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Liberalising The Gas Market - Industry Committee Backs Commission Compromise
added: 2008-06-06

The Industry Committee has confirmed its support for liberalisation of the gas market along the lines of a recent Commission compromise proposal, which aimed to address concerns of countries opposed to "full ownership unbundling" (the complete separation of gas suppliers from gas transmission networks) without going as far as the so-called "third option" supported by those countries.

The Committee's final vote on the gas market liberalisation report by Romano La Russa (UEN, IT), delayed since its last meeting in Strasbourg on 19 May to allow more time to reach a consensus, was 31 votes in favour, 16 against and 2 abstentions. An amendment seeking to introduce the "third option" was rejected by 31 votes to 19.

The Commission's original proposal would have given Member States two options: ownership unbundling; or the preservation of integrated supply and transmission companies, provided that the operation of the transmission network was handed over to a separate body. Eight Member States had proposed a third option which kept the transmission network with the suppliers but with a structure to ensure it operates independently in practice.

Rejecting this "third option", the committee confirmed its 19 May endorsement of a proposal based on the recent Commission compromise text, involving the creation of "independent transmission operators" (ITOs). This proposal, like the "third option", would allow a company to retain the ownership of pipelines, if management of them is in the hands of a transmission system operator with "effective decision-making rights", but with some further safeguards of these rights.

According to the committee, Member States and companies could chose between complete ownership separation ("full ownership unbundling") or this new plan (the "independent transmission operator" (ITO) model).

Details of the ITO model

The ITO model leaves ownership of pipelines with the with the gas supply companies, but hands the management over to an ITO whose operational independence would be guaranteed by

- an 'independent trustee”, meant to protect “the asset value of the transmission system operator”;
- a “supervisory body” – composed of gas company representatives, third party shareholders, transmission system operator representatives, as well as the Trustee – responsible for decisions “which may have a significant impact on the value of the assets of the shareholders”;
- a “compliance programme” setting out measures that prevent “discriminatory conduct”;
- a “compliance officer” responsible for monitoring the implementation of the compliance programme.


No later than five years after the directive's entry into force, the energy regulators' Agency would report on whether requirements have managed to ensure the independence of transmission system operators.

Thursday’s vote also confirmed the committee’s position in favour of the Commission's proposal to prevent control of transmission systems by third countries unless there is an EU-third country international agreement.

Consumer protection measures

Other changes made in amendments adopted on 19 May and confirmed on Thursday bolstered the draft legislation with a number of consumer protection measures. Customers, they decided, should have:

- the right to withdraw from contracts with their gas providers without charge;
- the right to compensation if service quality levels are not met (as with, for example, inaccurate and delayed billing);
- access to information on their rights through bills and gas company web sites;
- access to information on procedures to be followed in case of disputes;
- the right to be informed, at least quarterly, of actual gas consumption and costs;
- access to smart meters within 10 years of the directive's entry into force.


As in the vote on the electricity market, the Committee sought to address the needs of vulnerable energy consumers. It decided, therefore, that EU countries should take "appropriate measures [...] to ensure that the number of people in energy poverty" – those unable to afford heating the home to an acceptable standard, as defined by the WHO – "decreases in real terms." MEPs insisted that countries work towards cutting the cost of energy to low income households. In the same vein, they backed an amendment mandating national authorities "to introduce pricing formulas which increase for greater levels of consumption".

This was far from the only amendment to heighten the role for national regulatory authorities. In parallel with the introduction of the new alternative to unbundling, MEPs had already decided on 19 May to mandate national authorities:


- to ensure energy efficiency and integrate renewables (e.g. biogas) in both transmission and distribution grids;
- to “facilitate the access to the grid [...] for new market entrants and renewable energies”;
- to approve the annual investment plans of the transmission system operators;
- to fix or approve network access tariffs;
- to impose sanctions - including penalties of up to 10% of yearly turnover - against gas companies non-compliance with their obligations or for discriminatory behaviour.


Source: European Parliament

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