit  all  new  key  security  of  supply  relevant  gas  supply 
contracts,  as  defined  above,  or  any  modifications  of  the  existing  ones56  (including  all 
amendments,  annexes  or  other  documents  signed  or  agreed  in  relation  to  and  having  an 
impact on the execution of these gas supply contracts) to the Competent Authorities and to 
the Commission for a security of supply assessment immediately after being signed. This 
will  not  apply  to  the  revisions  which  are  solely  related  to  the  contract  price  or  a  price 
formula, which is by far the most common reason for contract amendments.  

54  

55  

56  

The participation of a supranational authority as the Commission or ACER is backed by some stakeholders (e.g. 
EDP, Gasunie) alleging the need to ensure transparency and a global overview of the process taking into account 
the concerns of Member  States potentially affected.  The  role  of the  Commission  is  perceived,  in  particular,  very 
relevant when European funds are involved. A more prominent role of the Commission is also mentioned by some 
stakeholders (e.g. NET4GAS,) who call for the approval of the Commission before the exemption could be granted 

Security  of  supply  relevant  contracts  subject  to  notification  refer  to  contracts  with  a  long-term  duration  (i.e. 
contracts  exceeding  one  year)  that  provide  individually  or  cumulatively  with  other  contracts  with  the  same  third 
country supplier or its affiliates more than 40% of yearly natural gas consumption in the Member State concerned 
to  one  natural  gas  undertaking  or  to  its affiliates.  The  definition  looking  at  the  buyers'  side  appears  to  strike  the 
right  balance  in  terms  of  administrative  burden  and  making  obligations  clear  for  market  participants.  The  40% 
threshold does not prejudge that other long-term contracts may have relevance for the security of supply assessment 
and other gas contracts may be requested by the Commission. 
Modifications  of  the  existing  security  of  supply  relevant  gas  supply  contracts  is  understood  as  a  modified  gas 
contract  is  a  contract  which  has  undergone  any  change  in  substance  to  the  contract  or  to  any  element  of  the 
contractual framework (e.g. change of delivery points, duration, allowed off-take flexibility, contract's execution, 
suspension or implementation) 

26 

 
 
 
 
 
                                                 
ii.  Moreover, the Commission would also have a discretion to request suppliers to submit to 
the  Competent  Authority  and  the  Commission  certain  existing  long-term  security  of 
supply relevant gas supply contracts, even if they were not subject to a revision, where the 
Commission  has  reasonable  indications  to  assume  that  a  given  on-going  contract  with  a 
third country could raise security of supply issues or if such contracts would be needed for 
a comprehensive assessment of the impact of a contractual framework on the security of 
supply situation in a Member State, region or in the Union and in particular for the Risk 
Assessments,  Preventive  Action  Plans  and  Emergency  Plans.  The  confidentiality  of 
commercially sensitive information will be ensured. 

Subsequently, the Commission could address eventual security of supply issues by requesting 
the Competent Authorities of the Member States concerned to update their Risk Assessments 
and include adequate measures in the Preventive Action and Emergency Plans in the light of 
the new, updated or existing gas supply contracts.  

In addition, should a Competent Authority identify a competition law concern in relation to a 
gas  supply  contract,  it  could  refer  to  the  Commission  for  a  substantial  competition  law 
assessment. Should the Commission find a competition concern, it could under existing rules 
adopt a binding decision bringing the infringement to an end and as appropriate sanctioning it. 

Finally,  for  the  Energy  Community,  option  3  proposes  the  description  in  the  revised 
regulation  of  a  set  of  precise  obligations  of  the  EU  Member  States  towards  Energy 
Community Contracting Parties, whose application would be conditioned to the adoption by 
the  latter  of  matching  obligations57  towards  the  EU  Member  States  (via  several  "switch-on 
clauses"). Such conditional obligations would be associated with particular provisions of the 
Regulation considered to be the most relevant for the general policy goal which is to develop 
a  coherent  and  functional  security  of  supply  framework  with  Contracting  Parties.  The  main 
focus  should  be  put  on  emergency  plans,  peer  review  of  plans,  cooperation  in  established 
regions and risk assessments.  

5.5.  Option 4: Full harmonisation  

This  option builds on option 3 but goes  further proposing a full harmonisation approach by 
preparing an EU-wide Risk Assessment and Plans and setting at EU level a number of levels 
and principles to be complied with by all Member States as well as the measures to comply 
with them, thus reducing the flexibility to a minimum level. 

Under this option, the scope of the Risk Assessment and the Plans would be extended to the 
EU  level  and  would  be  prepared  by  the  Commission.  The  EU-wide  Risk  Assessment  will 
replace the regional Risk Assessment described under option 2 and will serve as the basis for 
the  EU  Preventive  Action  Plans  and  the  EU  Emergency  Plans,  which  will  also  replace  the 
regional  Plans.  The  establishment  of  centralised  EU  Risk  Assessment  would  contain 
information of all Member States, assessing in an integrated and coherent manner correlated 
risks and cross-regional effects in the case of a gas emergency. The  EU Preventive Action 
Plan would include all measures to put in place to tackle the risks identified in a coordinated 

57  

The  'switch-on'  clauses  would  not  automatically  ensure  that  similar  obligations  would  be  put  on  the  Contracting 
Parties towards EU Member States. The Contracting Parties would need to bind themselves through the adoption of 
a specific and separate legal act. 

27 

 
 
 
 
 
 
 
                                                 
way, while the EU Emergency Plan would contain all measures to mitigate the impact of an 
unexpected  event  such  as  gas  supply  disruption  to  the  EU  or  severe  weather  conditions 
affecting several Member States. 

The supply standard will remain a national obligation but the values will increase compared 
to option 3 and the current standard58. In addition, the flexibility given to Member States in 
option  3  to  comply  with  the  supply  standard  would  be  reduced  and  prescriptive  measures 
would  be  introduced  on  the  way  in  which  Member  States  have  to  ensure  the  standard  is 
met. The most obvious example59 of this approach would be prescribing a minimum level of 
gas stocks to be kept in underground storages by each Member State. Furthermore, as much 
supported  by  the  industry  itself,  market-based  demand  side  measures,  such  as  interruptible 
contracts, voluntary firm load shedding, etc. for industry should also be included here.  

As  a  new  element  compared  to  option  3,  the  full  harmonisation  of  protected  customers 
proposed  under  this  option  would  limit  the  eligible  categories  of  consumers  to  households, 
critical  social  services,  like  hospitals,  and  district  heating  for  households  and  critical  social 
services.  A  definition  that  is  clear  and  limited  in  scope  would  facilitate  a  fair  and 
straightforward allocation of scarce gas resources on the basis of solidarity. Furthermore, not 
only  the  solidarity  principle  but  also  the  mechanisms  to  apply  it  in  the  event  of  an 
emergency would be prescribed under this option with the aim to ensure that the expected – 
and  agreed  –  missing  volume  of  gas  for  protected  customers  in  Country  A  can  only  be 
acquired  via  a  market-based  mechanism  (e.g.  tender  or  auction)  among  non-protected 
customers  in  Country  B.  In  that  way,  the  TSO  of  Country  A  is  sure  to  procure  the  agreed 
missing volume from its neighbour, but at a price at which the non-protected customers with 
supply contracts are willing to give up their supplies. 

Regarding the infrastructure standard, the N-1 standard would here be mandatory at regional 
level  and  would  replace  the  current  N-1  standard  at  national  level.  This  option  also 
contemplates  mandatory  reverse  flow  at  every  interconnection  point,  eliminating  the 
exemption  procedures  foreseen  in  previous  options  and  in  the  existing  Regulation.  New 
pipelines would also have to be designed to be bi-directional. This absence of flexibility with 
the elimination of the exemption procedure is the new element compared to option 3. 

With respect to the information exchange, this option would go a step further than option 3 
and  include an  ex-ante notification  of  security  of  supply relevant  gas  supply  contracts60 
with  third  countries  and  the  assessment  by  the  Competent  Authorities  and  the 
Commission.  Under this mechanism, commercial parties would be obliged to submit security 
of  supply  relevant  gas  supply  contracts  to  the  Competent  Authorities  and  the  Commission 
before  signature.  The  Competent  Authorities  would  issue  a  draft  decision  on  the  contracts' 
implications for security of supply that would be submitted to the Commission. If considered 
necessary, the Commission would be able to request undertakings to provide any additional 

58  

59  

60  

There are several ways to increase the level of the supply standard, such as, for example, increasing the number of 
days  during  which  supplies  must  be  guaranteed  (e.g.  adopting  the  90  days  applicable  to  strategic  oil  stocks). 
Another option is to be prepared for even colder winters: not just a winter that occurs once every 20 years, but for 
instance  once  every  50 years.  A third  option  that  has  been  put  forward  by  a  couple  of  respondents to  the  public 
consultation  is  the  'Source  Scenario'  or  S-1,  whereby  Member  States  would  have  to  ensure  supplies  for  their 
protected customers in case the largest supply route (e.g. Russia, Ukraine) falls away. 

Another  option  would  be  to  prevent  Member  States  from  depending  too  much  on  hubs  or  to  prescribe  the 
acquisition of LNG contracts or options 
This obligation would cover the same type of contracts described in option 3. 

28 

 
 
 
 
 
                                                 
information needed for a comprehensive assessment of the impact of a contractual framework 
on the security of supply situation in a Member State, region or in the Union. 

The Commission would then issue an opinion on the assessment (i.e. the draft decision) by the 
Competent Authority which should take the Commission's opinion into utmost account when 
adopting its  final  decision.  The  procedure  would  have  a  suspensive  effect  for the  entry into 
force  of  the  contract  until  the  final  decision  is  adopted  by  the  Competent  Authority.  The 
Competent  Authority,  on  the  basis  of  its  assessment,  should  take  eventually  effective 
preventive  measures  in  view  of  the  contract  and  up-date  the  risk  assessments  and  the 
Preventive Action Plans and Emergency Plans. 

Under  this  option,  Member  States  would  increase  their  bargaining  power  by  resorting  to 
mandatory  joint  gas  purchasing.  This  binding  character  is  the  new  element  compared  to 
option  1  where  the  joint  purchasing  remains  voluntary.  It  would  consist  of  a  central  buyer 
contracting on behalf of a number of EU gas suppliers a pre-determined quantity of gas. Such 
regime would in first instance be inspired by a desire to achieve more bargaining power.  

The  involvement  of  the  Energy  Community  will  under  this  option  be  based  on  a  general 
"switch  on"  clause.  Similarly  to  option  3,  this  legal  solution  would  imply  a  general 
obligation  put  on  Member  States  towards  the  Energy  Community  Contracting  Parties 
"switched  on"  as  soon  as  the  Contracting  Parties  decide  to  implement  the  Regulation61,  but 
under option 4 it will cover the whole Regulation. 

6.  ANALYSIS OF THE IMPACTS OF THE VARIOUS POLICY OPTIONS 

In this section the impacts of the different policy options are identified and assessed, as well 
as the ability of the options to contribute to the achievement of the identified objectives.  

The options proposed should first and foremost be effective at improving the current level of 
gas security of supply and thus be suitable to tackle the specific problems. 

As  regards  the  impacts,  given  the  administrative  nature  of  the  measures  and  the  objectives 
pursued with the revision of the regulation, the most relevant impacts in terms of magnitude 
are of economic nature. Consequently, for each policy option, the assessment will cover:  

Impact on stakeholders, with a special focus on SMEs 

  Costs of the measures and impact on prices  
 
  Administrative burden  
  Likelihood of contributing to the completion of the internal market  

In terms of social impacts, all options are likely to have a positive impact on the welfare of 
EU citizens by avoiding the occurrence of gas supply crisis and mitigating its effects should 
they nevertheless occur. The magnitude of this impact varies depending on the effectiveness 
of the option to address the identified problems (see section 7 for a comparison of the options, 
including  on  the  basis  of  their  effectiveness).  From  a  point  of  view  of  employment,  policy 

61  

The  'switch-on'  clause  would  not  automatically  ensure  that  similar  obligations  would  be  put  on  the  Contracting 
Parties towards EU Member States. The Contracting Parties would need to bind themselves through the adoption of 
a specific and separate legal act. 

29 

 
 
 
 
 
                                                 
 
options related to  enhanced cooperation, such  as peer review, or  infrastructure development 
such as reverse flow obligations may have an impact on employment due to some additional 
tasks  appearing,  however,  these  cannot  be  considered  significant  or  valid  for  a  sustained 
period of time (see per option the assessment of the impact in terms of administrative burden). 
Out  of  these  measures,  building  more  reverse  flow  capacity  may  have  a  positive  impact  on 
employment for the duration of design and construction.  

The direct impact of the proposed changes to the current Regulation are mostly administrative 
in  nature,  such  as  improving  regional  cooperation  or  improving  information  exchange  on 
security of supply aspects. Therefore, the proposed policy options can only have an indirect, 
likely  positive  impact  on  the  environment  in  that they  are  the  consequence  of  stakeholder 
(e.g.  competent  authorities,  gas  undertakings,  etc.)  decisions  on  specific  measures  they  will 
take.  The  current  Regulation  provides  the  possibility  to  use  preventive  and  emergency 
measures  with  potential  environmental  impact,  such  as  fuel  switch  (in  most  cases  to  oil  or 
coal) or curtailment of gas consumption. As a result of more regional cooperation, as pursued 
by all the options, we expect a more efficient use of such national and cross-border measures 
decreasing  the  overall  impact  at  EU  level  with  less  switching  to  more  polluting  fuels,  for 
example.  The  Regulation  does  not  make  a  choice  for  gas  as  a  preferred  supply  option,  but 
where this has been chosen it ensures the necessary security of supply. In line with the 2030 
targets,  the  Regulation  already  requests  Member  States  to  consider  efficiency  measures  and 
the revised regulation will allow for the use of alternative energy sources, such as renewables, 
to  comply  with  certain  obligations,  such  as  the  supply  standard62.  Therefore,  the  expected 
environmental impact of security of supply measures introduced in case of a crisis should also 
overall decrease as a consequence or at least not change considerably.  

From the point of view of ICT, the options proposed could have a theoretical impact in terms 
of  ICT.  Close  regional  cooperation  and  the  exchange  and  review  of  plans  of  other  Member 
States require appropriate software to be at the disposal of the Member States. Such tools are 
however  already  in  place  and  were  set  up  in  2013  to  enable  Member  States  to  notify  their 
plans  to  the  Commission  (the  Circbac  platform).  Competent  Authorities  have  used  this  tool 
systematically  for  the  notification  of  the  second  cycle  of  Preventive  Action  Plans  and 
Emergency  Plans  prepared  under  the  existing  Regulation  as  well  as  for  their  replies  to  the 
Commission's opinions on their Plans. In addition to this, the use of web conference tools has 
become  usual  practice, for  example  to  hold  technical  meetings  on  short  notice  to  assess  the 
security  of  supply  situation  under  changing  circumstances  (e.g.  online  meetings  of  the  Gas 
Coordination  Group  on  3  and  14  March  2014).  Furthermore,  the  Commission  will  build  on 
existing  IT  systems  to  ensure  the  secure  handling  of  confidential  documents,  notably  in  the 
framework of the new targeted system to improve access to information. 

6.1. Option 1: Enhanced implementation and soft-law measures 

6.1.1 Contribution to the policy objectives 

Setting  principles  and  mechanisms  for  cooperation  via  guidelines  would  facilitate  and 
streamline  the  procedure  for  the  coordination  among  Member  States  in  the  preparation  of 
coordinated  Risk  Assessments  and  Preventive  Action  Plans  and  Emergency  Plans.  The 
guidelines, based on the experience gained during these five years of implementation, would 

62  

See for example the reply of Sweden to the public consultation. 

30 

 
 
 
 
                                                 
help  Member  States  to  carry  out  a  joint  assessment  of  risks,  paying  special  attention  to 
correlated risks affecting several countries at the same time (e.g. severe weather conditions or 
failure of upstream pipelines). On the basis of the results of the joint risk assessment, Member 
States would then prepare coordinated Preventive Action and Emergency Plans.  

The  guidelines  for  the  supply  standard  would  allow  for  a  more  harmonised  compliance 
introducing  transparency  and  predictability  in  certain  relevant  aspects  such  as  the  measures 
taken to fulfil the standard and the monitoring process.  

Regarding the definition of protected customers, the enforcement of the existing legislation 
seems in any case insufficient to solve the problems identified in the implementation of this 
provision63. Technical reasons,  different  definitions of essential  social services and different 
levels of gas penetration across Europe reduce the effectiveness of this provision even in the 
case of timely and accurate implementation.  

Regarding  the  infrastructure  standard,  the  room  for  improvement  seems  limited.  For 
example, it is unlikely that the re-examination of the reverse flow exemptions will conclude 
with indications of enabling bi-directional capacity in exempted pipelines, mainly due to the  
market  environment  does  not  normally  change  rapidly  to  amend  decisions  adopted  by 
Member States, which are mostly based on the results of the market demand assessment and 
the cost benefit analysis.  

As  regards  the  guidelines  for  better  implementation  of  information  exchange  obligations, 
they will have positive impact in the regional and EU assessment by the Commission based 
on more comprehensive and comparable information. In addition, the guidance with respect 
to  the  acquis  has  a  positive  preventive  character  thanks  to  an  increased  awareness  of  risky 
and/or  illegal  contract  clauses  and  frameworks,  as  for  example,  the  insertion  of  a  territorial 
restriction  in  a  supply  contract  with  a  buyer  may  have  a  negative  impact  on  the  security  of 
supply  in  other  Member  States.  Guidance  on  gas  market  pricing  will  also  provide  useful 
reference for pricing of long-term gas contracts, in particular, in areas without liquid hubs. It 
is  claimed  that  gas  prices  of  other  buyers  are  a  relevant  benchmark  for  such  negotiations.  
This would create more transparency and strengthen the bargaining position of gas purchasers 
by allowing them to compare an offer from a supplier with competitive prices at the various 
European hubs. Regional benchmarks can possibly strengthen the bargaining position of gas 
purchasers vis-a-vis gas suppliers by allowing a rough comparison of an offer with other long-
term gas contracts in the absence of local gas hubs.  

Regarding collective voluntary common gas purchasing, undertakings can already today, to 
the  extent  they  respect  competition  and  trade  rules,  aggregate  their  demand  and  address 
suppliers to achieve better terms and conditions. In the retail energy market, but also in other 
sectors,  it  is  not  uncommon  that  buyers  join  forces  to  negotiate  better  conditions  with  their 
suppliers. In theory, this could also be the case on wholesale gas markets. The Commission 
has issued guidance as to the applicability of Article 101 TFEU to joint purchasing schemes 
and  what  the  relevant  elements  are  in  assessing  their  compatibility.64  It  is  therefore  up  to 

63  
64  

See sections 3.2 and 3.3.  
See  Chapter  5  of  the  Guidelines  on  the  applicability  of  Article  101  of  the  Treaty  on  the  Functioning  of  the 
European 
http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2011:011:0001:0072:EN:PDF   

co-operation 

agreements, 

horizontal 

2011/C 

11/01, 

Union 

to 

31 

 
 
 
 
 
 
 
                                                 
market participants to  decide  for themselves  whether pooling their demand and setting up a 
scheme  would  indeed  result  in  increased  buyer  power  and  therewith  improved  conditions. 
Whereas in general such considerations related to price may be more relevant, such schemes 
could also have security of supply effects, for instance when they enable to tap in to a new 
source or spur the development of new infrastructure.  

6.1.2 Analysis of impacts 

a) Costs of the measures and impact on prices  

Overall option 1 will have a limited impact in costs as the measures proposed are oriented to 
improve the implementation of existing measures and the enforcement of current obligations. 
Indeed, the main advantage of soft law is the minimum cost in their implementation, as it only 
requires  limited  number  of  changes  in  the  measures  already  in  place.  For  example,  the 
guidelines for the supply standard will imply more detailed information on the fulfilment of 
this obligation that Member States have to report to the Commission. Therefore, the costs of 
option 1 and the impact on prices are negligible.  

b) Impact on stakeholders, with special focus on SME 

The  measures  proposed  under  option  1  have  limited  impact  on  stakeholders,  as  it  only 
requires  the  improvement  of  existing  measures.  Among  the  stakeholders,  the  Competent 
Authorities  will  be  the  most  affected  as  actors  responsible  for  the  implementation  of  the 
Regulation and therefore, natural addressees of most guidelines. In this regard, the measures 
proposed to enforce and improve the implementation could have a short-term impact in view 
of the necessary changes in the approach usually followed by the Competent Authorities. In 
any  case,  as  the  actions  aim  to  improve  the  way  to  put  in  practice  existing  measures  the 
impact will be limited and, in the long-term, even positive.  

c) Administrative burden 

In line with the arguments expressed before, the administrative burden is limited as it is only 
related  to  changes  in  the  approach  to  put  in  place  existing  measures.  The  Competent 
Authorities  will  have  certain  additional  administrative  burden  as  actors  responsible  for  the 
implementation (explained above). Even though it is difficult to quantify, the administrative 
burden  related  to  following  guidelines  and  best  practices  in  the  short  term  is  unlikely  to  be 
burdensome. The preparation of guidelines will require additional work for the Commission. 
However, the efforts  already done in the implementation  will facilitate this task minimizing 
the impact.  

d) Completion of the internal market 

As  the  actions  proposed  aim  to  improve  the  implementation  and  enforcement  of  existing 
measures, the contribution to the single market will be in general positive but limited. Special 
attention  deserve  the  guidelines  on  gas  market  pricing,  as  the  transparency  of  prices  of 
commercial gas supply contracts could have anticompetitive effects (e.g. possible alignment 
of  prices  at  upstream  or  downstream  wholesale  level  but  not  necessarily  at  a  lower  price 

32 

 
 
 
 
 
 
 
 
level).  Additionally,  a  regional  benchmark  could  be  also  counter-productive  if  the  resulting 
benchmark was not market-reflective.  

6.2  Option 2: Improved coordination with an increased scope for tailor made 
solutions 

6.2.1 Contribution to the policy objectives 

Measures  grouped  under  this  option  address  all  the  problems  identified  while  leaving  room 
for  manoeuvre  for  Member  States  given  that  a  one-size-fits-all  approach  was  almost 
unanimously rejected in the public consultation.  

The main benefit of a regional Risk Assessment as a starting point of this option is that such 
assessment would be  based on common scenarios leading  to an increased coherence among 
the national Plans and the necessary involvement of the Member States in the region, which 
would create more engagement and ownership. This would enhance considerably the security 
of  supply  in  the  region.  The  mandatory  templates  will  facilitate  the  development  of  a  joint 
document  and  will  facilitate  the  comparability  of  the  national  Plans  while  leaving  room  to 
include national specificities as needed.  

The mandatory templates constitute a simple tool to ensure the consistency and increase the 
quality  of  the  national  Plans  and  the  provision  of  the  courtesy  translation  into  English  will 
address one of the practical difficulties identified in the Report on the implementation of the 
existing Regulation and will allow for meaningful discussions of the Plans. The peer review 
process serves a twofold purpose. On the one hand, it will allow for an early identification of 
inconsistencies and measures that could endanger other Member States' security of supply; on 
the other hand, it will provide for actively spreading of best practices among Member States 
building  on  the  experiences  of  Member  States  with  more  advanced  security  of  supply 
systems.  

Building on the logic of this option, both the levels of and the measures to comply with the 
supply  standard  are  left  to  the  decision  of  the  Member  States  on  the  basis  of  two  key 
arguments: the highly divergent situations of the gas market and the different roles of natural 
gas as a fuel in the energy mix of Member States. Where gas markets are functioning, price 
signals can be relied upon to attract gas when and where it is needed most. Where gas is used 
by  a  large  share  of  households  for  heating  their  homes  in  winters,  Member  States  are  more 
minded to enforce stricter supply levels.  

This  option  also  addresses  the  risk  of  overly  protective  measures  with  the  obligation  for 
Member  States  to  introduce  stricter  enforcement  measures  as  regards  the  definition  of 
protected customers. Such measures would prevent that consumers who are non-eligible for 
the  category  of  protected  customers  would,  in  the  case  of  an  emergency,  consume  the  gas 
allocated  for  protected  customers  and  thus  enhance  the  security  of  supply  of  protected 
customers  in  a  given  Member  State.  Secondly,  as  the  gas  necessary  to  cover  the  needs  of 
protected customers under demanding conditions (to be  defined by the Member State under 
this  option)  would  be  limited  to  the  strictly  necessary  amounts,  the  need  to  resort  to  high 
supply standards, of which risks for neighbouring Member States in terms of overly protective 
measures were explained in the previous paragraph, would be removed and thus, the security 
of  supply  in  the  region  as  well  as  the  possibilities  for  solidarity  actions  would  improve. 
Furthermore, this tool provides a viable and proportionate solution as each Member State will  

33 

 
 
 
 
 
 
decide  on  the  nature  of  the  measures,  i.e.  technical  or  administrative,  depending  on  their 
national  circumstances,  typically  the  size  of  their  gas  market  and  the  number  of  consumers 
connected to their distribution network that could potentially consume during an emergency 
gas allocated for protected customers.  

Solidarity  would  also  be  improved  under  this  option,  on  the  one  hand,  as  a  result  of  the 
measures  on  protected  customers  and  to  enhance  coordination;  on  the  other  hand,  via  the 
obligation to consider a solidarity principle65. As a best efforts obligation, this option has the 
benefit  of  flexibility  both  in  terms  of  implementation  and  form.  Moreover,  the  regional 
approach provided by the joint Risk Assessment ensures a comprehensive outlook.  

Even  if  this  may  appear  counterintuitive,  the  consideration  of  the  most  critical 
infrastructure  does  not  seem  to  significantly  improve  the  security  of  supply.  Firstly,  the 
classical  definition  of  the  N-1  standard  already  ensures  that  the  national  gas  system  has  a 
capacity margin to compensate for the disruption of the largest gas infrastructure. As such, the 
capacity margin ensured with the classical N-1 definition is higher or equal than the margin 
that  would  be  ensured  by  considering  the  most  critical  infrastructure.  Secondly,  the  special 
consideration  that  the  most  critical  infrastructure  deserves  and,  in  particular,  the  analysis  of 
certain aspects e.g. utilisation level of this asset or the outage probability, should in any case 
be  properly  assessed  in  the  framework  of  the  Risk  Assessment  and  the  resulting  needs 
addressed as part of the preventive measures to be included in the Preventive Action Plan.  

The inclusion of the whole corridor in the consultation and assessment regarding the reverse 
flow  obligations  would  give  better  understanding  of  the  positive  implications  of  a 
transnational concept of security of supply and a better magnitude of costs in relation to the 
benefits  provided.  Technical  barriers  such  as  those  represented  by  different  odorization 
practices  need  to  be  addressed  in  this  context,  as  possible  costs  related  to  de-odorization 
techniques may have to be included in the cost-benefit analysis. 

With regard to the external problems and the exchange of information, the improvement of 
the  reporting  obligations  will  enhance  the  Commission's  ability  to  assess  security  of  supply 
situation at regional and Union level as well as the adequacy of Risk Assessments, Preventive 
Action  Plans  and  Emergency  Plans.  Furthermore,  the  new  targeted  system  for  access  to 
information  will  improve  the  ability  of  the  Competent  Authorities  and  the  Commission  to 
prepare for and react to concerns with respect to gas supplies before they lead to crisis. Cases 
such as the observed deviation of flows during autumn/winter 2014/2015 show that without 
such  a  system  the  available information  may  not  be  sufficient  for  Competent  Authorities  or 
the  Commission  to  draw  operational  conclusions  and  foresee  the  likely  development  of 
potentially negative events.  

Finally,  as  regards  the  Energy  Community,  the  foreseen  voluntary  cooperation  would 
constitute a step forward in the inclusion of this area in the framework of the security of gas 
supply policy.  

65  

See section 5.2 

34 

 
 
 
 
 
 
 
 
 
                                                 
6.2.2 Analysis of impacts 

a) Costs of the measures and impact on prices 

Overall option 2 will entail a very limited increase in costs compared to the baseline scenario 
as  a  result  of  the  flexible  approach  followed  and  the  reduction  of  standards  set  at  EU  level 
(e.g.  supply  standard).  The  majority  of  the  measures  composing  this  option  consist  of 
improvements  of  existing  mechanisms  and  the  correct  implementation  of  a  number  of 
principles and, as such, do not involve significant higher costs.  

As an example, measures related to the exchange of information, the N-1 standard calculated 
with the critical infrastructure or the conditioning of reverse flow obligations to a cost-benefit 
analysis along the corridor should have no large impact on costs. The new calculation of the 
N-1  should  also  not  entail  additional  costs as  Member  States  already  have  the  obligation  to 
assess and adopt measures to address the risks associated to the failure of their most critical 
infrastructure,  provided  it  is  indeed  a  risk  for  the  system.  Similarly,  the  extension  of  the 
consultation along the corridor should in itself not encompass an increase in costs for the two 
Member States on both sides of an interconnection point. To the extent that this consultation 
results in investments to enable reverse flow capacity (i.e. the investment is considered to the 
beneficial  in  terms  of  security  of  supply),  the  costs  shall  be  jointly  allocated  among  those 
Member  States  who  benefit  from  the  enhanced  infrastructure  taking  into  account  the 
proportion of the benefits. National Regulatory Authorities shall then take into account such 
efficiently incurred costs in the tariffs, as already foreseen in the existing Regulation.  

There could be a limited amount of additional costs associated with the stricter enforcement 
of  the  protected  customers  and  the  application  of  the  principle  of  solidarity.  However,  the 
flexibility  provided  for  the  enforcement  of  the  protected  customer´s  definition  will  allow 
Member States not to implement technical measures, if considered too expensive, and adopt, 
for example, administrative measures instead, such as effective sanctions. 

As the users-pay principle applies generally to the energy policy, the costs of these measures 
will be mostly passed on to consumers. Therefore, in the light of the precious assessment, it is 
very  unlikely  that  the  implementation  of  option  2  will  lead  to  a  significant  increase  of  gas 
prices for European consumers. 

b) Impacts on stakeholders, with special focus on SMEs 

Given  the  nature  of  the  proposed  measures,  no  major  impact  on  market  participants  nor 
consumers is expected. SMEs can be considered protected customers, if the Member State so 
decides,  and  therefore,  would  not  necessarily  have  to  undertake  additional  costs  to  ensure 
preparedness  for  a  disruption  of  their  gas  supply.  Furthermore,  the  joint  Risk  Assessment 
should  lead  to  a  better  identification  of  problems  and  synergies  in  the  design  of  preventive 
measures,  which  in  return  would  lead  to  a  reduction  in  the  impact,  including  the  costs,  of 
security of supply measures. 

Measures proposed regarding the exchange of and access to information would not interfere 
in the contractual freedom of undertakings. 

c) Administrative burden 

The  impact  in  terms  of  administrative  burden  would  remain  relatively  low.  The  main 
contributor to this impact would be the preparation of joint Risk Assessments but the increase 

35 

 
 
 
 
 
 
 
 
 
in the work associated to the preparation of such Risk Assessment would be limited. Exercises 
such  as  the  stress  tests  have  paved  the  way  for  the  preparation  on  this  type  of  projects  as 
Member  States  had  to  simulate  a  set  of  given  scenarios  bearing  in  mind  the  fact  that  their 
neighbouring Member States were also facing the same situation and, consequently, effects of 
likely simultaneous emergencies had to be factored in. The template for the Risk Assessment 
will be a key tool to facilitate the work.  

As regards the peer reviews, the consultation of national Plans was already mandatory under 
the existing Regulation. The introduction of templates for the Plans would lead to much more 
comparable  Plans,  which  would  significantly  reduce  the  administrative  burden  of  its 
assessment both for Member States and the Commission. These templates could be amended, 
in case of need, via delegated acts, which will ensure that the templates remain updated and fit 
for  purpose without  having  to  revise  the  whole  legislative  act.  The  courtesy  translation into 
English will also reduce the burden as Member States will only have to translate one set of 
Plans (i.e. their Plans) instead of the Plans of all their neighbours. 

The  amendment  of  the  exemption  procedure  could  in  principle  require  further  efforts  as  a 
well-designed cross-border cost allocation needs to be applied. However, the latter should be 
based  on  the  existing  procedures  for  the  Projects  of  Common  Interest  (PCI)66,  thus 
streamlining  procedures  for  all  stakeholders  and  ensuring  the  coherence  of  the  whole 
legislative framework. 

As regards the tools proposed for the exchange of and access to information, the increase in 
burden should be minimal, if any, given that the scope of information to be provided is only 
slightly enlarged and that the targeted mechanism would only be used when and if needed. 

There would be a slight increase in the burden for the Commission in the management of the 
peer  reviews  although  the  Commission  is  already  working  closely  with  Member  States  in 
regional  groups  facilitating  and  sometimes  even  coordinating  the  work  (e.g.  focus  groups 
created for the stress test exercise, regional cooperation between the Baltic States and Finland, 
CESEC). 

d) Completion of the internal market 

While this option creates common frameworks to cooperate (i.e. regional Risk Assessments), 
it also allows for a very high degree of flexibility and tailor-made measures, hence, it cannot 
be  excluded  that  overly  protective  measures  are  adopted  by  a  number  of  Member  States. 
Overly protective measures, and overall widely divergent levels and approaches, may impact 
negatively  on  cross-border  trade  and  the  ability  or  willingness  to  supply  neighbouring 
countries in need. In the past, stakeholders have often complained about situations in which a 
certain Member State suffered supply-demand tensions, but in which shippers were prevented 
from  buying  gas  from  neighbouring  markets  because  the  suppliers  in  these  neighbouring 
marking were prohibited from selling by national public service obligations requiring them to 
hold certain gas volumes.67  

66  
67  

See for example ENI´s reply to the public consultation. 
See as well footnote 21 

36 

 
 
 
 
 
 
                                                 
6.3  Option 3: Enhanced coordination with some principles/standards set at EU 
level 

6.3.1 Contribution to the policy objectives 

This option takes account of the fact major gas crises are most likely to affect several Member 
States and consequently, of the need to discuss possible disruption scenarios and measures to 
prevent  and  mitigate  them  in  a  cross-border  context.  By  replacing  national  plans  with 
regional Plans, it guarantees coherence of the actions planned and significantly reduces the 
risk  of  having  national  measures  that  would  not  fully  reflect  the  spirit  of  solidarity  in  the 
region.  These  significant  coordination  improvements  would  clearly  enhance  the  security  of 
supply in the region.  

The peer review process described under option 2 would remain applicable. This procedure 
would ensure stakeholders' interests are considered and would also allow for the involvement 
of other Member States outside the region who could be nevertheless potentially affected. The 
mandatory use of templates will facilitate the development of the joint Plans as well as the 
comparability among different regional Plans, notably with a view to the peer review process 
and  the  discussions  in  the  Gas  Coordination  Group  of  the  regional  Plans.  Such  discussions 
would ensure a European dimension of all regional Plans, given the cross-regional effects of a 
crisis and the need to monitor security of supply at EU level, and would avoid a fragmentation 
of  the  security  of  supply  approach  in  different  regions.  It  must  be  borne  in  mind  that  the 
regional division in sub-groups is foremost a tool to facilitate the work at a regional level and 
make a number of improvements to policy tools workable.  

As for the supply standard, the key change proposed under this option is a better oversight 
for  new  measures  via  a  mandatory  impact  assessment  that  should  ensure  the  early 
identification  of  measures  that  could  negatively  affect  the  internal  market  or  other  Member 
States' security of supply. Furthermore, analysis of costs should ensure that security of supply 
is achieved at the lowest possible cost for consumers. It would also improve transparency  for 
the general public and facilitate informed discussions on the risk appetite of a certain market. 

The  notion  of  priority  of  certain  protected  customers  over  others  for  the  application  of  the 
solidarity  principle,  which  will  no  longer  be  a  best  efforts  obligation  but  a  substantially 
better defined obligation, ensures the application of a minimum solidarity in case of extreme 
circumstances  and  for  very  concrete  needs,  i.e.  the  priority  subgroups  of  protected 
customers68.  There  will  continue  to  be  flexibility  as  Member  States  will  continue  to  design 
and  agree  (via  the  Plans)  on  the  necessary  mechanisms  and  arrangements  to  apply  it  in 
practice. This option has the additional benefit that there will be pressure on Member States to 
keep their protected customers limited to what is strictly necessary in order to be accepted by 
their  peers.  The  Commission,  in  the  context  of  its  assessment  of  the  regional  Plans,  will 
monitor that the mechanisms proposed are effective and efficient.  

On the infrastructure section, a more accurate definition of the various parameters of the N-1 
formula  would  reflect  the  situation  of  the  gas  system  as  a  whole  better,  and  obtain  a  more 
precise picture of the individual position of Member States. A higher transparency regarding 
raw data and values applied as well as the calculation of the parameters (e.g. total gas demand 
in a day of exceptionally high gas demand) to be used in the formula, as underlined by some 

68  

As  explained  in  section  5.3,  this  priority  concept  will  cover  households,  essential  social  services  and  district 
heating. 

37 

 
 
 
                                                 
stakeholders,  could  also  provide  a  better  understanding  of  the  responsiveness  of  the  gas 
system  in  the  event  of  technical  failure  of  a  major  infrastructure  or  gas  disruption  at  a 
negligible additional cost. 

The hydraulic calculation complements the pure capacity approach of the N-1 standard by 
incorporating actual gas flows into the picture and thus provides a more accurate assessment 
of how Member States could satisfy their total gas demand in the case of the interruption of 
the largest infrastructure (e.g. identification of internal bottlenecks).  

The  second  new  element,  the  EU-wide  simulation  with  common  standards  and  specific 
scenarios, brings the benefits of comparability, transparency and a better capture of the cross-
border  impacts  of  a  crisis,  including  the  impact  of  the  measures  used  to  mitigate  the  gas 
disruption.  It  would  consist  in  simulations  of  hypothetical  disruption  scenarios  with  a 
specified duration (e.g. one week, one month) in a particular period of the year (e.g. winter).  

On  the  second  component  of  the  infrastructure  measures,  the  reverse  flows,  a  more  active 
participation of ACER and the Commission, including by reinforcing the latter's powers (e.g. 
possibility to issue a decision before the exemption procedure is concluded and the exemption 
granted), enhances a more coherent, coordinated and integrated approach of the cost-benefit 
analysis  and  more  transparent  and  reasonable  cost-sharing  mechanisms  involving  also  all 
Member  States  along  the  whole  corridor  (upstream,  who  would  benefit  from  the  increased 
security of supply, and downstream, where most of the investment need to take place). Such 
approach would result in cost-effective investments providing important benefits in terms of 
security of supply. Additionally, the mandatory revisions of the granted exemptions ensure a 
full and comprehensive analysis of the reverse flow obligation.  

As regards risks to security of supply originating from infrastructure take-overs by companies 
owned/controlled by third states, the proposed approach has a number of advantages. It will 
incentivise  the  Member  States  to  identify  the  risk  and  address  it  with  appropriate  measures 
proposed in the Preventive Action Plans. The peer review and discussion of the Plans in the 
Gas Coordination Group will contribute to better awareness, developing and exchanging best 
practises.  

On  external  factors,  the  proposed  mechanism  with  respect  to  security  of  supply  relevant 
contracts constitutes an efficient and well calibrated tool providing for an ex-post assessment 
of key new and up-dated security of supply relevant contracts and their impact on the security 
of  supply  situation.  The  system  consisting  of  an  automatic  flow  of  most  instrumental  long-
term gas contracts providing vital gas supplies to a given market backed with a discretionary 
system for assessing existing contracts, to the extent that they are suspected to raise security 
of supply problems, ensures proportionality in the approach. It will allow the Member States 
and the Commission  to identify promptly risks stemming  from certain biggest  gas contracts 
with  third  countries  which  due  to  their  security  of  supply  relevance  should  be  adequately 
reflected in the Risk Assessments and for the Preventive Action Plans and Emergency Plans. 
Additionally, this mechanism would serve as a deterrent/preventive tool as the automatic flow 
of information to Competent Authorities and the Commission facilitates the investigation and 
possible sanctions. The Commission's opinion will raise additional political awareness, where 
necessary, without prejudging competition law enforcement. 

Finally, regarding  the  Energy  Community, the  approach proposed  under this option would 
strengthen the cooperation in the field of security of supply between the Energy Community 
Contracting Parties and the EU Member States and it would establish a coherent framework 
of implementation of security of supply provisions in the Energy Community in the course of 
2016 or later. 

38 

 
 
 
6.3.2 Analysis of impacts 

a) Costs and impacts on prices 

Overall,  the  cost  of  the  policy  tools  proposed  under  this  option  will  be  again  very  limited. 
While some measures could entail higher costs than option 2, these will still be very limited, 
and some of the proposals even aim at avoiding unnecessary costs and exploiting synergies in 
the  security  of  supply  measures,  which  should  reduce  the  overall  costs  of  the  security  of 
supply framework for all consumers. 

Measures such as the regional Risk Assessments, regional Plans or the provisions regarding 
contracts  will  not  lead  to  any  significant  increase  in  costs  and  should  be  rather  assessed  in 
terms of its impact in administrative burden (see section on administrative burden).  

The  policy  tools  with  a  likely  higher  impact  on  costs  would  be  the  refinement  in  the  N-1 
calculations  and  the  reverse  flow  obligations.  The  implications  of  the  later  were  already 
assessed  under  option  2.  As  regards  the  N-1  standard,  it  is  however  unlikely  that  the 
refinement of the formula would change the situation of a Member States from compliant to 
non-compliant and thus trigger mandatory investments –the possibility to comply with the N-
1 standard via demand side measures will in any case remain. A fine-tuned N-1 could lead to 
higher  investments  but  based  on  an  individual  assessment  of  the  Member  State  and  with  a 
better picture of the actual capacity situation. Consequently, it seems a cost-effective measure 
in  terms of  benefits  associated to  a better  diagnosis of the sector with  minimum investment 
(e.g.  real  contribution  of  storages  thanks  to  a  more  realistic  estimate  of  withdrawal  rates 
depending on the level of gas stored). The hydraulic calculation should not imply additional 
costs either as TSOs are currently equipped with tools to carry out such assessments. As for 
the EU-wide simulations, they can be carried out by ENTSOG as part of the annual summer 
and winter supply outlook required by Regulation (EC) No715/2009 and they can contribute 
to identifying the cost effective measures to minimize the potential negative impacts. 

Other  measures,  such  as  the  increased  oversight  on  the  supply  standard,  will  enhance 
transparency  and  ensure  that  security  of  supply  is  achieved  at  the  lowest  possible  cost  for 
consumers.  Transparency  should  facilitate  informed  discussions  on  the  risk  appetite  of  a 
certain market. Furthermore, the regional Plans should ensure that synergies are exploited to 
the  maximum  extent  possible,  which  will  again  result  in  likely  reduction  of  the  costs  of 
security of supply measures. 

Given  the  limited  impact  expected  in  costs,  it  is  unlikely  that  this  option  will  have  a 
significant impact in gas prices for European consumers. In any case, and to the extent that 
costs  in  infrastructures  are  incurred,  the  Regulation  provides  the  framework  to  ensure  that 
costs are borne by those consumers that benefit from the increases in their security of supply. 

b) Impact on stakeholders, with special focus on SMEs 

This option should overall have a positive impact on market participants and consumers. The 
improved  oversight  on  the  supply  standard  measures  will  ensure  it  is  complied  with  in  a 
transparent and cost-efficient manner. This was a common criticism by industry respondents 

39 

 
 
  
 
 
 
 
 
 
to the public consultation who asked for transparency69 and fully justified measures subject to 
regular review or test70. 

With regard to SMEs, they will continue to be part of the "protected customers" if a Member 
State so decides, and, as such, this option will not have a negative impact on them. The main 
difference  in  this  option  is  that  they  will  not  necessarily  be  covered  under  the  solidarity 
principle. It must be borne in mind however that the solidarity principle is designed to address 
very extreme situations in which the supply to households and essential social services, which 
is  a  necessary  priority,  is  at  stake.  This  mechanism  is  foreseen  as  a  last  resort  in  a  case  of 
extreme  need  that  the  whole  revised  regulation  aims  at  avoiding  but  for  which  we 
nevertheless need to be prepared. 

The  approach  adopted  on  the  provisions  related  to  the  ex-post  notification  of  security  of 
supply  relevant  contracts  does  not  entail  a  suspensive  effect  nor  interference  in  contractual 
freedom: contractual freedom is preserved in a similar manner as under competition rules.  

c) Administrative burden 

The  assessment  of  this  option  shows  again  a  limited  increase  in  administrative  burden, 
although it would be to some extent higher than option 2.  

One of the main sources of administrative burden would be the preparation of regional Risk 
Assessments  and  regional  Plans.  However,  it  must  be  noted  that  this  option  builds  on  the 
currently  existing  mandatory  consultation  at  regional  level  on  the  Plans  and  sets  a  clearer 
framework for a result-oriented regional cooperation and coordination, which already ensures 
that  the  increase  in  administrative  burden  is  limited.  Experience  shows  that  this  solution  is 
both  technically  and  legally  feasible,  e.g.  the  joint  UK-Ireland  Preventive  Action  Plans  and 
the joint report prepared by the Baltic States and Finland for the stress test exercise carried out 
in  2014.  It  will  require  a  clear  definition  of  responsibilities  and  timeframes  for  the  timely 
delivery of the Plans, which can be arranged according to several models, e.g. in some cases 
there is a secretariat while other Member States have opted in the past for a rotating allocation 
of leading roles per deliverable. The Commission would stand ready to provide guidance and 
facilitate the process as needed, as it has already done during the stress test exercise for the 
so-called Focus Groups and within the BEMIP Focus group for regional cooperation between 
the Baltic States and Finland. 

Some increase will inevitably exist even if the regional Plans replace the national Plans and 
duplicated  tasks  are  thus  avoided.  It  could  be  also  argued  that  agreeing  on  the  Plans  at 
regional level is likely to be more time consuming and require additional arrangements. For 
that reason, and in order to keep the increase in additional burden limited, the update interval 
for the regional Risk Assessment and regional Plans could be increased from 2 years, under 
the existing Regulation, to 4 years. 

The mandatory joint decisions regarding reverse flows and the revision of exemptions would 
also  increase  burden  but,  once  again,  to  a  very  limited  extent.  The  revision  could  be  now 
aligned with the update period for the regional Risk Assessment and Plans (4 years). This 4 

69  
70  

For example E.On and Eurelectric. 
For example Eurelectric and EFET. 

40 

 
 
 
 
 
 
 
                                                 
year period is in line with the responses to the public consultation71 and the alignment with 
the  updates  of  the  Risk  Assessments  would  ensure  a  more  accurate  and  in-depth  analysis, 
which  will  improve  the  effectiveness  of  the  process  and  the  results.  Ad  hoc  reviews  under 
special  circumstances  (e.g.  an  unexpected  source  disruption  due  to  a  geopolitical  conflict,  a 
technical failure affecting the major gas infrastructures) would complement this longer review 
period ensuring a tool to react in case of sudden changes/needs. 

Finally,  the  provisions  concerning  contracts  will  only  cover  a  few  contracts  and, 
consequently, the impact in terms of administrative burden for the Competent Authorities and 
the Commission would be limited. Based on the information provided under Article 13(6)(b) 
of the Regulation, during the next 10 years around 20 security of supply relevant long-term 
contracts would come to end, and if they were prolonged, they would be have to be notified to 
the Commission (i.e. about 2 per year). In addition, at a 40% market share threshold, there are 
currently up to around 18 particularly security of supply relevant gas supply contracts. With 
an  average  revision  period  of  three  years,  up  to  six  contracts  would  be  amended  yearly  on 
average and thus notifiable to the Commission. A large majority of these contract revisions, 
estimated  at  above  75%,  concerns  a  price  revision,  which  is  not  relevant  for  the security  of 
supply assessment and therefore should be excluded from the notification obligation. Taking 
the  above  into  account,  a  number  of  notifications  of  particularly  security  of  supply  relevant 
gas supply contracts would be limited to around two-three per year.  

d) Completion of the internal market 

This  option  is  likely  to  contribute  in  a  significant  manner  to  a  better  functioning  single 
internal  market.  In  fact,  the  risks  of  national  security  of  supply  measures  distorting 
competition  or  discriminating  against  non-nationals,  will  be  significantly  reduced  via  the 
proposed  measures,  which  will  act  as  successive  filters.  First  of  all,  mandatory  impact 
assessments  for  new  measures  to  be  adopted  by  Member  States  should  already  prevent 
harmful measures from entering into force and being part of the Plans. The existing measures 
will  also  be  subject  to  scrutiny  by  the  other  Member  States  in  the  region,  thus  avoiding 
negative spill over effects of certain measures in neighbouring Member States frameworks. In 
a second step, the peer review process and the Commission's oversight should further enable 
to identify and remove possible negative impacts of security of supply-related measures. 

6.4.  Option 4: Full harmonisation 

6.4.1 Contribution to the policy objectives 

The measures of this policy option pursue the maximum level of harmonisation at EU level 
with the clear aim to increase the level of preparedness ahead of a crisis and the mitigation of 
impact in the case of an unexpected event occurs.  

71  

The majority of stakeholders agreed that the existing framework of review in relation to the risk assessment (i.e. 
every  2  years,  if  needed)  is  sufficient  (Governments  of  Portugal  and  Lithuania,  GASUNIE,  WINGAS).  Some 
governments and TSOs (e.g. UK Government, GRT Gaz, GIE) however perceive the reviews as burdensome and 
argue  for  longer  review  periods  (from  three  to  five  years).  The  main  arguments  for  a  longer  period  is  that  the 
general market environment does not normally change so rapidly and the consequently the current timeframe is too 
short  and  does  not  allow  for  a  comprehensive  assessment.  The  extension  of  the  review  period  for  the  Risk 
Assessment  to  4 years and  the alignment  of  these  reviews  with them would  be thus in  line  with  the  positions of 
both groups of replies. 

41 

 
 
 
 
 
 
 
                                                 
The  starting  point  for  this  option  is  the  preparation  of  an  EU-wide  Risk  Assessment  and 
Preventive  Action  Plan  and  Emergency  Plan.  While  the  idea  of  EU  Plans,  already 
suggested  by  some  stakeholders  in  2009,  could  theoretically  offer  an  overarching  and 
comprehensive approach, the divergences across the EU in the role that gas plays in energy 
mixes as  well as  Member States' exposure to  risks  are  such that an  EU risk assessment and 
plans would most likely be a compendium of regional assessments and Plans. As such, these 
Plans would not bring effectiveness in terms of added value to the security of gas supply in 
the EU.  

This option also proposes to increase the values of the supply standard. This measure would 
have a direct positive impact in the level of security of supply as it would ensure gas for the 
protected customers during a longer period in the event of a gas crisis.  However, some voices 
suggested in the public consultation that such increase would send a wrong signal about the 
level of security of supply in the EU72, and could have an impact in the security of supply of 
neighbouring Member States73. In this context, the inclusion of an additional scenario to cover 
geopolitical  risks  (S-1)  is  strongly  rejected  by  some  stakeholders,  as  they  are  considered 
disproportionately  costly  and  more  importantly,  not  an  appropriate  tool  to  deal  with  such 
risks74.  

The question whether or not a S-1 scenario should be included can also be phrased differently: 
should Europe be able and ready at any moment in time to replace the full volume of Russian 
supplies?  As  ENTSOG  has  demonstrated  in  its  scenario-modelling  carried  out  for  the 
Commission's  Stress  Test  Exercise,  Russian  volumes  would  have  to  be  replaced  mostly  by 
increased LNG imports, given the limited availability of other sources.  

Graph 1: EU supply portfolio by source and replacement possibilities 

The practical implementation of a standard including such a scenario would also be difficult 
and could create great  uncertainty as  regards the content of the subsequent obligations. The 
consideration  of  the  S-1  scenario  implies  the  analysis  by  each  Member  State  of  possible 
simultaneous  gas  scarcity  situations  in  several  Member  States  upstream  along  a  supply 
corridor.  While  for  Member  States  closer  to  the  supply  source  this  scenario  would  largely 

72  
73 
74  

See for example the reply of the Czech Government to the public consultation. 
See for example the replies of RWE and the Slovak Government to the public consultation.   
See for example the reply of the Austrian Government to the public consultation. 

42 

 
 
 
 
 
 
                                                 
coincide  with  the  N-1  scenario  (disruption  of  the  single  largest  infrastructure),  for  Member 
States downstream along the corridor this case would entail the assessment of an increasing 
number of hypothetical scenarios based on probabilistic calculations.  

Option  4  also  proposes  the  prescription  of  the  measures  to  comply  with  the  supply 
standard.  This  has  a  positive  impact  on  security  of  supply  as  it  would  ensure  that  gas  is 
physically available to the protected customers in case of a disruption, preventing also free-
riding  behaviour.  In  the  public  consultation  only  few  respondents75  are  in  favour  of  the 
prescription of measures, as it would remove the flexibility to a given extent by imposing a 
given common level of protection and common means to achieve it. 

Currently, a majority of Member States already do have in place some form of intervention in 
the storage market for the purpose of security of supply. Current practice thus suggests that 
gas storage plays an important role in ensuring security of supply. This is substantiated also 
by the Load Duration Curves of the Member States assessed, which demonstrate clearly that 
in a situation of peak demand storages provide the necessary flexibility. It is possible to see 
the  pivotal  role  of  storages  in  providing  the  necessary  'swing'  in  some  countries  like  the 
Netherlands,  a  country  with  a  high  number  of  households  connected  to  the  gas  distribution 
grid and therefore with a very temperature-sensitive demand structure. 

Chart 1: Gas Delivered to the transmission grid in The Netherlands by source (2008),  

source: ACM 

The question is whether an obligatory EU-wide roll-out of detailed gas storage obligations for 
security of supply purposes is an appropriate way of realising a better fulfilment of the supply 
standard.  The  definition  of  a  common  level  (or  a  formula  to  calculate  that)  would  be 
extremely challenging given the different role of natural gas in the energy mix of the different 
Member  States.  Moreover,  the  development  of  gas  storages  across  the  EU  has  historically 
been  driven  by  geological  conditions  and,  while  the  cross-border  use  of  storage  would  be 
certainly  beneficial,  this  would  imply  higher  costs  for  Member  States  that  do  not  have 
storages in place. As many stakeholders in their response to the Public Consultation point out, 

75  

See for example the reply of Engie to the public consultation 

43 

 
 
 
 
 
 
 
                                                 
prescribing  one  instrument  automatically  limits  the  use  of  others.  Other  replies  even 
questioned whether such a measure would indeed increase the security of supply76 

Finally, it is doubtful whether predefined levels of storage will actually ensure a higher degree 
of security of supply. A study commissioned by the Commission demonstrates that countries 
which currently have some form of storage obligations do not experience higher filling rates 
of their storages than Member States which have not introduced such obligations. The study 
also demonstrates that despite decreasing summer/winter spreads so far utilisation levels have 
not dropped. This may  suggest that market parties continue to value storage for its physical 
character and take into account their reputational risks in case they cannot meet their supply 
obligations.  A  more  prescriptive  approach  with  regard  to  the  measures  in  general  was  not 
supported by stakeholders77.  

Regarding  the  protected  customers,  the  definition  proposed  under  option  4  is  clear  and 
limited in scope, which facilitates a fair and straightforward allocation of scarce gas resources 
on  the  basis  of  solidarity78.  In  the  responses  to  the  public  consultation,  most  stakeholders 
agreed that further harmonisation on a regional or pan-European level could provide benefits. 
A common definition and most importantly a common understanding and application of this 
definition are a pre-requisite for solidarity measures between Member States. 

The prescription under this option of the solidarity principle as well as the mechanisms to 
apply  in  the  event  of  an  emergency  would  ensure  the  necessary  clarity  as  regards  the 
application of the solidarity principle as well as a choice of market based mechanisms (such 
as a tender or auction) using price signals to steer the process. However, the prescription of a 
mechanism also entails a certain rigidity that prevents the consideration of the different roles 
of gas in the various regions. Moreover, it would be difficult to amend in case the mechanism 
prescribed appeared to have shortcomings. 

The mandatory N-1 at regional level79 calculated in the framework of a mandatory regional 
risk assessment could give a better idea of the benefits that regional cooperation could bring 
in terms of sharing a diversified pool of infrastructures to mitigate scarcity situations in a cost 
efficient manner. The calculation of the N-1 value at regional level could also help to identify 
improvements  needed  in  the  expansion  of  common  infrastructures.  The  optimization  of 
investments  and  the  complementarity  of  a  portfolio  of  infrastructures  is  clearly  one  of  the 
main benefits that a regional calculation of the N-1 standard could provide. 

Nevertheless,  some  of  the  shortcomings  identified  for  the  N-1  calculated  at  national  level 
would  also  apply  to  the  regional  calculation  and  would  even  be  amplified.  This  would  be 
notably the case of the bottlenecks and missing internal infrastructure. As the N-1 would look 

76  
77  

78  

79  

See for example the reply of IOGP to the public consultation 
See  for  example  the  reply  of  the  Governments  of  Belgium,  Denmark,  Netherlands  and  Germany  and  industry 
(IOGP, Eurogas) to the public consultation 
An appropriate solution would nevertheless need to be found to deal with the technical problems described under 
previous options (e.g. difficulties in carrying out selective curtailments among customers connected to a same 
distribution network). 

The majority of stakeholders expressed that an additional regional assessment, complementary to the national level, 
could improve the overall ability to react and to prepare the necessary actions in the field of security of supply (e.g. 
sharing information, avoiding or mitigating infrastructure failure and preventing stranded assets). However, some 
respondents  oppose  any  binding  commitment  leaving  a  decision  on  regional  approach  to  the  free  choice  of  the 
Member  States  (e.g.  the  Governments  of  Germany,  the  Netherlands,  Belgium  and  Denmark  and  the  Dutch  and 
Austrian TSOs). 

44 

 
 
 
 
 
 
 
                                                 
at  the  region  as  a  sort  of  “black  box”,  it  would  not  necessarily  take  into  account  whether 
sufficient  interconnections  between  Member  States  exist  so  as  to  effectively  compensate 
throughout the region the loss of the regional single largest infrastructure.  

Additionally,  the  mandatory  reverse  flow  at  every  interconnection  point  would  clearly 
have a direct positive impact on the level of security of supply ensuring reverse flow all over 
the EU.  

In  terms  of  information  exchange,  the  advantage  of  the  ex-ante  notification  of  gas  supply 
contracts is that it could prevent situations that could put at risk the security of supply of a 
country  or  a  region.  The  Commission's  decision  on  the  ex-ante  assessment  would  have  an 
effective  preventive  effect  against  the  conclusion  of  contracts  impacting  negatively  on 
security of supply considerations. 

Option 4 also includes mandatory joint gas purchasing whose main advantage is to ensure 
certain  volumes  of  gas  to  be  supplied  to  the  EU  in  scarcity  situations  (e.g.  due  to  severe 
weather conditions or geopolitical conflicts). 

For  the  Energy  Community,  the  switch-on  clause  would  establish  the  framework  for  the 
relations between the Energy Community Contracting Parties and the EU Member States.  

6.4.2 Analysis of impacts 

a) Cost of the measures and impact on prices 

Overall option 4 will have a significant impact in terms of the economic costs of the measures 
proposed that could result in an increase of gas prices for consumers. This could have serious 
negative 
their 
competitiveness80.  Main  increases  in  cost  would  stem  from  the  increases  in  the  level  of  the 
supply standard, the prescription of the measures to comply with it and the mandatory reverse 
flow at every interconnection point.  

industrial  customers  and  SMEs  affecting 

in  particular 

impacts  for 

With  regard  to  the  increase  in  the  values  of  the  supply  standard  stakeholders  in  the  public 
consultation  pointed  to  the  costs  of  such  increase  for  the  end  consumers81,  particularly  in 
functioning markets with hubs82. Gas sellers and buyers even warn about the risk of making 
gas  an  uncompetitive  fuel83.  An  additional  scenario  to  cover  geopolitical  risks  (S-1)  is  also 
considered disproportionately  costly  by  the stakeholders.  It  appears  that  the  additional  costs 
are  significant  with  very  negative  impact  on  gas  prices  for  consumers.  As  an  example,  the 
following table estimates the costs of using the S-1 scenario for replacing missing Russian gas 
volumes. 

To  impose  detailed  gas  storage  obligations  for  security  of  supply  will  have  also  significant 
implications  in  terms  of  costs.  Natural  gas  is  an  expensive  fuel  to  store,  involving  high 
investment and operational costs, especially as a result of the fact that in order to keep the gas 

80   

81  
82  
83  

This is a particular concern taking into account that today wholesale gas prices in Europe are still more than twice 
as high as in the US. 
See for example the reply of the Spanish Government to the public consultation. 
See for example E.On's reply to the public consultation 
See for example the replies of Eurogas and E.On to the public consultation 

45 

 
 
 
 
 
 
 
 
 
 
                                                 
underground the pressure needs to be constantly kept at an appropriate level (as opposed  to 
for  instance  oil).  In  2014,  the  Dutch  government  presented  calculations  to  the  Dutch 
Parliament  regarding  the  costs  of  keeping  strategic  gas  stocks  and  concluded  these  are  ten 
times  higher  than  for  oil,  projecting a  cost  of  around  EUR  0,80/m3  of  stored  gas  or  around 
three  times  the  current  price  of  gas,  a  cost  that  would  be  reflected  in  the  energy  bills  of 
consumers.  A  study  carried  out  by  independent  consultants  in  the  United  Kingdom  on  the 
impacts of gas market interventions on security of supply concluded that the net present value 
over ten years of such measure was largely negative (between 495 and 751 £million). Also the 
Commission's study on gas storage demonstrates that for all the assessed disruption scenarios 
costs outweigh benefits if storage measures were to be introduced EU-wide. 

Table 2: Means and costs of replacing missing Russian gas volumes 

Source: Study "The role of gas storage in internal market and in ensuring security of supply"84 

Table 3: Costs and benefits of various types of storage measures  

84  

SRSM  refers  to  Storage  Related  Security  of  Supply  Measures.  Cooperative  and  non-cooperative  refer  to  the 
scenarios considered, as in the stress test exercise. 

46 

 
 
 
 
                                                 
Source: "The role of gas storage in internal market and in ensuring security of supply" 

The  mandatory  reverse  flow  at  every  interconnection  point  would  also  introduce  a  certain 
amount  of  costs  that  would  be  difficult  to  allocate.  Compared  to  option  3,  the  mandatory 
introduction  of  reverse  flow  at  every  interconnection  point  avoids,  as  a  first  step,  a  cost-
benefit analysis without which any proposal for cross-border cost-allocation would be hard to 
substantiate.  This  could  lead  to  enormous  disputes  among  Member  States  that  could 
negatively affect the cooperation climate pursued by this Regulation. In could also be possible 
that consumers could end up paying for an investment from which they would not benefit. 

In  summary,  it  is  very  likely  that  the  implementation  of  option  4  will  lead  to  a  significant 
increase of gas prices for European consumers, not always justified nor necessarily correctly 
allocated. 

b) Impact on stakeholders, with special focus on SME 

Some  of  the  measures  proposed  in  option  4  will  have  important  implications  for  the 
stakeholders,  notably  the  supply  standard,  the  definition  of  protected  customers  and  the 
provisions regarding the ex-ante notification of certain contracts. 

The  increased  supply  standard  with  prescriptive  measures  to  comply  with  will  have 
considerable  implications  for  natural  gas  undertakings  (for  those  under  the  obligation  to 
ensure gas for protected customers). By prescribing a concrete way to implement the supply 
standard,  provisions  and  investments  already  arranged  or  undertaken  by  natural  gas 
undertakings  to  ensure  the  supply  to  their  share  of  protected  customers  (e.g.  long  term 
capacity  bookings,  options  on  LNG  cargos)  may  end  up  being  redundant  and  lead  to 
significant sunk costs for them. Such costs will most likely be even higher for undertakings 
active in Member States without favourable conditions for the development of gas storages. 

47 

 
 
 
 
 
 
 
 
 
 
The full harmonisation on the definition of protected customers will have a direct impact on 
SMEs  who  will  no  longer  be  considered  "protected  customers".  This  measure  will  have  a 
different  impact  depending  on  the  level  of  penetration  of  gas  across  Europe  and  whether 
Member States have considered SMEs as protected customers or not in the past. To the extent 
that  they  were  considered  in  the  past  as  protected  customers,  SMEs  will  now  face  an 
increased likelihood of disruptions and therefore, may have to incur additional costs to ensure 
preparedness ahead of a disruption85.  

The  ex-ante  notification  of  gas  supply  contracts  with  third  countries  implies  a  high 
intrusiveness  into  commercial  freedom  of  undertakings,  leading  to  delays  in  contract 
negotiations  or  implementation.  It  is  very  difficult  to  reconcile  the  dynamics  of  contract 
negotiations with the Commission's investigation procedure. 

The  proposed  general  switch  on  clause  with  regard  to  the  Energy  Community  Contracting 
Parties may have negative effects on Member States as it establishes the application of all the 
obligations  imposed  on  Member  States  by  this  Regulation  towards  the  Energy  Community 
Contracting Parties to the same extent as obligations between Member States. First of all it is 
questionable  whether  all  obligations  of  the  Regulation  need  to  be  applied  also  towards 
Contracting  Parties  of  the  Energy  Community.  Secondly,  in  the  light  of  the  manifold 
obligations  included  in  the  Regulation,  the  absence  of  specified  obligations  taking  into 
account the differences in the institutional setting in the Energy Community and the EU and 
the consequent differences in relations between Contracting Parties and EU Member States is 
likely  to  result  in  asymmetries  and  heterogeneous  implementation,  which  would  undermine 
the effectiveness of the whole instrument. 

c) Administrative burden 

Overall option 4 will put significant administrative burden for the stakeholders involved in the 
implementation of the measures proposed. For example, the preparation of the EU-wide Risk 
Assessment and Plans will require important efforts to gather information related to national 
and  regional  circumstances  and  contribute  to  the  joint  task  of  assessing  the  risks  and 
identifying  the  measures  to  be  included  in  the  EU  Plans.  The  use  of  existing  regional 
platforms and the experience of EU-wide exercise like the stress test of 2014 could facilitate 
the task. In any case, it would seem unrealistic to coordinate all Member States with diverging 
security  of  supply  situations  to  come  up  with  a  comprehensive  document  with  valuable 
conclusions for all of them. 

Furthermore,  the  ex-ante  notification  of  gas  contracts  and  their  assessment  will  result  in 
additional  administrative  burden  for  the  Competent  Authorities  and  the  Commission, 
particularly due to time constraints given that the assessment has a suspensory effect.  

d) Completion of the internal market 

Certain  measures  such  as  increased  levels  for  the  supply  standard  or  the  prescription  of  the 
measures to comply would imply strong interferences in the market.  

85  

Based  on  the  implementation  of  Regulation  994/2010,  nine  Member  States  include  SMEs  in  the 
definition of protected customers.  

48 

 
 
  
 
 
 
 
 
 
 
                                                 
Prescribing  detailed  EU-wide  rules  on  how  to  use  gas  storages  for  the  compliance  with  the 
supply standard is also likely to be inappropriate for those Member States that have developed 
well-connected  and  liquid  gas  markets  which  deliver  security  of  supply  in  the  most  cost-
efficient manner. Here, competition between sources of flexibility takes place and the active 
shippers have an incentive to choose the flexibility source which ensures they meet the supply 
standard at the lowest possible cost. Prescribing for instance a percentage of the consumption 
of  protected  customers  to  be  met  with  gas  from  storage  appears  to  be  an  unnecessary 
distortion  of  the  market.  Various  respondents  to  the  public  consultation  warn  of  the  effects 
such intervention could have not only as a potential source of discrimination between users or 
a barrier to entry, but also for the overall cost of natural gas in competition with other fuels.  

Mandatory joint gas purchasing would have a drastic impact on the functioning of the internal 
gas market. In a situation in which wholesalers all pay the same price, competition is limited 
to  ancillary  services  which  are  of  marginal  importance  for  a  homogenous  product  such  as 
natural  gas.  It  is  also  questionable  to  what  extent  the  wholesalers  would  pass-through  their 
benefits to the retail level. Generally, this pass-through only occurs fully when there is vibrant 
competition on the retail level. In addition, even if in the short term discounts for the buyers 
could be realized, which is unlikely for areas that are dependent on a single supplier but also 
for areas in which competition determines prices, in the long run the lock-in effect may have 
counterproductive effects. Where buyers realize welfare gains, sellers (outside the EU) suffer 
from  welfare  losses.  These  sellers  may  re-consider  their  strategy  and  decide  to  leave  the 
market or search for alternative markets. Furthermore, incentives to diversify are reduced thus 
increasing de facto dependency on fewer sources. Finally, mandatory mechanisms are likely 
to raise serious EU competition law concerns. 

7.  COMPARISON OF THE OPTIONS 

Taking into account the impacts of the options and the assessment presented in Section 6, this 
section  compares  the  different  options  against  each  other  using  the  baseline  scenario  as  the 
reference and applying the following criteria: 

  Effectiveness:  the  options  proposed  should  first  and  foremost  be  effective  at 
improving the level of security of supply protection compared to the levels achieved 
by the current Regulation and thus be suitable to tackle the specific problems. 

  Efficiency: this criterion assesses the extent to which objectives can be achieved at the 

least cost (benefits vs the costs).  

  Consistency with other policies: some security of supply measures are by definition 
interfering with the internal energy market (IEM) and thus distorting its functioning. 
Therefore, market based approaches should be the preferred option and, where these 
are not appropriate, the options proposed should limit the impact on the functioning of 
the internal energy market as much as possible.  

From the point of view of impacts, particularly costs and administrative burden, options 
1 and 2 could in principle appear as preferred options. However, their performance in 
terms  of  effectiveness  is  rather  poor,  and  consequently,  also  in  terms  of  efficiency. 
Furthermore, to the extent that there are higher risks of having measures that could negatively 
affect  the  internal  market,  as  indicated  in  section  6.2.2,  option  2  could  make  the 

49 

 
 
 
 
implementation of the Regulation less consistent with other EU policies. Option 1 would not 
interfere negatively with other policies. 

Overall,  the  more  harmonized  and  enforced  implementation  pursued  by  option  1  would  not 
solve the problems identified and it would result in a minimum increase of security of supply.  
The evidence shows that in spite of the efforts done so far, Member States do not take fully 
into account the added value of soft measures. Moreover, guidelines for a more harmonized 
implementation, for example, of the supply standard would not solve the problem identified, 
which is directly linked to the flexibility allowed by the legislation and the lack of effective 
oversight.  In  order  to  have  an  effective  protection  of  the  protected  customers  at  EU  level, 
further measures would be needed. 

As regards option 2, the main drawback of this approach is that each Member State would be 
drafting and adopting the national Plans under their own responsibility. While the mandatory 
templates, the peer review process and the Commission's  binding decision  at the end of  the 
assessment process aim at ensuring some more uniformity and at preventing the introduction 
of  measures  with  a  negative  impact  on  the  internal  market  and/or  on  other  Member  States' 
security  of  supply,  national  Plans  could  continue  to  be  too  much  focused  on  the  national 
situation. Therefore it would not be guaranteed that all regional specificities and needs will be 
duly  taken  into  account  or  in  the  most  effective  manner.  Furthermore,  it  cannot  be  ensured 
under  option  2  that  a  minimum  level  of  security  of  supply  is  guaranteed  even  for  the 
minimum  categories  of  protected  customers,  i.e.  households.  Where  clear  rules  are  absent, 
Member  States  would  be  less  well-prepared  and  disruptions  can  have  more  serious 
consequences86. This lack could result in free-riding and, as such, hampers efforts for regional 
solidarity.  

The contribution of options  1 and 2 to  solidarity is quite uncertain. The current Regulation 
does  not  contain  specific  provisions  regarding  solidarity  and  therefore,  it  is  highly  unlikely 
that an enhanced implementation, as proposed in option 1, would result in more solidarity. In 
this  regard, option  2,  as  well  as  options  3  and  4,  represents  the  first  time  that  this  principle 
would  be  reflected  in  secondary  legislation  under  Article  194  TFUE.  Nevertheless,  the 
implementation is not obligatory under option 2 and Member States may opt for the easy way 
out  and not implement a sufficient degree of solidarity in their region. Furthermore, a well-
defined and regionally accepted protected customer's standard is a pre-requisite for this tool to 
work  properly.  In  this  regard,  even  if  the  measures  proposed  to  enforce  the  definition  of 
protected customers would certainly reduce overprotection and facilitate a better cooperation 
and approach to solidarity, the risk would remain that the existing flexibility on the definition 
of  protected  customers,  even  if  legitimate  under  this  option,  may  still  deter  neighbouring 
countries from coming to the rescue in an emergency situation, typically in situations where 
the  inclusion  of  SME's  as  protected  customers  varies  across  the  borders  and  competition 
concerns may be weighed in. 

From  the  point  of  view  of  the  consideration  of  external  risks  in  the  design  of  energy 
policies, option 1 will deliver very limited improvements compared to the baseline scenario. 
The  Report  on  the  implementation  of  the  existing  Regulation  already  explained  why  the 
provisions of the existing Regulation were not fit to provide an adequate perspective in terms 
of security of supply. Moreover, a support  in  terms of guidelines, although useful, does  not 

86  

European  Commission,  The  January  2009  Gas  Supply  Disruption  to  the  EU:  An  assessment,  SEC(2009)  977 
http://ec.europa.eu/danmark/documents/alle_emner/energi/2009_ser2_autre_document_travail_service_part1_ver2.
pdf 

50 

 
 
 
                                                 
guarantee  that  their  content  is  followed  nor  the  availability  of  the  necessary  information  to 
assess external risks and take them into account in the design of security of supply policies.  

The  targeted  system  proposed  in  option  2  represents  a  step  in  the  right  direction  but,  on  its 
own,  it  would  be  insufficient.  The  proposed  mechanism  can  only  be  triggered  once  the 
Commission  observes  or  is  informed  of  abnormalities  in  gas  supplies  to  the  EU.  The 
mechanism  is  blind  towards  potential  serious  security  of  supply  issues  hidden  in  most 
important gas supply contracts on gas markets dominated by a single supplier. Once problems 
in gas supply patterns are identified it may be too late to properly tackle the problem.  

It is also unlikely that either option 1 or 2 will ensure an appropriate framework under which 
EU Member States and Energy Community Contracting parties could cooperate. Option 1 will 
not  entail  any  improvement  compared  to  the  baseline  scenario  and  option  2  will  not  set  a 
legally  binding  framework  applicable  between  the  Energy  Community  Contracting  Parties 
and the EU Member States. The voluntary cooperation foreseen under option 2 can work in 
practice, but it will have its limits when it comes to binding decisions that have cross-border 
character  and  may  be  ineffective  when  it  comes  to  complex  management  of  regional 
cooperation  mechanisms  oriented  at  prevention  and  mitigation  of  potential  gas  supply 
disruptions.  

Concerning infrastructures, option 1 will not ensure that concepts not captured under the N-
1 approach are considered by the Member States and option 2 may even be less effective than 
the baseline scenario as explained in section 6.2.1. On reverse flows, even if option 2 ensures 
that  the  benefits  along  the  whole  corridor  are  considered,  it  is  uncertain  that  such 
consideration will trigger the necessary decisions by the Member States on both sides of the 
interconnection. 

Option  3,  however,  provides  an  effective  package  of  solutions.  Under  option  3  the 
definition of the supply standard is set at EU level ensuring a common protection framework 
across the EU. Additionally, the preparation and adoption of the Plans at regional level ensure 
the  regional  consistency  of  the  measures  and  a  common  consideration  of  the  key  issues  at 
stake.  

Options  3  includes  the  mandatory  application  of  the  solidarity  principle  and  addresses  the 
problems  stemming  from  divergent  definitions  of  protected  customers  by  decoupling  both 
concepts,  i.e.  the  definition  of  protected  customers,  which  may  include  SMEs,  from  the 
application of the solidarity principle. By limiting the application of the solidarity principle to 
households and essential social services, i.e. excluding SMEs from this principle, competition 
concerns do not stand in the way of cooperation. 

Options 3 builds  on options 1 and 2 and adds a more specific  system to  access information 
related to certain contracts ensuring more accurate information for the assessment of security 
of  supply  risks.  The  assessment  of  many  clauses  contained  in  the  contracts  cannot  be 
effectively  carried  out  ex-ante  and  will  depend  instead  on  the  market  context  or  factual 
circumstances  which  can  only  be  established  by  a  fully  fletched  investigation;  some 
provisions may turn out to be problematic only years after the contract has been implemented. 
In  addition,  abuses  often  derive  from  implementation  or  side  agreements  between  the 
contracting parties. Overall, the ex-post assessment seems to be more effective from a security 
of supply point of view. 

Compared  to  the  baseline  scenario,  option  3  also  provides  for  a  concrete  framework  for 
cooperation  between  Member  States  and  the  Energy  Community  Contracting  Parties 
defining concrete obligations for a number of provisions relevant to both sides. 

51 

 
 
With regard to infrastructures, option 3 ensures the use of more appropriate parameters for 
the calculation of the N-1 standard and complements the pure capacity approach provided by 
the  N-1  standard  with  some  modelling  regarding  flows.  Moreover,  it  provides  for  a  system 
with  sufficient  guarantees  to  ensure  that  benefits  for  all  Member  States  along  the  supply 
corridor are considered in the decision making related to the reverse flows (i.e. joint decisions, 
consultations of Member States, Commission´s decisions at the end of the process) together 
with an appropriate consideration of the benefits, the costs and its allocation on the basis of 
existing tools and practices (e.g. use of TEN-E tools, ACER´s opinion).  

Option  4  provides  for  a  number  of  solutions  that  are,  to  a  certain  extent,  effective. 
However, they are generally more costly and some can even be counterproductive.  

Similarly  to  option  3,  option  4  provides  for  an  effective  solution  with  regard  to  the  supply 
standard.  Nevertheless,  and  despite  its  reliance  on  physical  measures,  it  still  cannot  hedge 
against all possible risks. Furthermore, by prescribing the precise measures it does not exploit 
to  the  fullest  extent  the  benefits  that  would  stem  from  the  regional  cooperation  for  the 
compliance  with  the  supply  standard,  in  particular  on  a  market  based  approach.  The  added 
value  for  the  regional  cooperation  of  the  EU  Plans  compared  to  the  regional  Plans  is  also 
highly questionable as they may likely result in a compilation of regional plans.  

Option  4  will,  as  option  3,  ensure  the  application  of  the  solidarity  principle.  It  would 
furthermore  ensure  the  reliance  on  market-based  mechanism  for  its  application,  which  is 
positive,  notably  as  it  provides  an  opportunity  for  consumers  flexible  enough  to  cease 
consumption in times of scarcity. However, it removes the possibility to include SMEs among 
the protected customers, with the impacts already discussed in section 6.4.2 

With regard to the solution to improve the access to information, the ex-ante notification, the 
theoretical  advantage  that  could  be  considered  is  that  the  assessment  and  potential 
enforcement would take place ahead of the signature of the contract. However, as indicated 
above,  there  are  a  number  of  shortcomings  in  an  ex-ante  notification  that  make  an  ex  post 
notification  system  more  effective.  Furthermore,  a  cursory  review  lacks:  (i)  decisional 
(binding) power, (ii) sanctions, (iii) insufficient investigative powers of the Commission, also 
due to time pressure constraints (a proper review would likely take at least several months). 
Other limitations are related to the assessment, under time-pressure, lengthy and complex gas 
contracts in various EU languages. However, it could even be counterproductive as raising a 
substantial risk of prejudging competition law enforcement: perception that the Commission 
blesses commercial contracts would bring substantial risk of prejudging or even undermining 
competition  law  enforcement  by  creating  the  perception  that  the  Commission  blesses 
commercial contracts. These concerns are even more significant for the more intrusive variant 
that the contract would be submitted ex-ante to the Competent Authorities for a competition 
law assessment. It would not be possible to conduct any meaningful competition assessment 
in  a  relatively  short  timeframe  in  line  with  the  established  procedural  and  substantive 
requirements. 

The analysis of the impacts of option 4 shows that they are not proportionate nor fully 
justified  by  the  effectiveness  of  the  solutions,  which  makes  option  4  perform  poorly  in 
terms of efficiency. 

Overall, option 4 represents a highly intrusive approach that tries to address possible risks by 
resorting to a full harmonisation of principles and the prescription of concrete solutions. For 
example, the risk of free-riding is removed by ensuring that gas is physically available for the 
supply of protected customers. However, the likely benefits achieved under this options need 
to be weighed against the cost incurred. The assessment of impacts in option 4 shows that the 
estimated  impact  on  cost  is  likely  to  be  high,  and  looking  at  the  above  description  of  the 

52 

 
 
performance  of  option  4  in  terms  of  effectiveness,  it  makes  option  4  a disproportionate  and 
not  very  efficient  option.  Furthermore,  option  4  has  stronger  negative  impacts  on  the 
achievement  of  the  internal  market,  which  makes  this  option  less  consistent  with  other  EU 
policies. 

The assessment of impacts carried out in section 6.3.2 has shown that the costs associated to 
option 3 are quite  limited. Consequently, option 3 is  not  only effective but  also an efficient 
overall  package  of  measures.  Moreover,  other  negative  impacts  (such  as  impacts  on 
stakeholders and SMEs) would also be limited under this option. Option 3 is also consistent 
with other EU policies, such as measures related to the internal market, as it actively seeks to 
prevent  the  introduction  of  measures  with  negative  effects  on  the  internal  market  (see  the 
assessment of impacts in the internal market in section 6.3.2). 

In  the  light  of  the  previous  assessment,  the  preferred  option  would  be  option  3.  This 
option  is  the  best  in  terms  of  effectiveness  and,  given  its  economic  impacts,  has  been 
demonstrated to be the most efficient as well as consistent with other policy areas. 

The  following  table  summarizes  the  assessment  of  the  policy  options.  The  options  are 
measured  against  the  criteria  applied  for  the  assessment  of  the  impacts  (section  6)  and  the 
comparison  of  the  options  (section  7).  Each  policy  option  is  rated  between  "---"  (very 
negative), 0 (neutral) and "+++" (very positive).  

Table 4: Comparison of policy options 

Impacts 

Effectiveness  Efficiency  Consistency 

Costs and impact 
on prices 

Impact on 
stakeholders 

Administrative 
burden 

0 

0 

0 

0/+ 

+ 

+++ 

++ 

0/+ 

+ 

+++ 

--- 

+++ 

- 

+++ 

--- 

0 

0 

- 

- 

--- 

0 

0 

- 

- 

--- 

0 

- 

- 

-- 

--- 

Achievement 
of internal 
market 
0 

0 

- 

++ 

--- 

Criteria  
--------- 
Options  

Policy option 
0 (Baseline 
scenario) 
Policy 
Option 1 
Policy 
Option 2 
Policy 
Option 3 
Policy 
Option 4 

8.  MONITORING AND EVALUATION 

The  Commission  will  monitor  how  Member  States  have  implemented  the  changes  of  the 
revised  regulation.  Moreover,  increased  involvement  as  well  as  oversight  and  monitoring 
powers  should  ensure  better  compliance  with  the  rules  across  the  EU.  Where  needed,  the 
Commission  services  will  offer  assistance  to  Member  States  for  the  implementation  of  the 
legislative changes in the form of workshops with all the Member States or bilateral meetings 
at the request of any of them. When necessary, the Commission will pursue the procedure set 
out in Article 258 TFUE in case any Member State fails to respect its duties concerning the 
implementation and application of Union law.  

53 

 
 
 
 
 
 
 
The  Commission  anticipates  "the  regional  approach"  as  the  major  challenge  in  the 
implementation  of  the  revised  regulation.  The  challenge  is  to  change  the  dynamics  where 
security of supply is not primarily looked at from a purely national point of view but ensures, 
from  the  very  early  stages,  a  robust  regional  approach.  The  preparation  of  the  regional  risk 
assessment  and  the  plans  and  the  assessment  of  the  reverse  flow  needs  along  the  corridors, 
could be a lengthy and complex process for the first time. However, the experience gained on 
individual  basis  since  the  Regulation  entered  into  force  and  the  use  of  existing  tools  and 
regional  platforms  in  the  EU  legislation  (e.g.  TEN-E  guidelines)  could  facilitate  the 
coordination and overcome the problems that could be encountered during this process. The 
role  of  supranational  bodies,  the  Commission  and  ACER,  is  to  facilitate  and  stimulate  the 
coordination  among  Member  States  in  particular  in  the  revision  of  the  plans  (peer  review 
mechanisms) and in the reverse flow procedure.  

Regarding the evaluation of the consequences of the application of the revised regulation, this 
could  take  place  as  part  of  the  monitoring  obligations  of  the  Commission  in  the  current 
Regulation under Article 14. The evaluation pursues the assessment of the effectiveness of the 
measures implemented in order to achieve the general objectives identified in section 4. Given 
the  wide  set  of  amended  and  new  measures  of  the  revised  regulation,  the  evaluation  will 
necessarily  cover  the  whole  legislative  proposal.  The  results  of  the  overall  implementation 
will be assessed six years after the entry into force of the revised Regulation. The reason for 
this  proposed  timing  is  to  ensure  a  complete  picture  of  the  implementation  based,  in 
particular, on the assessment of the plans87.  

As part of the evaluation exercise, the Commission will carry out a stress test, similar to the 
exercise of 2014, to assess the ability of the energy system throughout Europe to cope with 
unusual  situations  such  as  a  gas  disruption  or  extremely  high  demand88.  The  results  of  the 
modelled scenarios -before and after the implementation of the revised regulation- will draw 
conclusions  on  the  effectiveness  of  this  legislative  proposal  to  achieve  the  objectives 
identified.  In  particular,  the  EU-wide  simulation  will  provide  a  quantitative  assessment 
showing how the most vulnerable Member States are more resilient and therefore less affected 
in the event of a crisis, due to better level of preparedness and enhanced regional cooperation. 
The quantification of the benefits could include, among others, the value of disrupted demand 
avoided89 and the less impact on increased prices90.  

The  fulfilment  of  the  specific  objectives  pursued  by  the  revised  regulation  could  be  also 
assessed  on  regular  basis  (e.g.  after  plans  are  submitted  by  Member  States)  through  several 
indicators91.  In  particular,  the  country-specific  supplier  concentration  index92  could  serve  to 

87  

88  

89  

90  

91  

The  plans  could  be  delivered  for  first  time  e.g.  two  years  after  the  entry  into  force,  following  similar  scheme 
introduced by the current Regulation. After the first submission, plans would be prepared every four years. 

In order to carry out a stress test, the Commission would follow similar methodology used for the exercise of 2014. 
All  Member  States  should  participate  and  run  a  series  of  scenarios  simulating  a  disruption  of  gas  supply  or 
extremely high demand. The analysis of the results would be carried out by the Commission in cooperation with 
ENTSOG. 
Similar methodology applies ENTSOG in the cost benefit analysis set out in Regulation 347/2013 to evaluate the 
PCIs projects. (See further information in the Annex 6). 

The starting point for the disrupted demand monetization would be the value of lost load (VoLL) as the basis for 
cash out the involuntary interruption of supply. The impact on prices could be also examined and quantified, with 
particular focus on the average increase of prices. 
The  indicators  mentioned  to  evaluate  the  fulfilment  of  the  specific  objectives  pursued  by  the  revised  Regulation 
will be part of the information that Member States have to include in the risk assessment and plans. The documents 

54 

 
 
 
 
                                                 
 
assess  the  degree  of  diversification  and  evolution  of  the  situation  in  Member  States  and 
regions.  Complementary,  the  access  to  a  pool  of  gas  infrastructures,  including  storage 
and/or LNG terminals, at regional level could also give an indication of the major resilience to 
certain risks (e.g. infrastructure failure, gas supply disruption). 

The  improvement  of  the  infrastructures  could  be  also  tested  through  the  N-1  rule,  in 
particular, how many countries fulfil the N-1 at national and regional level and how close/far 
they are of the 100%  level. The  number of  pipelines  equipped with  bi-directional capacity 
compared to the situation today will be another indication of the effectiveness of the revised 
regulation.  

92  

referred should be updated and submitted to the Commission periodically. The baseline values for the monitoring 
indicators would be the year that the revised Regulation entered into force. The evolution of the indicators would 
be monitored on a regular basis for example after the plans have been submitted by Member States.  
The country-specific supplier concentration index (SCI) is computed as the sum of squares of the quotient of net 
positive imports from an extra European Economic Area country to an importing Member State (numerator) and 
the gross inland consumption of gas in the importing Member State (denominator). Smaller values of SCI indicate 
larger diversification and hence lower risk. 

55 

 
 
 
 
 
 
                                                                                                                                                         
ANNEX 1: PUBLIC CONSULTATION 

A public consultation was organized between January 15th and April 8th 2015 and produced 
106 responses from stakeholders. The majority of respondents came from private sector and 
associations  (consumer,  regulatory  and  industry)  but  relatively  a  large  number  of  public 
authorities  also  participated.  Therefore  the  reach  of  the  consultation  can  be  considered  very 
wide.93  

Chart 2: Public consultation structure 

Source: European Commission, Responses to the Public consultation on the Revision of Regulation No 994/2010 on security 
of gas supply 

The  consultation  followed  the  structure  of  the  existing  Regulation  based  on  two  pillars: 
prevention  and  mitigation.  On  the  prevention  side,  the  questions  aimed  to  gain  insight  in 
whether  improving  provisions  were  necessary,  but  also  gave  room  to  test  new  ideas,  most 
notably  with  regard  to  the  application  of  measures  to  fulfil  the  supply  standard.  On  the 
mitigation  side,  questions  aimed  to  ensure  that  Member  States  were  prepared  to  manage  an 
emergency  situation  and  in  doing  so  consider  efficient  coordinated  solutions  rather  than 
adopting  a  purely  national  approach,  resorting  to  counter-effective  measures  impacting 
neighbouring countries. 

Regarding  the  outcome,  most  of  public  authorities  focused  on  deficiencies  in  cooperation 
between  Member  States,  while  private  undertakings  and  associations  insisted  that  market 
measures  should  be  priority  in  tackling  security  of  supply  issues.  In  most  of  cases,  the 
proposed options differed depending on the state of the gas market in which the respondent 
operates.  For  example,  the  more  mature  and  developed  the market  the  higher  confidence  in 
market  measures.  The  opinion  of  the  different  stakeholders  has  also  been  reflected  in  the 
assessment and impacts of the policy options in sections 6 and 7. 

93  

See for a list of respondents: 
https://ec.europa.eu/energy/sites/ener/files/documents/List%20of%20stakeholders%20FOR%20PUBLICATION%
20-%20updated%2018%2006.pdf  

56 

 
 
 
 
 
 
                                                 
ANNEX 2: PROVISIONS UNDER THE CURRENT REGULATION  

1. The infrastructure standard: N-1 and reverse flow  

The  Regulation  contains  two  main  elements  that  aim  to  ensure  a  sufficient  degree  of 
infrastructure:  the  N-1  and  the  obligation  to  install  physical  reverse  flow  capabilities  at 
interconnection points. 

The  N-1  rule  aims  at  ensuring  a  certain  redundancy  in  the  system  so  that  in  the  event  of  a 
disruption of the single largest gas infrastructure, the capacity of the remaining infrastructure 
is able to satisfy the transportation of the total gas demand. A regional approach to N-1 can be 
considered when the same gas infrastructure contributes to the supply of gas to more than one 
Member State.  

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. 

Graph 2: Which Member States meet the N-1 rule?  

Note:  Finland  fulfils  the  N-1  using  demand-side  measures;  Ireland  fulfils  the  N-1  at  regional  level  (UK-IE); 
Sweden, Slovenia and Luxemburg are exempted  
Source: Member States' Risk Assessments and Preventive Action Plans 

The N – 1 formula describes the ability of the technical capacity of the gas infrastructure to 
satisfy total gas demand in the calculated area in the event of disruption of the single largest 
gas infrastructure during a day of exceptionally high gas demand occurring with a statistical 
probability  of  once  in  20  years.  Gas  infrastructure  includes  the  gas  transmission  network 
including interconnectors as well as production, LNG and storage facilities connected to the 
calculated  area.  The  technical  capacity  of  all  remaining  available  gas  infrastructure  in  the 
event of disruption of the single largest gas infrastructure should be at least equal to the sum 
of  the  total  daily  gas  demand  of  the  calculated  area  during  a  day  of  exceptionally  high  gas 
demand occurring with a statistical probability of once in 20 years. The results of the N – 1 
formula, as calculated below, should at least equal 100 %.  

57 

 
 
 
 
 
     [ ]                                                      

‘D max’ means the total daily gas demand (in mcm/d) of the calculated area during a day of 
exceptionally high gas demand occurring with a statistical probability of once in 20 years.  

 ‘EPm’:  technical  capacity  of  entry  points  (in  mcm/d),  other  than  production,  LNG  and 
storage facilities covered by P m , S m and LNG m , means the sum of the technical capacity 
of all border entry points capable of supplying gas to the calculated area.  

‘Pm’:  maximal  technical  production  capability  (in  mcm/d)  means  the  sum  of  the  maximal 
technical daily production capability of all gas production facilities which can be delivered to 
the entry points.  

‘Sm’:  maximal  technical  storage  deliverability  (in  mcm/d)  means  the  sum  of  the  maximal 
technical daily withdrawal capacity of all storage facilities which can be delivered to the entry 
points, taking into account their respective physical characteristics.  

‘LNGm’: maximal technical LNG facility capacity (in mcm/d) means the sum of the maximal 
technical daily send-out capacities at all LNG facilities, taking into account critical elements 
like  offloading,  ancillary  services,  temporary  storage  and  re-gasification  of  LNG  as  well  as 
technical send-out capacity to the system.  

‘Im’ means the technical capacity of the single largest gas infrastructure (in mcm/d) with the 
highest capacity to supply the calculated area. When several gas infrastructures are connected 
to  a common upstream or  downstream gas  infrastructure and cannot be separately operated, 
they shall be considered as one single gas infrastructure. 

Regarding  the  reverse  flow,  the  Regulation  put  an  obligation  on  transmission  system 
operators  to  enable  permanent  bi-directional  capacity  on  all  cross  border  interconnections. 
The  Regulation  also  foresees  explicit  exemptions,  e.g.  in  the  connections  to  gas  fields. 
Moreover, Competent Authorities may decide to grant an exemption on a case by case basis 
where reverse flow investments would not enhance security of supply in the target market or 
the  estimated  costs  would  outweigh  the  potential  benefits  for  security  of  supply.  See  as  an 
example the cost estimates for enabling bi-directional capacity in the BBL pipeline. 

Table 5: Cost estimates for enabling di-direction capacity in the BBL pipeline between UK and NL (1) 

Scenario 1 

Scenario 2 

Technical 
feasibility study 

Reverse  flow  capacity 
is  0,7  mln 
m3(n)/h  (equals  168  GWh/day).  This 
scenario 
the  maximum 
physical  reverse  flow  capacity  without 
compression in the UK 

assumes 

Investment costs    € 420 M [€20 M improvements in 
the  pipeline  (boilers,  valves)    +  € 
400  M  reinforcement  of  adjacent  
networks] 

  €  110  M  per  year  for  storing  the 

BBL inventory gas  

Reverse flow capacity is 1,6 mln m3 (n)/h (equals 
384  GWh/day).  In  this  scenario  physical  reverse 
flow  capacity  with  maximum  compressor 
capacity  at  Bacton  (3+1  units)  is  assumed.  It 
would  give  the  same  reverse  capacity  as  the 
initial forward capacity 
  € 225 M (improvements in the pipeline) 
  €  850  M  (reinforcement  of  the  adjacent 

systems) 

(1) The data is based on the technical study done in 2011 so the costs today might be different 
Source: Notification of exemption for reverse flow (Article 7 of the Regulation) 

58 

 
 
 
 
 
 
 
 
 
 
 
2. Risk assessment, Preventive Action Plan and Emergency Plan  

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.  

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. 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  primarily  market-based  as  they  cover  the  pre-crisis  period  and  those 
situations when the market is still functioning and is able to supply customers . 

The  Emergency  Plan  focuses  on  those  situations  when  the  amount  of  gas  provided  by  the 
market  is  not  enough  to  cover  all  demand.  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 has strongly encouraged Competent 
Authorities to 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  

59 

 
 
 
3. Supply Standard and protected customers 

The Regulation 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  (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 .  

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 supply standard is binding in its result. 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  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. 

Graph 3. 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. 

60 

 
 
 
4. Competent Authorities 

The Regulation requires Member States to designate an authority specifically responsible for 
the security of supply the so called "Competent Authority". 

Article  2  of  the  Regulation  defines  Competent  Authority  as  the  national  governmental 
authority  or  the  national  regulatory  authority  designated  by  each  Member  State  to  be 
responsible for ensuring the implementation of the measures set out in the Regulation. This is 
without  prejudice  to  the  ability  of  Member  States  to  allow  the  Competent  Authority  to 
delegate specific tasks set out in the Regulation to other bodies. Such delegated tasks shall be 
performed  under  the  supervision  of  the  Competent  Authority  and  shall  be  specified  in  the 
plans referred to in Article 4. 

5. Gas Coordination Group 

Article 12 of the Regulation establishes the Gas Coordination Group with the aim to facilitate 
the  coordination  of  measures  concerning  security  of  gas  supply.  The  Group  is  composed  of 
representatives of the Member States, in particular of their Competent Authorities, as well as 
the  Agency,  the  ENTSO  for  Gas  and  representative  bodies  of  the  industry  concerned  and 
those of relevant customers. The Commission chairs the Group.  
The Gas Coordination Group shall be consulted and shall assist the Commission in particular 
on the following issues:  
(a) security of gas supply, at any time and more specifically in the event of an emergency;  
(b) all information relevant for security of gas supply at national, regional and Union levels;  
(c) best practices and possible guidelines to all the parties concerned;  
(d) the level of security of supply, benchmarks and assessment methodologies;  
(e) national, regional and Union scenarios and testing the levels of preparedness;  
(f)  the  assessment  of  the  Preventive  Action  Plans  and  the  Emergency  Plans  and  the 
implementation of the measures foreseen therein;  
(g)  the  coordination  of  measures  to  deal  with  an  emergency  within  the  Union,  with  third 
countries  that  are  Contracting  Parties  to  the  Treaty  establishing  the  Energy  Community  and 
with other third countries;  
(h) assistance needed by the most affected Member States.  

The  Commission  convenes  the  Gas  Coordination  Group  on  a  regular  basis  (normally  four 
meetings per year). 

61 

 
 
 
 
 
 
 
 
ANNEX  3:  SUMMARY  OF  THE  SET  OF  MEASURES  INCLUDED  IN  THE  OPTIONS 
PROPOSED FOR THE REVISION OF THE REGULATION  

Option 1 
  Guidelines to encourage the use of the voluntary regional approach 
for the preparation of the Risk Assessment and the Preventive 
Action Plan and Emergency Plan  

  Enforcement of an accurate implementation of the definition of 

protected customers 

  Guidelines to ensure harmonized implementation for the 

compliance with the supply standard 

  Enforcement of compliance with the N-1 rule and re-examination 
of the assessment carried out by Member States for granting 
reverse flow exemptions  

  Guidelines for the information exchange and guidance with 

respect to clauses in gas supply contracts and hub pricing with 
special focus on their relevance for long term gas contracts 
  Encourage the assessment of measures to enhance bargaining 

power 

Option 3 

  Mandatory regional Risk Assessment as the basis for regional 
Preventive Action Plans and Emergency Plans (all prepared 
according to templates). Mandatory review of the Plans by peers, 
discussions at the Gas Coordination Group and possibility for the 
Commission to request amendments (Commission's decisions) 
  Supply standard defined at EU level with an increased oversight of 
the measures to comply with it, via the assessment of the Plans or, 
for new measures, a mandatory public impact assessment 

  No changes to the current definition of protected customers but an 

increased oversight in its implementation 

Option 2 

  Mandatory regional Risk Assessment as the 

basis for national Preventive Action Plans and 
Emergency Plans (all prepared according to 
templates). Mandatory review by peers and 
possibility for the Commission to request 
amendments (Commission's decisions) 

  The level of the supply standard and the means 
to comply with it set at national level on the 
basis of the regional Risk Assessment 

  No  changes 

the  current  definition  of 
protected customers but an increased oversight 
in its implementation 

to 

  New solidarity principle to be applied, subject 
to a positive result of its assessment in the 
Emergency Plan 

  N-1 calculated on the basis of the most critical 

infrastructure 

  Consultation  and  cost  benefit  analysis  along 
the  whole  transportation  corridor  mandatory 
for the reverse flows decisions 

 

Improved targeted access to relevant 
information ahead of an emergency under duly 
justified circumstances   

  Voluntary cooperation with the Energy 

Community on cross-border issues after the 
adoption of the Regulation in the Energy 
Community 

Option 4 
  EU wide risk assessment, Preventive Action 

 

Plan and Emergency Plan  
Increased values of the supply standard and 
prescription of the measures to comply with it 

  Full harmonisation of the definition of the 

protected customers limiting it to households, 
critical social services, like hospitals, and 
district heating for the previous categories.  
  Prescription of the mechanisms to apply the 

solidarity principle.  

  Priority granted to certain categories of protected customers for the 

  Mandatory N-1 at regional level and 

application of the solidarity principle 

  Mandatory application of the solidarity principle on the basis of 
technical and administrative arrangements agreed between 
Member States 
Improved the N-1 complemented by a national hydraulic 
calculation and a series of EU-wide scenarios. 

 

  Higher involvement of the Commission and ACER in the reverse 
flows obligations on the basis of joint decisions to be adopted by 
Member States 

  Mandatory ex-post notification of certain key security of supply 
relevant contracts with third countries and discretion to request 
certain key security of supply gas contracts in force for security of 
supply assessment in addition to the targeted access system 
proposed under option 2 
Inclusion of cross-border issues between the Energy Community 
contracting parties and the EU Member States based on "switch-

 

mandatory reverse flow capacity at every 
interconnection point 

  Ex-ante notification of security of supply 
relevant  contracts with third countries (in 
addition to the measures under option 2) 
  Mandatory joint gas purchasing mechanism 
 
Inclusion of cross-border issues between the 
Energy Community contracting parties and the 
EU Member States based on a single "switch-
on" clause 

62 

 
 
 
 
on" clauses 

ANNEX 4: BACKGROUND INFORMATION   

Figure 1: Different degrees of single supplier dependency in Member States, Source: ACER  

This table compares the gas sector of the Member States on a number of fundamental indicators for market functioning with 
each other and with the desired level set by ACER in its 'Gas Target Model' or GTM. The Churn Rate in the context of the 
Gas Target Model is the volume of gas traded relative to physical volume. The higher this number is, the more 'liquid' is the 
hub in the country. The absence of a figure means the absence of a hub. The  HHI stands for Herfindahl Hirschman Index 
and is a measure of concentration amongst suppliers based on energy measured by firm. The HHI of a market is calculated 
by summing the squares of the percentage market shares held by the respective firms. The highest possible figure is 10,000, 
which  corresponds  to  a  monopoly.  The  RSI  is  the  Residual  Supply  Index  which  assesses  market  power  by  subtracting  the 
Largest  Seller’s  Supply  from the  Total  Supply  and  dividing  it by  Total  Demand.  A  figure  below  100%  is  a  signal  that  the 
largest supplier x is able to practise market power. 

63 

 
 
 
 
 
 
 
Table 6:  Overview of storage obligations and strategic storage regimes in place in a sample of Member States  

Source:  Study  on  the  role  of  gas  storage  in  internal  market  and  in  ensuring  security  of  supply,  prepared  by 
REF4E, Mercados, E-Bridge for DG Energy, July 2015 

64 

 
 
 
 
 
 
 
 
ANNEX 5:  POSSIBLE REGIONS FOR JOINT RISK ASSESSMENTS AND PLANS 

65 

 
 
 
 
 
 
 
ANNEX 6: MODEL FOR THE EVALUATION OF THE REVISED REGULATION BASED 
ON THE STRESS TEST OF 2014 AND ENTSOG METHODOLOGY   

The  model  for  the  evaluation  of  the  revised  regulation  will  be  based  on  previous  EU-wide 
simulations of scenarios (e.g. gas supply disruptions and extremely high gas demand) carried 
out by ENTSOG.   

Stress test exercise carried out in 2014: 

  The  objective  of  this  exercise  was  to  test  the  ability  of  the  energy  system  throughout 
Europe to cope with a severe gas disruption occurring in winter 2014/2015. All Member 
States  were  asked  to  participate  as  well  as  the  Energy  Community  Contracting  Parties, 
Georgia, Switzerland and Turkey. 

  All  participants  were  asked  to  run  a  series  of  scenarios  simulating  a  disruption  of  gas 
supply. The modelled scenarios cover the disruption of the Ukrainian route as well as all 
Russian flows to the EU for a period of 1 month or 6 months covering the whole fall and 
winter  until  February.  The  results  of  these  simulations  have  been  reflected  in  national 
reports submitted to the Commission at the end of August and September and in a joint 
report for the case of the Baltics and Finland. 

  The analysis carried out by ENTSOG shows that in a 6-month disruption of Russian gas 
flows  9  bcm  of  gas  would  still  be  missing  for  the  EU  and  Energy  Community  without 
Ukraine  (out  of  an  estimated  consumption  of  291  bcm).  This  means  that  despite  the 
increase  in  LNG  imports,  in  imports  via  pipeline,  in  domestic  production  and  in 
withdrawals from storage to compensate the 65 bcm from Russia that would be disrupted 
in a 6-month scenario, a deficit of 9 bcm would still remain. This deficit would have to be 
covered  from  other  measures  such  as  fuel  switching,  market-driven  demand  reductions 
and,  ultimately,  by  gas  curtailments  to  different  categories  of  consumers.  Although  this 
shortfall figure is not very high, barely 3% of the estimated consumption over the period, 
it  must  be  noted  that  the  impact  will  be  concentrated  in  a  number  of  countries  such  as 
Finland,  Estonia,  Bulgaria,  Bosnia  and  Herzegovina,  Serbia  and  the  former  the  former 
Yugoslav Republic of Macedonia. 

  ENTSOG has also simulated a scenario in which Member States and Energy Community 
countries apply solidarity to the extent that shortfalls in gas are spread equally, a so called 
cooperative  scenario.  As  a  result  of  this  approach,  the  impacts  in  the  most  vulnerable 
Member  States  are  significantly  dampened,  in  particular  Bulgaria,  Estonia,  Bosnia  and 
Herzegovina, the former Yugoslav Republic of Macedonia and Serbia. At the same time, 
however, Greece and Latvia will also experience some non-negligible deficits. The results 
show  that  an  enhanced  cooperative  approach  can  significantly  improve  the  ability  of 
Europe  to  face  a  severe  disruption.  This  cooperation  must  however  go  beyond  a  mere 
consistency-check  of  national  measures  and  be  extended  to  include  the  identification  of 
synergies  and  agreements  on  solidarity  measures.  Such  an  approach  would  result  in 
efficiency gains, both in economic terms but also in terms of ensuring a very short terms 
security of gas supply.  

66 

 
 
 
 
 
 
 
ENTSOG  methodology  to  evaluate  the  Projects  of  Common  Interest  set  out  in 
Regulation 347/2013:  

The  modelling  based  indicators  developed  by  ENTSOG  to  assess  the  contribution  of  the 
projects to the security of supply are the following:  

1) Remaining Flexibility (RF): This indicator measures the resilience of a zone as the room 
before  being  no  longer  able  to  fulfil  its  demand  and  the  existing  flows  to  adjacent  systems. 
The  value  of  this  indicator  is  set  as  the  possible  increase  in  demand  of  the  zone  before  an 
infrastructure or supply limitation is reached somewhere in the European gas system.  

2) Disrupted Demand (DD): In case the Remaining Flexibility of a zone is zero, the amount of 
disrupted  demand  for  a  given  zone  is  provided  as:  a)  the  unserved  demand,  b)  the  relative 
share of unserved demand. This amount is calculated under the flow pattern maximising the 
spread of the non-fulfilled demand in order to reduce the relative impact on each country. 

3) Uncooperative Supply Source Dependence (USSD): This indicator identifies zones whose 
physical supply and demand balance depends strongly on a single supply source when each 
zone tries to minimize its own dependence. 

.4)  Cooperative  Supply  Source  Dependence  (CSSD):  This  indicator  identifies  zones  whose 
physical  supply  and  demand  balance  depends  strongly  on  a  single  supply  source  when  all 
zones together try to minimize the relative impact (the flow pattern resulting from modelling 
will  spread  the  dependence  as  wide  as  possible  in  order  to  mitigate  as  far  as  possible  the 
dependence of the most dependent zones).  

5)  Supply  Source Price Diversification (SSPDi): This  indicator measures the ability of each 
zone  to  take  benefits  from  an  alternative  decrease  of  the  price  of  each  supply  source  (such 
ability does not always mean that the zone has a physical access to the source).  

ENTSOG seasonal assessments:  

As part of its obligation under Art. 8(3)(f) of Regulation (EC) 715/2009, ENTSOG undertakes 
seasonal  assessments  of  the  European  gas  network.  For  the  winter  outlook,  the  analysis 
focuses on the possible evolution of underground storages inventory along the season and the 
ability  of  the  gas  system  to  face  high  daily  demand  situations.  Sensitivity  studies  are  also 
carried out to further illustrate, among other, the ability to face some disruption events under 
high  daily  demand  situations  and  the  ability  to  face  a  disruption  of  gas  supply  from  a  third 
country (e.g. from Russia through Ukraine for 14 days of high daily demand). 

67 

 
 
 
 
 
 
 
 
ANNEX 7: GLOSSARY 

GAS TARGET MODEL 
The Gas Target Model is a structural framework setting out how a functioning European gas 
market should emerge. It was developed in the framework of CEER (the Council of European 
Energy  Regulators,  association  of  EU  NRAs)  to  enable  the  target  to  complete  the  internal 
market  in  2014  but  also  offers  a  vision  by  2020  and  2025.  It  advocates  for  market  rules 
enabling  European  markets  to  become  integrated  and  advance  in  terms  of  competition, 
sustainability and security of supply. 

PRIMES 
The PRIMES energy model simulates the European energy system and markets on a country-
by-country  basis  and  across  Europe  for  the  entire  energy  system.  The  model  provides 
projections  of  detailed  energy  balances,  both  for  demand  and  supply,  CO2  emissions, 
investment in demand and supply, energy technology penetration, prices and costs. The model 
produces  projections  over  the  period  from  2015  to  2050  in  5-years  intervals.  The  data  are 
based on Eurostat statistics. The PRIMES model covers individual projections for the EU28 
Member  States,  and  also  for  Norway,  Switzerland,  Albania,  Serbia,  Montenegro,  Kosovo, 
Bosnia-Herzegovina,  FYROM  and  Turkey.  The  PRIMES  model  simulates  a  multi-market 
equilibrium solution for energy supply and demand and for ETS and other potential markets 
by  explicitly  calculating  prices  which  balance  demand  and  supply.  PRIMES  simulates 
demand  and  supply  behaviour  by  agent  (sector)  under  different  assumptions  regarding 
economic  development,  emission  and  other  policy  constraints,  technology  change  and  other 
drivers.  The  simulation  of  agents  behaviour  is  based  on  microeconomic  founded  modelling 
which includes technical – engineering oriented – constraints. 

AGENCY FOR THE COOPERATION OF ENERGY REGULATORS (ACER) 
ACER’s missions and tasks are defined by the Directives and Regulations of the Third Energy 
Package,  especially  Regulation  (EC)  713/2009  establishing  the  Agency.  In  2011,  ACER 
received additional tasks  under Regulation (EU) No 1227/2011 on wholesale energy  market 
integrity  and  transparency  (REMIT)  and  in  2013  under  Regulation  (EU)  No  347/2013  on 
guidelines for trans-European energy infrastructure. 

The  Agency's  overall  mission,  as  stated  in  its  founding  regulation,  is  to  complement  and 
coordinate  the  work  of  national  energy  regulators  at  EU  level,  and  to  work  towards  the 
for  electricity and  natural  gas. 
completion  of 

single  EU  energy  market 

the 

ACER plays a central role in the development of EU-wide network and market rules with a 
view  to  enhancing  competition.  The  Agency  coordinates  regional  and  cross-regional 
initiatives,  which  favour  market  integration.  It  monitors  the  work  of  European  networks  of 
transmission system operators (ENTSOs), and notably, their EU-wide  network development 
plans. Finally, ACER monitors the functioning of gas and electricity markets in general, and 
of wholesale energy trading in particular. 

GAS CRITICAL INFRASTRUCTURE 
Gas  critical  infrastructure  means  an  asset,  system  or  part  thereof  located  in  Member  States 
which is essential for the maintenance of the gas supply to customers. 

68 

 
 
 
 
 
 
 
 
ANNEX 8: MINUTES OF THE LAST MEETING OF THE IMPACT ASSESSMENT 
STEERING COMMITTEE  

EUROPEAN COMMISSION 
DIRECTORATE-GENERAL FOR ENERGY 

Brussels,   
ENER/   

MINUTES  
FOURTH MEETING OF THE INTER-SERVICE GROUP  
FOR THE REVISION OF THE SECURITY OF SUPPLY REGULATION 

The  fourth  meeting  of  the  Inter-Service  Group  on  the  revision  of  the  Security  of  Supply 
Regulation (Regulation (EU) No 994/2010) took place on 7 July in DG ENER's premises. The 
meeting  was  chaired  by  DG  ENER  and  a  list  of  attendants  is  provided  as  an  annex  to  this 
note.  

A draft version of the Impact Assessment was distributed to the members prior to the meeting 
and  was  discussed  in  detail  during  the  meeting.  Members  of  this  ISG  may  send  further 
additional comments in written until Friday 10th July c.o.b.  

DG ENER introduced each of the topics, the options proposed and the choice of the preferred 
options and asked attendants for comments/questions.  

Infrastructure standard: N-1 and reverse flows 
JRC warned that a regional N-1 could be misleading and further hinder internal bottlenecks, 
both  at  national  and  regional  level.  In  this  regard,  and  in  order  to  address  national  internal 
bottlenecks,  MS  should  be  required  to  carry  out  a  hydraulic  calculation  in  addition  to  the 
compliance with the N-1. JRS highlighted that all TSOs should be currently in a position to 
perform  such  calculation  as  they  use  this  type  of  models  on  a  regular  basis.  Such  national 
calculation should furthermore consider the analysis of neighbouring Member States to avoid 
double counting (i.e. several Member States relying on the same infrastructure for their own 
domestic use). They support the improvement of the conditions for the calculation of certain 
parameters in the N-1 formula, such as for storage. 

DG  ENER  considered  that  such  a  hydraulic  calculation  could  complement  the  N-1  and  the 
modelling  by  ENTSOG,  providing  a  more  accurate  picture  of  how  Member  States  could 
satisfy  gas  demand  in  the  case  of  the  interruption  of  the  largest  infrastructure.  Attention 
should be paid to the possible obligations, in terms of infrastructure building, stemming from 

69 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
such  a  calculation  as  they  could  have  a  significant  impact  in  costs.  A  cost  benefit  analysis 
could  be  envisaged  to  address  this  problem.  Alternatively,  the  calculation  of  the  hydraulic 
model could be explicitly included in the Risk Assessment as part of the scenarios to be run 
by Member States. 

DG ENER also recalled the situation of pipelines for which an indefinite exemption from the 
obligation to ensure reverse flow capacity has been granted. Regardless of the duration of the 
exemption, Member States have an obligation to repeat the exemption request process in case 
the  updated  Risk  Assessment  (every  two  years)  shows  a  need  for  additional  capacity.  The 
regional  Risk  Assessment,  to  be  proposed  in  the  revised  Regulation,  could  automatically 
trigger this review. 

Supply Standard 
DG COMP supported the approach taken by DG ENER and recalled that storage obligations 
are used as a barrier to entry in certain markets. DG ENER will also consider amending the 
table on page 30 on the costs of storage by including additional figures, such as the GDP, so 
as to allow a reader to understand the order of magnitude of the storage costs. 

Risk Assessment, Preventive Action Plans and Emergency Plans 
No comments 

Protected customers 
DG COMP inquired about the technical issues referred to in option 1. 
DG  ENER  clarified  that  it  refers  to  the  alleged  technical  impossibility  to  selectively  curtail 
non-protected  customers  connected  to  a  distribution  network  located  among  protected 
customers.  Some  deterrent  to  the  consumption  of  these  non-protected  customers  could  be 
introduced via sanctions and obligations to notify consumption levels when an emergency is 
declared and right after it. 

Transparency of contracts 
DG  ENER  apologised  that,  due  to  a  last-minute  reshuffling  of  the  text,  the  draft  impact 
assessment distributed contained a number of editorial mistakes in this section, e.g. the table 
on page 52 needs to be updated and aligned with the current policy options, the definition of 
security of supply relevant contracts should be first described under option 2 and the national 
authorities should be reintroduced in option 3 as the first ones to be notified of the security of 
supply relevant contracts. 
Following a comprehensive discussion, it was concluded that: 

   Option 1 should be clarified so that it is easier to understand for a reader what the new 
elements are compared to the existing provisions under article 13. This option is meant 
to  allow  the  Commission  to  access  relevant  security  of  supply  information,  which 
could  cover  elements  included  in  contracts  (e.g.  contractual  flexibility  margins),  in 
duly  justified  circumstances  and  before  an  emergency  is  possibly  declared.  The 
purposes  for  requiring  this  information  would  have  to  be  included  in  the  revised 
Regulation. 

   In  option  2,  it  will  also  be  added  why  an  ex  ante  assessment  also  on  competition 

grounds is not viable. 

   Option 3 would be clarified, and possibly split in two sub-options, to indicate that: 

70 

 
 
 
 
 
 
 
  Security  of  supply  relevant  contracts  will  be  automatically  notified  to  the 
national  authorities,  as  well  as  to  the  Commission  for  the  security  of  supply 
assessment.  

  Authorities  responsible  for  security  of  supply  first  and  then  also  the 
Commission would assess the contracts from the point of view of security of 
supply. Subsequently the Commission (DG ENER) could request the Member 
State to review the Risk Assessment/Plans in the light of the contract if there 
are security of supply concerns. 

  National authorities would carry out their assessment of the notified contracts 
and, where relevant, present a complaint to the Commission (DG COMP) that 
could trigger the investigation by DG COMP.  

DG ENER will correct the current text on this topic and take some of the comments made into 
account in an updated version to be circulated as soon as possible, which should then serve as 
a new basis for further comments by the group. 

Options to increase the bargaining power  

SecGen insisted on the importance of this topic being addressed in the Impact Assessment to 
the extent possible in the light of the interim results of the on-going study. 

Declaration of emergencies 

No comments 

Application of the revised Regulation to the Energy Community 

DG COMP asked whether the general clause under option 1 can be already considered as an 
option while at the same time it is acknowledged that, since the exact details for the revised 
Regulation are not ready yet, we do not know exactly to which provisions it will apply. DG 
ENER explained that the Contracting Parties' main interest is in a number of issues, such as 
the risk assessment, emergency plans and emergency measures. It further explained how the 
options  could  look  like  in  the  final  legal  text  and  offered  to  clarify  this  in  the  Impact 
Assessment to avoid confusion, including highlighting as examples the topics already known 
as topics of interest for the Contracting Parties. 

DG  ENER  also  informed  the  members  of  the  ISG  that  the  calendar  for  the  revision  of  the 
Decision on Inter-Governmental Agreements (IGAs) is likely to be accelerated and, for that 
reason, they would like to launch a public consultation as soon as possible before the summer 
holidays. It is proposed to consult this ISG on such a document ahead of the creation of its 
own  ISG,  which  can  only  take  place  after  summer.  SecGen  offered  to  further  discuss  in 
bilateral on the procedures for this proposal. 

AOB 
No further issues were discussed under AOB. 

List of attendants 

71 

 
 
 
 
 
 
72