FEATURE-Regulators monitor how Europe’s gas security of supply standard is applied
CEER’s new report on the application of the gas supply standard of the gas security of supply regulation (Article 8 of the EU Regulation 994/2010 on measures to safeguard security of gas supply and Article 6 of the revised EU regulation 2017/1938) provides insights on applying the standard at national level.
What’s in the Report?
The report looks at:
- Responsibility for the gas supply standard and calculation method;
- Definition of protected customers;
- Storage obligation; and
- Monitoring of the supply standard.
Since the data collection from CEER’s national regulatory authorities (NRAs) for this report started in 2017, before the entry into force of the revised regulation 2017/1938, the report refers primarily to the practice when Regulation 994/2010 was applicable. Whilst the revised regulation 2017/1938 did not modify the provisions for the supply standard, it is currently under implementation in the Member States (MSs).
Main findings of the Report
Responsibility for the supply standard and calculation method
Article 3 of the Regulation leaves it to the EU MS to designate a competent authority responsible for gas security of supply and in charge of the application of the supply standard. The majority of countries have entrusted the responsibility for the security of supply to the Ministry competent for energy. NRAs are often closely involved and can have specific tasks as defined in the national gas laws (e.g. the Austrian NRA is by national law responsible for monitoring the supply standard). The NRA is the competent authority in only 5MSs.
Article 8 of the Regulation allows the MS to apply an increased supply security standard (e.g. stricter rule than “1 in 20 years” a more severe period than at least 30 days coverage in case of the disruption of the single largest infrastructure under average winter conditions. In terms of the application of the supply standard, in 2017, most MSs apply the “1 in 20 year” rule and compute the corresponding extreme gas consumption in a dynamic statistical manner (yearly update based on historical data). Denmark, France and Netherlands apply more strict criteria to ensure “1 in 50 years” while Ireland and the United Kingdom claim that their markets can ensure (at least) “1 in 50 years”.
Calculations based on recently published Eurostat data for 2016 show that at least 36,9% of EU-28 gas consumption is protected according to the Regulation which amounts to 1823,20 TWh. Volumes and shares in national gas consumption of protected gas varies considerably across MSs.
Definition of protected customers
Various definitions for protected customers are applied, from households (e.g. Austria and Finland) to a maximum extension of the definition including small and medium-sized enterprises connected to distribution network and essential consumption and district heating.
The Regulation provides no specific requirements to meet the supply standard. About half of the EU MSs leave it to the market to choose the tools and the other half have storage obligations. This report found that there are various types of storage obligations throughout Europe ranging from light obligations on suppliers to strong obligations to keep gas in storage. Other MSs do not have storage obligations at all (e.g. Austria, Germany, Greece (where there is no possibility of long term storage in the country), Netherlands, Slovenia, Sweden and the United Kingdom), and some countries (e.g. Hungary, Italy, Latvia, Lithuania, Poland, Portugal and Spain) have strategic storage.
Monitoring of the gas security of supply standard
Monitoring of the compliance of suppliers differs strongly across MSs ranging from only market-functioning control (collective security of supply provision) to individual compliance of suppliers (individual security of supply provision).
NRAs signal the complexity of monitoring compliance of individual suppliers with the supply standard in a hub-based market with internationally active suppliers, where overall monitoring of market functioning and liquidity is considered to be more efficient.