In January 2009, the Russian-Ukrainian gas crisis caused serious disruptions of gas supplies to the Community. The Commission has failed to deal efficiently with the gas dispute. The existing Directive 2004/67/EC concerning measures to safeguard security of natural gas supply has been deemed by Brussels to be inadequate to deal with supply disruptions. According to the European Commission, “Member States still enjoy a large margin of discretion as to the choice of measures” as regards the security of gas supply. Hence, the Commission proposed a draft regulation concerning measures to safeguard security of gas supply, repealing Directive 2004/67/EC.

Last June, behind a close doors meeting, the European parliament, the European Commission and the Council reached a compromise deal on the proposal. On 21 September, the European Parliament voted in favour of the compromise deal, adopting the Regulation on Security of Gas Supply. Several member states, including the UK have raised concerns over the extended powers which the proposal confers on the Commission however the compromise deal has not reduced such powers.

Member States would be required to designate a competent authority to be responsible for security of gas supply. Such competent authorities would be responsible for monitoring security of gas supply at national level, assessing risks to supplies, establishing preventive and emergency action plans. Unsurprisingly, they would be coordinated by the Commission at the Community level through the Gas Coordination Group.

Each competent authority is required to ensure that adequate interconnections, storage and reverse flow capacities are in place as well as demand-side measures, such as fuel switching for power plants and increased use of renewable energy sources. The regulation introduces a general requirement of reverse flow capabilities on all intra-EU interconnectors. The transmission system operators would be required to ensure the permanent physical capacity to transport gas in both directions on all interconnections within three years from the entry into force of the regulation. The regulations provides for exceptions, nevertheless the final decision on the reverse flows and interconnectors authorisation will be taken by the Commission.

The European Commission has stated that “Different sources of Community funding are available to support Member States to finance the necessary investment in indigenous production and infrastructure” particularly “loans and guarantees from the European Investment Bank or funding from regional, structural or cohesion funds.” In fact, the Commission has allocated 1.4bn euros, in the European Energy Programme for Recovery, to fund cross border gas infrastructures.

Under the draft regulation, each competent authority is required to establish a preventive action plan, at national level, which must contain the necessary measures to mitigate the risks identified and an emergency plan containing the measures necessary to mitigate the impact of a gas supply disruption. But, before adopting such plans, the competent authorities are required to consult the Commission and consult each other. The compromise deal foresees the possibility of joint preventive action plans and joint emergency plans being established at regional level, in addition to the national plans.
The Commission will then assess the plans of all Member States and has the power to require a revision if considers that they are not effective or they do not comply with this Regulation, or they are inconsistent with the plans of another competent authority, the competent authorities will have therefore to amend their plans. The Commission may also require the competent authority to review a preventive action plan whilst presenting recommendations for amendments, if it considers that the plan endangers the security of gas supply of other Member States. The European Commission will have, therefore, the final word on approving member state action plans.

The regulation sets up a common gas security indicator and supply standard. The proposal provides for a common indicator to define a serious gas supply disruption, the so called N-1. The N-1 indicator describes the ability of the gas infrastructure's capacity to supply gas for maximum demand in a given area in case of disruption of the largest infrastructure. Member States are required to ensure that, by 2014, in the event of a disruption of the largest gas supply infrastructure, “the capacity of the remaining infrastructure, is able, to satisfy total gas demand of the calculated area during a day of exceptionally high gas demand occurring with a statistical probability of once in 20 years.”

The Commission has stressed that Member States would decide how best to achieve the N-1 benchmark. However, each competent authority would have to report to the Commission any non compliance with that standard.

Moreover, the European Parliament and the Council agreed that the member states competent authorities will be able to require to the natural gas undertakings to introduce measures to ensure gas supply to the protected customers of the Member State. The regulation defines "protected customers" as household customers, but member states may also include small and medium-sized enterprises and essential social services, providing they do not represent more than 20 % of the final use of gas. Hence, gas companies will be required to ensure gas supplies to householders in cases of “extreme temperatures during a seven-day peak period”, in “any period of at least 30 days of exceptionally high gas demand” and for “a period of at least 30 days in case of the disruption of the single largest gas infrastructure under average winter conditions .”

The Member State’s competent authorities will also have to establish emergency plans taking into account different crisis levels as defined in the Regulation. Such plans will detail the mechanisms used to cooperate with other Member States for each crisis level as well as the required actions to make gas available in case of an emergency. Moreover, they would be required to notify the Commission and provide it with all the necessary information when they declare any of the crisis levels. In case of an emergency, the competent authorities must follow the emergency plan pre-described actions and shall without delay inform the Commission about the actions they intend to take. Unsurprisingly, the Commission will have the power to require the competent authorities to change such measures and to lift their declaration of emergency.

Under the compromise deal the Commission may declare a Union or regional emergency at the request of one competent authority and shall declare it at the request of at least two competent authorities.
The Commission has been given extensive coordination powers during crises. The Commission will have the power to coordinate actions between Member States and towards third countries and to ensure exchange of information. Member States would be obliged to collaborate more closely in a crisis through the revised Gas Coordination Group, chaired by the European Commission. Moreover, the Commission would be empowered to require competent authorities or natural gas undertakings to change their action if it is considered inappropriate to deal with a EU or regional emergency or if it jeopardizes the situation in another Member State. Furthermore, the regulation prevents Member States to introduce any measures restricting the flow of gas within the EU, during a crisis. The Commission will create an EU task force to monitor the gas flows within and outside the Community, in cooperation with the supplying and transiting countries. The costs of the monitoring task force would be covered by the Community budget.

Several Member States were also concerned over the level of information that, under the proposal, they would be required to provide to the Commission, particularly during an emergency. However, the compromise deal has not changed such provisions. Furthermore, gas companies will have to notify to the Commission contracts concluded with suppliers from third countries and Member States would be required to notify the Commission of all intergovernmental gas supply agreements with third countries dealing with security of gas supply. According to the Commission such information is necessary to assess the EU’s security of supply and claims that it will ensure the confidentiality of commercially sensitive information. However, one could wonder whether confidentiality would be guaranteed.