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North / North West Region Regional Gas Initiative

North / North West Region Regional Gas Initiative. Regulatory Co-ordination Workshop 8 th February 2007. Responses to Issues Paper. Regulatory Co-ordination. Responses Received to Issues Paper. Twelve Individual Responses Six Shipper / Trader Six Transporter

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North / North West Region Regional Gas Initiative

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  1. North / North West RegionRegional Gas Initiative Regulatory Co-ordination Workshop 8th February 2007

  2. Responses to Issues Paper Regulatory Co-ordination

  3. Responses Received to Issues Paper • Twelve Individual Responses • Six Shipper / Trader • Six Transporter • Consolidated Response from European Transporters

  4. General Observations • Assume all regulators consult as much as possible • Obligations under Art 25 Dir and Reg 1775 • Extent limited by National Legislation • Philosophical / Policy differences • Extension of Duties under proposed 3rd EU package • Telecoms Framework Directive good model

  5. How to Co-ordinate • Co-operate in developing harmonised regulations • Compulsory if not voluntary • Common Criteria • Checklist of Issues • One Regulatory Window

  6. Legal Structures • Institutionalised Co-operation • EU regulatory body • Monitor regulatory actions / decisions • Consistent EU Network Codes • Memoranda of Understandings • Mandatory Guidelines

  7. Circumstances where Cooperation NB • Neighbouring Countries • Where direct interconnection • E.g. UK, Ire, Be, Norway, Netherlands • Where new Rules being introduced already operating elsewhere • Specific Projects (cross border investments)

  8. Issues for Co-operation • Open Season • Transport, transparency, trading hubs • New Projects (consenting, construction) • Costs • Gas Quality • Balancing

  9. Impacts from lack of Co-ordination • Different Balancing Requirements • Move imbalance to other market, distort flows, impede trade • Limiting Exit Capacity • Artificially curtailing flows • Different Open Seasons • Risks if required to commit to one jurisdiction first • Compounded if no effective Secondary Trading • Restricts new entry

  10. Dual Regulation • Investments • Different tariff methodologies • Delays in decision making - need for joint consultations at early stages • Access to Pipelines • Entry / Exit regimes • Balancing • Maximum Available Capacities • Quality • Storage Production • Different Country for Connection to Grid

  11. General Examples • Licencing • By Two Regulators • Interconnectors • Storage production different from connection point • Cross Border Pipes • Access (different Entry /Exit Regimes) / Open Season & 2nd ry Cap availability • Pricing Methodology • Balancing Regimes • Compression • Regulatory Asset Bases • Market Arrangements • Balancing • New Procedures • Quality

  12. Specific Examples • UK Exit reforms • No advance Discussions with Ireland / NI • Difference in Open Season (Ne, Be) • Transportation Pricing • Process itself • Technical Access Conditions • Interconnector Auctions (D – NL; DK – D) • Art 22 Exemptions (OFGEM /Dte) • Two regulator Decisions required • Timing different

  13. Specific Examples (2) • UK Interconnector Licencing (Fr, Be, Ire) • Licenced by two Regulators • Potential for Conflict • Gas Quality (UK, Be, NL) • Different Approaches • Inconsistent Approaches to Market Development • Application of Legislation (Swe, Den) • UK Transporter can’t operate Interconnector • German approach to Pipe/pipe and Market Area Competition

  14. How to Manage Risks • Assign Regulatory Responsibilities • Consult Regularly and with Market Players • Framework for Dealing with X border issues • Consult before Licencing - early • Co-ordinate Actions • Guidelines based on Case Histories • Harmonise Business Practices (rules / regulations) • Dispute Resolution Process

  15. Market Arrangements • Mechanisms should be Compatible – Not necessarily Harmonised • Capacity • Entry / Exit need to Correspond • Definitions of Firmness Harmonise Products Sell combined Products Common Auctions or Open Seasons • Balancing Regimes • (hourly v daily) • Penalties Electronic Communications Same timelines for advising Allocated Quantities

  16. Market Arrangements (2) • Secondary Market Harmonise Rules • Transparency • Trading Hubs • Tariffs • No need to fully harmonise if trade not affected • Compression costs can Distort Trade • Joint Consultations could be useful • Gas Quality Discrepancies • Volumetric v Energy

  17. Dispute ResolutionComments • Desirable but not Major Issue • Will become increasingly NB as supplies more diversified and longer distances • May Require National Legislation • Rules enabling EU Commission to take Greater Role may be Needed

  18. Proposals for Dispute Resolution • Independent Mediation (non-binding) • Conciliation – Non binding • Formal Independent Arbiter – binding • ERGEG • Implementing guidelines and monitoring • More powers under 3rd package– binding • Treaties between neighbouring Countries • Mandatory Guidelines • European Courts • Lengthy Process • May be unavoidable

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