The feature article this month is on Liquified Natural Gas (LNG) given CEER’s recently published assessment of access conditions to LNG terminals in Europe. A key finding is the need to monitor transparency which needs to be further improved (see the LNG Status Review and a Citizens' Q&A memo).
Save the date (19 June) for CEER’s 2013 Customer Conference which will focus on the path towards achieving the 2020 energy customer vision (see the CEER-BEUC Customer Vision which has received widespread stakeholder support).
We are particularly proud that the European Commission showcased energy as a good example (for other sectors) of cooperation between consumer bodies and regulators at their European Consumer Summit (18-19 March). As well as a dedicated workshop “Enforcement in tandem – effective enforcement in the energy sector”, the recommendations from a multi-stakeholder dialogue on comparison tools (see thereport presented at the Summit) highlighted the work done by CEER in developing Guidelines of Good Practice on Price Comparison tools and commends this work as “an important step towards (self)- regulation in this sector”.
Transparency in LNG needs to be improved
Understanding how LNG terminals are operating and to what degree their capacity is being used (and made available on the market) is an important test of whether competition is developing and what measures are yet needed to reduce any remaining barriers for different sources of gas to access Europe's markets.
What have the regulators assessed? This CEER Status Review provides an assessment of the rules in place, the level of capacity utilisation, spot contracting, secondary market functioning and application of Congestion Management Procedures (CMPs) at individual European LNG terminals. It focuses on market evolution and utilisation relevant to European LNG terminals over the past three years (2009- 2011) for those Member States which currently have LNG terminals.
Main findings The report shows that the share of LNG in total gas supplies has been on the rise (from 28% to 30% in the countries concerned) for the period 2009-2011. Europe’s regasification and storage capacity of LNG has increased, with new terminals coming on line and several under construction. At the same time, the European LNG market is considered as a consolidated market, i.e. market that has not presented significant variations in the period.
From a European perspective, there is available capacity to contract, either on the primary market or through the application of CMPs, leading to capacity being brought back to the market. A secondary market is also available in some terminals and has been used in a few of them (those that are most contracted). This could be a good indicator: as one can expect, in terminals with available capacity all operations are concentrated in the primary market, whereas CMP and secondary markets are working better in more congested facilities. It therefore pursues the final objective of enhancing competition and achieving a single market at European level.
Why is this important for energy customers? While LNG infrastructure development is of key importance to secure gas supplies and to facilitate the development of competition for the benefit of end-customers, effective utilisation of LNG terminals also needs to be ensured. This serves to enhance competition and improve quality of service, in order to avoid inefficient infrastructure, since investment are generally passed on to consumers through their energy bills.
Next Steps European energy regulators plan to focus on monitoring the LNG transparency requirements and consistency of European LNG provisions with the relevant future network codes (in particular, balancing, Capacity Allocation Management (CAM) and CMP).