Press Release: Gas Target Model shows how to achieve an EU gas market by 2014

Gas Target Model shows how to achieve an EU gas market by 2014

                                                                                                 Brussels, 15 December 2011

Video Press Release

•    CEER vision paper considers both what can be put in place by 2014 and issues for a
     longer term vision until 2020
•    3rd Package implementation is necessary but not sufficient
•    Well-functioning and connected wholesale gas markets are key
•    Regulators commit to reviewing market liquidity and the degree of integration

CEER1has delivered on its promise to the European Commission to deliver a target model for a European gas market2. The short (13-page) Gas Target Model (GTM) sets out CEER’s vision for the European gas market in 2014 and beyond3. It is the result of a very wide stakeholder engagement with over 700 participants in 5 workshops over the course of the last year.

The Gas Target Model (GTM) rests on the following pillars:
• Well-functioning wholesale markets in all of Europe
• Connecting these functioning wholesale markets in all of Europe
• Secure supply patterns that ensure gas flowing to Europe
• Ensuring that economic investments take place

The GTM contains a suite of recommended steps to achieve a single EU gas market by the 2014 deadline set by th
e European Council, as well as dealing with longer term issues. Walter Boltz video

Commenting on the vision for a European gas target model, CEER Vice President and Vice Chair of ACER’s Board of Regulators, Walter Boltz, said
“Our vision calls for the development of liquid hubs across Europe, which are effectively interconnected through sufficient and efficient levels of interconnection and whereby market integration is served by an efficient use of cross-border capacity such that gas flows in response to price signals and to where it is valued most.”
Click here for 2 min. video

3rd Package implementation is necessary but not sufficient
The basis for achieving the vision for the European gas market is the full implementation of the 3rd Package in general, and entry-exit systems in particular. But, more may be needed to achieve the single market, which is why regulators want to review their national markets and look at what further measure
s could improve liquidity and integrate markets.

Well functioning and connected wholesale markets are key
A core objective is to enable functioning wholesale markets where they do not yet exist and for these wholesale markets to be connected closely. A well-functioning wholesale gas market could be based on a series of entry-exit zones which may be national or in some cases also cross-border in scope, where there are liquid hubs so a sufficient volume of gas is traded and a sufficient number of trades occurs. These liquid market hubs need to be connected through sufficient interconnection4.

Regulators commit to reviewing market liquidity and the degree of integration
Walter Boltz explained that National Regulatory Authorities (NRAs) will assess market liquidity and the degree of market integration:

“Where necessary for creating functioning wholesale markets, NRAs will explore measures to improve market liquidity and the degree of market integration. These measures may be of a national nature, but could also include joint actions with neighbouring markets, for example improving the efficiency of interconnection arrangements via implicit allocation or the creation of market areas or trading regions. This assessment, as well as the development of options to bring about functioning and integrated wholesale markets, and cost benefit analyses shall be concluded by the end of 2012.“

(see Note for Editors below)

1 - The Council of European Energy Regulators (CEER) is the voice of Europe's national regulators of electricity and gas at EU and international level. CEER works closely with, and supports the work of, the Agency for the Cooperation of Energy Regulators (ACER).
2 - At the 18th European Gas Regulatory Forum (Madrid Forum), in September 2010, CEER was asked by the European Commission to initiate a process to establish a target model for European gas markets. Since then, regulators have engaged in extensive dialogue with stakeholders on how the goal of the Internal Gas Market can be achieved. A call for evidence was launched in 2010. CEER then ran five public workshops, stakeholder roundtables, bilateral discussions as well as one webinar, all of which were very well attended. A formal public consultation was carried out between July and September this year. The Gas Target Mogel consultation documents (including the final CEER vision for European Gas Target Model and the Evaluation of Comments be found on CEER’s website
3 - See CEER’s Vision for a European Gas Target Model, Ref: C11-GWG-82-03, 1 December 2011.
4 - In order to connect wholesale markets, it is important that interconnector capacity is used efficiently, i.e. that all market participants can access it, that unused capacity is offered back to the market and that capacity is used such that gas flows from low priced areas to high priced areas. It will be important that efficient investment in network interconnection capacity takes place. One way to support this is for network users to signal their willingness to pay for this additional capacity. Historically, the main mechanisms to do this have been Open Seasons procedures. CEER, in consultation with stakeholders, will develop proposals on how to identify and integrate new capacity, based on market demand established through coordinated market-based procedures. CEER includes this topic in its work plan 2012.



Una Shortall
Tel: +32 484 668599