1 SECURITY
OF GAS SUPPLY
(30809)
11892/09
+ ADDs 1-4
COM(09) 363
| Draft Regulation concerning measures to safeguard security of gas supply and
repealing Directive 2004/67/EC
|
| Legal base |
Article 95EC; co-decision; QMV |
| Department | Energy and Climate Change
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| Basis of consideration |
Minister's letter of 23 November 2009 |
| Previous Committee Report |
HC 19-xxvii (2008-09), chapter 1 (14 October 2009)
|
| To be discussed in Council
| 7 December 2009 |
| Committee's assessment | Politically important
|
| Committee's decision | For debate in European Committee A (decision reported on 14 October 2009)
|
Background
1.1 Directive 2004/67/EC establishes a common framework
within which Member States may take steps to safeguard their security
of gas supply, and it requires them to define the roles of the
various market players, and to establish the minimum supply standards.
In particular, they must ensure supplies for households in the
event of a partial disruption of supplies or extremely cold temperatures:
and they may extend this provision to small and medium sized enterprises
and others who cannot switch their sources of supply. They are
also required to draw up national emergency plans, and to indicate
to a newly formed Gas Coordination Group if a situation arises
which cannot be dealt with by national measures. That Group may
also be invited by the Commission to consider situations where
a major supply disruption is likely to occur for a significant
period, and the measures taken by industry or nationally are not
sufficient; and the Commission may then provide guidance to Member
States (or, if this proves to be insufficient, propose further
measures to the Council).
1.2 The Commission put forward in November 2008 a
Communication[1] on the
implementation of this Directive, which highlighted the different
positions of the various Member States, and the way in which the
Directive had left them scope to adapt its provisions. It also
noted that Member States had implemented it in an uneven way,
with potentially negative impacts on other Member States, and
it concluded that a revision was necessary.
1.3 In the light of the responses to that Communication,
the Commission put forward in July 2009 this proposal that Directive
2004/67/EC should be replaced by a Regulation, which would define
more clearly the roles of the gas industry, Member States and
Community Institutions; ensure that each Member State has the
necessary infrastructure in place to cope with the failure of
its largest gas infrastructure or supply source in period of exceptionally
high demand; ensure that national emergency and preventive action
plans are in place, and co-ordinated with those of other Member
States; ensure that gas supply to protected customers can be maintained
in the case of extremely cold temperatures or a period of prolonged
high demand during the coldest weather; require a Member State
to carry out a risk assessment every two years of its security
of supply; define three main crisis levels which a Member State
may declare, and the action to be taken; and ensure that the market
is permitted to function for as long as possible in the event
of supply disruptions, with a requirement that non-market measures
should be introduced if it is no longer able to do so adequately.
1.4 In particular, as we noted in our Report of 14
October 2009, the proposal would give potentially wide-ranging
powers to the Commission, which would be able to declare a Community
Emergency at the request of a competent authority or when more
than 10% of gas supply from third countries is disrupted; to co-ordinate
the actions of competent authorities during such an Emergency;
to require the amendment of national emergency or preventive action
plans; and to request a Member State to lift an emergency declaration,
or to amend the actions it has taken.
1.5 We also noted that, although the Government had
welcomed aspects of this initiative, and did not expect it to
give rise to significant additional costs in the UK (particularly
when set against the possible costs arising from supply disruptions),
it was concerned about the potentially wide powers which would
be given to the Commission, and on how far these would impact
on the UK's own arrangements, especially as some of these have
a safety rather than a supply focus. In particular, it was concerned
that the Commission would be given new powers which would have
implications for subsidiarity, and it said that it would wish
to evaluate these carefully. A further concern was that the Commission
had proposed Article 95EC as the Treaty base, which it had said
is more appropriate than Article 100(1)EC (used for Directive
2004//67/EC) on the grounds the main emphasis of the new Regulation
was on the functioning of the internal market in achieving enhanced
security of supply, rather than on the measures appropriate to
the economic situation, in the event of supply difficulties for
certain products.
1.6 Whilst noting these points, we said that we were
concerned both at the extent to which what was now proposed would
greatly extend the powers of the Commission in this area (and
the implications this would have for subsidiarity), and at the
use of Article 95EC as the legal base. Since we thought it right
that the House should have opportunity to consider these issues
further, we recommended the document for debate in European Committee:
and we asked the Government to update us before then on whether
this proposal complied with the principle of subsidiarity and
had the correct legal base.
Minister's letter of 23 November 2009
1.7 The debate in question is due to take place on
8 December, and we have now received a letter of 23 November from
the Parliamentary Under-Secretary of State at the Department for
Energy and Climate Change (David Kidney).
1.8 As regards the Commission's powers, and whether
these are consistent with the principle of subsidiarity and proportionality,
he says:
- This is an area of shared competence. Internal
market legislation in natural gas has been an area of shared competence
since Directive 98/30/EC, the first internal market package, which
also dealt with aspects of security of supply. Subsequently, Directive
2004/67/EC confirmed that security of supply was a shared competence
with an emphasis towards greater Community action in order to
work further towards an internal market and a co-operative approach
between Member States on security of supply.
- The proposals in the main, but subject to the
views set out below, are consistent with the principle of subsidiarity.
It is clear that the Commission is best placed to oversee Community-wide
application of the Regulation, the appropriate interaction of
emergency plans of Member States, and the co-ordination of action
in a Community Emergency e.g. in declaring a Community Emergency
or requiring a change of action where an action by a Member State
or Competent Authority impacts negatively on the interests of
other Member States and/or distorts the internal market. One or
two Member States have indicated that they consider that the Commission
should not have powers to require changes in Member States' preventative
and emergency plans in respect of actions to mitigate purely national
risks. However, even with the current level of integration between
Member States (and in particular that between the UK and continental
Europe and Ireland) and the expected increase in interconnection
when current internal legislation is fully implemented, we consider
that it is now difficult to envisage how a national market can
remain isolated — and thus the UK accepts that some strengthening
of the Commission's powers in this area is consistent with the
principle of subsidiarity.
- The arguments on proportionality turn on the
degree to which some level of central action (be it direction
or co-ordination) is necessary to ensure energy security when
market measures prove inadequate to deal with a crisis in the
supply of natural gas. The effects of the Russia-Ukraine gas dispute
show that greater co-ordination of Member States' preparation,
and the existence of some overall co-ordinating powers during
a crisis, could help the EU should a similar crisis arise in the
future.
1.9 Nevertheless, he adds that the Government does
have some concerns over the apparent open-ended scope of the proposed
Commission powers in a number of areas, as for example, those
enabling it to require Member States to change their emergency
and preventative plans without clear criteria as to how this judgement
might be made. It also recognises that the proposed Commission
powers to require changes to a Member State's course of action
during a national or an EU emergency needs clarification. The
Minister says that the UK has sought greater clarity from the
Presidency, and will (with other Member States) press for these
powers to be more narrowly defined, with the hope that the issues
will become clearer once the Presidency has produced a revised
text (expected in early December) reflecting discussion so far.
Finally, he says that there are also a number of ambiguities in
the text relating to flows of gas and access to storage which
need to be clarified, and that, in addition to his officials'
continuing to make these points in the meantime, he will himself
do so at the Energy Council on 7 December.
1.10 On the issue of the legal base, the Minister
says that the view is emerging that the Energy Article 194 in
the new Treaty on the Functioning of the European Union (TFEU)
is now considered to be the most appropriate base for this Regulation.
That Article provides that:
"In the context of the establishment and
functioning of the internal market and with regard for the need
to preserve and improve the environment, Union policy on energy
shall aim, in a spirit of solidarity between Member States, to
(a) ensure the functioning of the energy market; (b) ensure security
of energy supply in the Union; (c) promote energy efficiency and
energy saving and the development of new and renewable forms of
energy; and (d) promote the interconnection of energy networks".
1.11 He says that the UK would not dissent from the
view that Article 194 captures the elements of the draft Regulation
in so far as it deals with the functioning of the internal energy
market (including promoting greater interconnection to fill gaps
in infrastructure), as well as security of energy supply, since
there is a strong emphasis throughout the proposal that a well
functioning market is the best means of enhancing security of
supply, and that the market should be allowed to function for
as long as possible, including into early stages of an emergency.
He adds that, if Article 194 TFEU is confirmed as the appropriate
legal base, the ordinary legislative procedure — defined
in Article 289(1) TFEU as joint adoption by the European Parliament
and the Council on a proposal from the Commission — would
apply, and is in essence the same as the co-decision procedure
as set out previously in Article 251 of the EC Treaty.
Conclusion
1.12 We are grateful to the Minister for this
further information, which we are drawing to the attention of
the House in advance of the debate in European Committee A on
8 December.
1 (30188) 15905/09: see HC 19-iii (2008-09), chapter
10 (14 January 2009). Back
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