In February, 2016, the European Commission proposed a revision of its Security of Gas Supply Regulation. The proposal forms part of a wider package, contributing to several of the five mutually-reinforcing dimensions of the Energy Union Strategy. With this revision, the Energy Union pursues the objective to make the EU more resilient to supply disruptions.
The existing Regulation was a major milestone, providing for a much more sophisticated framework in the field of security of gas supply. Thanks to this Regulation, for example, all Member States have currently in place, national plans to prevent and, should it nevertheless occur, mitigate the impacts of a gas crisis. However, a number of problems have been observed in the course of its implementation, and made evident the need for a revision. The Impact Assessment that accompanies the proposal, describes in detail, these problems which can be grouped in four large categories: behavioural biases (purely national approaches to security of supply), external factors (notably the behaviour of suppliers), technical issues related to infrastructures, and a limited scope of application.
In order to address the shortcomings of purely national approaches, the revised Regulation proposes increased regional co-operation, as a tool to improve security of gas supply. This means, more specifically, that Member States have to jointly develop within a region, a Risk Assessment, covering the risks affecting the security of gas supply and, on that basis, prepare a Preventive Action Plan and an Emergency Plan for that area. All three documents must include national sections covering the assessment of risks that, given their limited impact, are to be considered of national relevance only, as well as the appropriate consequent measures. Additionally, they have to include a joint assessment of the risks affecting the region, and the agreed measures to address and mitigate the impact of such risks at regional and national level. A definition of regions has been proposed for this purpose (Annex I) according to a number of criteria, such as existing groups (notably TEN-E), a necessary limitation in size, and the possibilities to pool resources and balance risk across the region.
This approach recognises the need for national measures, whilst establishing a robust framework for co-operation beyond the national borders, as major gas crises are most likely to affect several Member States, simultaneously. Such a framework aims at ensuring the consistency of the analysis and all the adopted measures, avoiding negative impacts of measures on neighbouring Member States, and exploiting possible synergies when designing security of gas supply measures, which will help reduce their costs for all energy consumers. The jointly prepared plans will be subject to a peer review by experts from other Member States, notably from those neighbouring the region, and from ENTSOG, and they will be discussed at the Gas Co-ordination Group to ensure cross-regional consistency and a pan-European view.
Another novelty of the proposal is the inclusion, for the first time, of provisions operationalising, explicitly, the solidarity principle enshrined in the Treaty. According to these provisions (Article 12), the gas supply to consumers other than households, essential social services and district heating cannot continue in a Member State, for as long as and to the extent that, the same group of consumers cannot be supplied with gas in another Member State, to which it is directly connected. This is a last resort safeguard measure aimed at providing help to a Member State in need, in a spirit of true solidarity between Member States. The detailed provisions governing its application have to cover the necessary technical, legal and financial arrangements, including compensation costs. In this regard, the proposal leaves an appropriate level of flexibility for Member States to agree, among themselves, the specific arrangements, given that a ‘one-size-fits-all approach’ would be too rigid and, therefore, not fit for purpose. In case such agreements cannot be reached between two Member States, the Commission may propose a framework, via a decision to enable the concrete application of the solidarity principle.
The current Regulation provides a good legal basis to request information relevant for the security of supply, when an emergency is declared. However, in the winter of 2014-2015, the competent authorities of Member States and the Commission had the experience that there is no legal basis to ask for information before an emergency is declared. During that winter, deviations were observed in gas flows to a certain number of European countries. The Commission and Member States received only limited information for assessment of the situation, provided by some gas companies on a voluntary basis. The competent authorities had no legal basis for formal information requests, since the situation did not (yet) qualify as an emergency.
The revised Regulation aims at improving the access of the competent authorities and the Commission, to information relevant for security of gas supply, irrespective of the declaration of emergency. Each gas undertaking will have to notify the national competent authority and the Commission, immediately, after their conclusion or modification of its gas supply contracts, with a duration of more than one year, that individually or cumulatively with its contracts with the same supplier, or its affiliates, provide more than 40% of the annual gas consumption in the Member State concerned. The notification obligation applies to all commercial agreements relevant for the execution of the gas supply contract.
To avoid a situation, in which contracts that do not meet the 40% threshold, but may be relevant for security of supply are not notified, the competent authorities or the Commission, will be empowered to request the notification of such contracts, on the basis of due justification. Although contracts with a very long duration became rare due to the market’s development, they still exist. If a long-term contract is concluded just before the revised Regulation enters into force, it will not be covered by the automatic notification obligation. If, in addition, such a contract contains a clause linking the price to the hub price, it may not be amended for a number of years. In other words, the automatic obligation to notify amendments will not apply either, in those cases.
These provisions are necessary to ensure that the competent authorities and the Commission receive the necessary information, to conduct a comprehensive assessment of all risks, including the impact of the contractual framework, and possible restrictive clauses that may negatively impact on the security of gas supply.
Member States are already now obliged to enable reverse flows at all cross-border interconnection points, unless they are granted an exemption. Reverse flows are the most cost-effective way to ensure gas can flow to where it is needed, mostly in cases of emergency. Under the new rules, such decisions can no longer be taken unilaterally. Instead, all decisions, including exemptions from the obligation to build reverse flow capacity, will have to be jointly adopted by Member States, on both sides of the interconnection point. The joint decision will be scrutinised by ACER. The Commission may adopt a decision requesting amendments to the joint decision. The Commission's power to adopt a decision will no longer be restricted to cases of disagreement between the Member States.
The revised Regulation will apply to the Contracting Parties of the Energy Community (once the necessary procedures are followed) and help ensure a more effective prevention and management of gas crises at the borders between the EU and the Energy Community.
Given the different legal frameworks, the above obligations will be enforced under different rules in the EU and the Energy Community. In the EU, the Commission has the power to take decisions that are legally binding on EU Member States, and to refer the Member States to the European Courts, in cases of non-implementation. In the Energy Community, legally binding decisions will require the agreement of the Ministerial Council. Therefore, it is important that the obligations of the Member States and the Contracting Parties have reciprocal character. This will be ensured by a procedure, in which the Commission, the Ministerial Council and the Energy Community Secretariat will be involved.
Once the revised Regulation becomes applicable, the Energy Community Contracting Parties will have to conduct a risk assessment, and draw up plans to be co-ordinated with the adjacent EU Member States, in order to avoid measures that would negatively affect security of supply of the respective neighbours. The Contracting Parties would also participate in the solidarity mechanism, and would have the obligation to enable reverse flows at all interconnection points to other Contracting Parties and Member States.
 COM(2016) 52 final
 Regulation (EU) No 994/2010 of the European Parliament and of the Council of 20 October 2010 concerning measures to safeguard security of gas supply and repealing Council Directive 2004/67/EC, OJ L 295 of 12.11.2010.
 Regulation (EU) No 347/2013
 European Network of Transmission System Operators for Gas
 A group of experts from Member States, ACER, industry and consumer associations assisting the Commission on security of gas supply issues.
 Agency for the Cooperation of Energy Regulators