18.3.2022
EN
Official Journal of the European Union
L 90/159
(298) Second, strengthening the gas network and interconnectors would not be a credible alternative either because of the high cost of these measures compared to using existing storage infrastructure.
In any case, this type of investment would not address potential shortages of natural gas in the event of a cold spell and would not be available in the medium term.
(299) Similarly, it appears from the information provided by France that increasing recourse to LNG is not a credible alternative for ensuring security of supply.
Existing liquefaction terminals are operating at a level close to their maximum capacity in order to recoup the significant investment cost.
In addition, almost all LNG cargoes are subject to long-term contracts due to the capital intensity of these projects and are therefore already sold prior to their production.
The lower cost of storing natural gas in gaseous form also explains the lack of development of LNG storage worldwide.
Thus the quantities of LNG available in the short term are low.
(300) Third, France explained that a purely administrative system of penalties imposed on suppliers for failure to supply natural gas to final customers could not be regarded as a satisfactory alternative either.
This kind of system presents a feasibility problem as the balancing of European gas markets takes place on a daily basis.
The load-shedding measures implemented by the system operator in the event of a critical drop in pressure in the network would lead to a subsequent trade in natural gas that would make it extremely difficult to identify the supplier initially in default.
Similarly, the customers cut off are not necessarily the customers of the defaulting supplier.
In this context, France argues that ex ante measures are preferable to ex post penalties.
(301) Fourth, the same applies to load-shedding or interruptibility mechanisms.
The French authorities specified that load shedding was a last resort in the event of a supply crisis and not a flexibility mechanism, the effectiveness of which depends on the consumer’s compliance with the load-shedding order issued by the network operator, since it is not possible to carry out automatic load shedding remotely.
The mechanism for regulating essential storage infrastructure is designed to avoid supply crises requiring the use of load shedding.
Interruptibility mechanisms which address high hazard and low probability risks such as cold spells were still being defined at the time of the reform and were taken into account to assess the demand for natural gas.
On the other hand, interruptibility mechanisms would not be suitable for addressing the risks of congestion characterised by a lower hazard but a higher probability.
(302) In view of these factors, the Commission considers that the regulatory mechanism is an appropriate instrument to facilitate the development of natural gas storage activity and to ensure security of supply.
(c) Proportionality of the aid scheme (303) Aid is regarded as proportionate when it is confined to the minimum amount necessary to limit the effects on the internal market.
(304) In the present case, under the regulatory mechanism, storage operators benefit from a guaranteed income.
To assess the proportionality of the regulatory mechanism, it is necessary to assess the proportionality of the method for calculating the authorised revenue of storage operators described in recitals (59) to (81).
(305) In its opening decision, the Commission expressed doubts about the CRE’s independent economic assessment of the market value of the RAB at the time when the regulatory mechanism was introduced.
The Commission felt that this might have undermined the proportionality of the aid scheme.
(306) Although this valuation is mainly based on gross accounting value and depreciation of assets, France and the beneficiaries were able to demonstrate that the CRE carried out a thorough revaluation of the original RAB on 31 December 2016.
The CRE checked that the depreciation periods requested by the operators corresponded to the periods indicated in their historical accounts and to standard industry data observed in other countries.
In particular, the CRE questioned the depreciation period of cushion gas.
As stated in recital (73), the CRE rejected the request for a depreciation period of 250 years, instead setting the depreciation period for cushion gas at 75 years.
The CRE hired external economic consultants to assist it in defining the initial RAB.
The Commission notes that, following these reviews, the CRE selected an initial RAB of EUR 4,8 billion for the three operators, a drop of 13 % compared to the RAB requested by the operators (see Table 4 in recital (77)).