1. Directorate-General for Energy and Transport Mark van Stiphout – C2 Electricity and Gas GSE Workshop on storage investment 24 May 2007 Policy framework for a secure and competitive gas market the role of storage

2. Table of contents Current EU framework: Directive 2003/55 & GGPSSO Current EU framework: Directive 2003/55 & GGPSSO Identified problems Identified problems –Commission’s report (10-01-07) –ERGEG’s monitoring of GGPSSO Proposals for action by the Commission Proposals for action by the Commission

3. Directive 2003/55 Article 19 – Access to storage Article 19 – Access to storage When technically and/or economically necessary for access to the system: Regulated access Regulated access –Publication of tariffs and/or other terms And/or Negotiated access Negotiated access –Obligation to negotiate access –Publication of main commercial conditions

4. Directive 2003/55 Designation and tasks: MS or natural gas undertakings shall designate system operators MS or natural gas undertakings shall designate system operators Unbundling of accounts Unbundling of accounts Each SSO shall: Each SSO shall: ‘operate, maintain and develop under economic conditions secure, reliable and efficient’ ‘operate, maintain and develop under economic conditions secure, reliable and efficient’ Refrain from discriminating Refrain from discriminating Provide other system operators with information Provide other system operators with information Provide system users with information necessary for efficient access Provide system users with information necessary for efficient access

5. Directive 2003/55 Regulators monitor access conditions (Art 25.1(f)) & account unbundling (Art 25.1(e)) Regulators monitor access conditions (Art 25.1(f)) & account unbundling (Art 25.1(e)) Confidentiality of commercially sensitive information (Art 10) Confidentiality of commercially sensitive information (Art 10) Definition (Art 2.9) excludes : Definition (Art 2.9) excludes : –temporary LNG storage necessary for the regaseification process, –storage used for production, –storage exclusively used by TSOs for their network functions

6. GGPSSO Voluntary Guidelines for Good Practice for Storage System Operators: Voluntary Guidelines for Good Practice for Storage System Operators: –Tariff structure and derivation –Necessary TPA services –Capacity allocation and congestion management –Transparency –Secondary market –Penalties –Confidentiality of users data –Cooperation with TSOs –roles and responsibilities of SSOs –role of storage users Applicable to both rTPA and nTPA Applicable to both rTPA and nTPA Voluntary agreement in the Madrid Forum by all stakeholders Voluntary agreement in the Madrid Forum by all stakeholders

7. Identified problems on access to storage I ERGEG monitoring of GGPSSO: ERGEG monitoring of GGPSSO: –Transparency (Confidentiality); –Equal treatment of storage users; –Congestion management; –Storage facilities in MS exempted from TPA; –Levelling regulatory powers;

8. Identified problems on access to storage II Hoarding/Lack of availability of storage capacity Hoarding/Lack of availability of storage capacity –Storage owned by incumbent companies –Long-term contracts for storage –Efficient hoarding measures? Competition disturbance due to co-existence of different access regimes in the EU Competition disturbance due to co-existence of different access regimes in the EU –Germany – Italy –France – Belgium Discriminatory access or no access rules Discriminatory access or no access rules Limited availability of flexibility Limited availability of flexibility –Flexibility is offered as a joint product of storage/production and the commodity

9. Investment in storage Production capacity in the EU is decreasing Production capacity in the EU is decreasing –Replaced by pipeline gas with high load factor Investment needs in (seasonal) storage Investment needs in (seasonal) storage –Sufficient market signals –risk hedging possibilities –Cushion gas price Timely investment signals? Timely investment signals? Storage for security of supply purposes Storage for security of supply purposes

10. Further actions Commission’s communication: Commission’s communication: –Unbundling of storage system operators –Binding guidelines based on GGPSSO –Increased power of national regulators –Strategic gas stocks EU legislation & Subsidiarity EU legislation & Subsidiarity Access & Investment Access & Investment Competition & Security of Supply Competition & Security of Supply