STATUTORY INSTRUMENTS.

S.I. No. 452 of 2004 .

EUROPEAN COMMUNITIES (INTERNAL MARKET IN NATURAL GAS) (NO. 2) REGULATIONS 2004.

S.I. No. 452 of 2004 .

EUROPEAN COMMUNITIES (INTERNAL MARKET IN NATURAL GAS) (NO. 2) REGULATIONS 2004.

Contents

S.I. No. 452 of 2004 .

EUROPEAN COMMUNITIES (INTERNAL MARKET IN NATURAL GAS) (NO. 2) REGULATIONS 2004.

I, DERMOT AHERN, Minister for Communications, Marine and Natural Resources, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 ( No. 27 of 1972 ), and for the purpose of giving effect to Directive No. 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC¹ , hereby make the following regulations:

Citation

1. These Regulations may be cited as the European Communities (Internal Market in Natural Gas) (No. 2) Regulations 2004.

Definitions

2. In these Regulations--

“Act of 1999” means the Electricity Regulation Act 1999 (No. 23 of 1999);

“Act of 2002” means the Gas (Interim) (Regulation) Act 2002 (No. 10 of 2002).

Saver

3. An authorisation, application, licence, designation, decision, determination, direction, consent, notice, notification, order or regulation made, granted or issued under the Gas Act 1976 , the Act of 1999 or the Act of 2002 in force immediately before the making of these Regulations continues in force after such making as if made, granted or issued under the Act concerned as amended by these Regulations.

Definitions (Gas Act 1976 and Act of 2002)

4. (1) Section 2 of the Gas Act 1976 is amended--

(a)  by inserting after the definition of “land” the following:

“‘LNG’ means liquefied natural gas;”,

and

(b)  by substituting for the definition of “natural gas” the following:

“ ‘natural gas’ means any gas derived from natural strata (whether or not it has been subjected to liquification or any other process or treatment) and in this Act, a reference to natural gas may also be construed as including, where the Commission considers it appropriate and where, in the opinion of the Commission, such gas may be technically and safely injected into, and transported through, the natural gas system, biogas, gas from biomass and other types of gas;”.

(2) Section 2(1) of the Act of 2002 is amended--

(a)  by inserting after the definition of “functions” the following:

“‘LNG’ means liquefied natural gas;”,

and

(b)  by substituting for the definition of “Directive” the following:

“‘Directive’ means Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003¹ concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC² ;”.

Public Service Obligations

5. Section 21 of the Act of 2002 is amended by substituting for subsection (1) the following:

“(1) The Minister, following consultation with the Commission and such interested parties as may be determined by the Minister, may by order direct the Commission to impose on such classes of natural gas undertakings as may be specified in the order in the general economic interest, public service obligations which may include security, including security of supply and technical or public safety, regularity, quality and price of supplies, and to environmental protection including energy efficiency and climate protection. Any obligations imposed shall be clearly defined, transparent, non-discriminatory and verifiable.”.

Consumer Protection

6. The Act of 2002 is amended by inserting after section 21 the following:

“Consumer Protection

21A.--(1) It shall be a function of the Commission to ensure that--

(a)  there is a high standard of protection for all final customers in their dealings with natural gas suppliers;

(b)  all final customers are supplied with natural gas of a specified quality at reasonable prices;

(c)  there are dispute resolution mechanisms in place for users of the natural gas system and their final customers;

(d)  there are adequate safeguards to protect vulnerable customers (including the elderly and disabled) which shall include measures to help such customers avoid disconnection;

(2) The Commission may give such directions as it considers necessary to carry out its functions under subsection (1).

(3) Without prejudice to the generality of subsection (1) the Commission shall--

(a) require, through licence conditions, that shippers and suppliers shall each, in a form approved by the Commission, develop, publish, adhere to and keep up to date a customer charter (in this section referred to as a ‘customer charter’) in respect of household customers. The content of the customer charter shall be reviewed by the supplier and shipper concerned at regular intervals and approved by the Commission,

(b) ensure that suppliers provide all household customers with the customer charter referred to in paragraph (a) following its approval by the Commission.

(4) The customer charter shall set out conditions regarding the supply of natural gas to household customers and these conditions shall be fair, transparent, readily accessible and given in clear and comprehensible language in advance of the making of a contractual commitment.

(5) The conditions in the customer charter shall, at least, include conditions which provide that all households customers--

(a)  are informed of their statutory rights to be supplied with natural gas of a specified quality at reasonable prices and have a right to a contract with a natural gas supplier which contract includes the--

(i)  identity and address of that supplier,

(ii)  services to be provided,

(iii) service quality levels offered as well as the time for the initial connection,

(iv)  types of maintenance service, if such service is offered,

(v)   means by which up-to-date information on all applicable tariffs and, if offered, maintenance charges may be obtained,

(vi)  methods of payment of bills by final customers,

(vii)  duration of the contract,

(viii) conditions for renewal and termination of services or the contract or both including connection and disconnection of final customers,

(ix)  existence of any right of withdrawal by either party,

(x)  contact details for customer service and details of complaints mechanism offered by the supplier,

(xi)  compensation and the refund arrangements which apply if contracted service quality levels are not met,

(xii)  method of initiating procedures for settlement of complaints,

(xiii) quality and specification of the natural gas supplied,

(xiv) provision of services to vulnerable customers including the elderly and disabled,

(xv) maintenance of a register of vulnerable customers, including those who by reason of the age or health of a person in the household require a priority service, and

(xvi) emergency gas service contact number;

(b)  have the right to the information referred to in paragraph (a) prior to the conclusion or confirmation of the contract;

(c)  are given adequate notice of any intention to modify contractual conditions and are informed about their right of withdrawal when the notice is given;

(d)  are notified directly of any increase in charges, at an appropriate time no later than one normal billing period after the increase comes into effect;

(e)  receive fair and transparent information on applicable prices and tariffs and on standard terms and conditions, in respect of access to and use of natural gas services;

(f)  are offered a wide choice of payment methods and where there is any difference in terms and conditions arising from choice of method of payment, such difference shall reflect the costs to the supplier of the different payment methods;

(g)  shall be protected against unfair, misleading or predatory selling methods;

(h)  shall be facilitated, if they so wish, in changing supplier and are not charged or penalised for doing so; and

(i)  shall benefit from transparent, simple and inexpensive procedures for dealing with their complaints and such procedures shall enable complaints to be settled fairly and promptly with provision, where warranted, for a system of reimbursement and compensation.

(6) The Commission shall also ensure that where contracts are concluded through intermediaries, the requirements of paragraphs (3), (4) and (5) are met, where relevant, prior to the conclusion of the contract.

(7) A shipper or supplier who fails to comply with a direction under subsection (2) or a requirement made of it by the Commission under subsection (3) is guilty of an offence and is liable on summary conviction to a fine not exceeding €3,000.

(8) Summary proceedings for an offence under subsection (7) may be brought and prosecuted by the Commission.

(9) In this section a reference to a household customer includes a person proposing to become a household customer of the supplier concerned, and who has or is entitled to have a connection to the natural gas system.

Resolution of Disputes

21B.--(1) The Commission shall establish comprehensive, easily accessible, transparent, fair, independent and simple dispute and complaint arbitration mechanisms for any final customer having an unresolved complaint with the holder of a natural gas licence or an intermediary of such a licence holder.

(2) Expenses properly incurred in the discharge of the obligations referred to in subparagraph (a) are deemed to be expenses properly incurred for the purposes of paragraph 16 of the Schedule to the Act of 1999.

(3) The Commission shall issue determinations and directions in writing regarding its decision on the matter in dispute (including, where appropriate, the payment of compensation) and the licence holder concerned shall comply with and be bound by any such direction.

(4) The Commission has the right to publish an outline of any complaint received if this is considered by it to be in the public interest, whether in the report referred to in subsection (6) or otherwise, and in so publishing may withhold publication of details by which persons who are not natural gas licence holders might be likely to be identified.

(5) Any dispute proceedings underway before the coming into operation of this section continues under the procedures established by this section.

(6) The Commission shall publish annually a report to the Minister on--

(a) the number and type of complaints received and their resolution; and

(b) the service levels provided by suppliers.

(7) This section does not apply to a dispute between a final customer and the holder of a natural gas licence where the dispute relates to third party access within the meaning of section 10A of the Gas Act 1976 .”.

Authorisation Procedures

7. (1) Section 16 of the Act of 2002 is amended by substituting for subsection (12) the following:

“(12) Where--

(a)  the Commission refuses to grant a natural gas licence or to give a consent under section 39A(1) of the Gas Act 1976 , or

(b)  the Minister refuses to give a consent under section 40(1) of the Gas Act 1976 ,

section 14(7) of the Act of 1999 shall apply to the refusal.”.

(2) Section 12(3) of the Act of 2002 is amended by substituting for paragraph (a) the following:

“(a) The Minister--

(i)  shall specify by regulations the criteria in accordance with which an application for a consent given under section 39A(1) of the Gas Act 1976 , may be determined by the Commission; and

(ii)  shall publish the criteria with which an application for a consent given under section 40(1) of the Gas Act 1976 may be determined.”.

Gas Capacity Statement

8. Section 19 of the Act of 2002 is amended by substituting for subsection (1) the following:

“(1) (a) It shall be the duty of the Commission to monitor security of supply of natural gas.

(b) The monitoring referred to in paragraph (a) shall include--

(i)  the balance between supply and demand on the natural gas system,

(ii)  the natural gas flows on each part of the natural gas system,

(iii) customer demand on each part of the natural gas system,

(iv) the capacity of the natural gas system,

(v) the level of expected future demand over the following 7 years,

(vi) the envisaged additional capacity being planned or under construction,

(vii) the quality and level of maintenance of the natural gas system,

(viii) the measures to cover peak demand, and

(ix) the measures to deal with a shortfall of capacity by one or more suppliers.

(1A) The Commission shall prepare and publish not later than 31 July in each year, commencing in 2005, a statement (in this section referred to as a ‘gas capacity statement’) outlining the findings resulting from the monitoring specified in subsection (1), together with the measures taken or envisaged to address any issues identified.

(1B) The Commission shall send a copy of the gas capacity statement to the Commission of the European Communities.”.

Code of Operations

9. Section 13 of the Act of 2002 is amended--

(a) in subsection (1)--

(i)   by inserting “, including technical safety criteria,” after “in respect of all technical design, operational and other requirements” and

(ii)   by inserting “ of a type mentioned in section 16(1)(a)(iii), (iv), (v) and (vi)” after “the holder of a natural gas licence”,

and

(b) by inserting after subsection (4) the following:

“(5) The Commission shall forward a copy of each code of operations to the Commission of the European Communities in accordance with Article 8 of Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998.”.

Natural Gas Licences

10. Section 16 of the Act of 2002 is amended--

(a) by substituting for subsection (1) the following:

“(1) (a) Subject to subsection (4) and section 16A, the Commission may grant, on such terms and conditions as may be specified in the licence, or may refuse to grant, to any person a licence (a “natural gas licence”) in respect of any or all of the following activities--

(i)  the supply of natural gas,

(ii)  the shipping of natural gas,

(iii)  the operation of a transmission system,

(iv)  the operation of a distribution system,

(v)  the operation of an LNG facility, or

(vi)  the operation of a natural gas storage facility.

(b) For the purposes of Articles 7 and 11 of the Directive, a person who has been granted a licence in respect of the operation of a--

(i)  transmission system shall be deemed to have been designated as a transmission system operator,

(ii)  distribution system shall be deemed to have been designated as a distribution system operator,

(iii)  LNG facility shall be deemed to have been designated as an LNG system operator, and

(iv)  natural gas storage facility shall be deemed to have been designated as a storage system operator.”,

(b) by deleting in subsection (8) “paragraph (a), (b) or (c) of”,

(c) by substituting for subsection (13) the following:

“(13) A holder of a natural gas licence shall--

(a)  operate, maintain and develop under economic conditions such facilities or systems as required for the purpose of carrying out the activity for which it is licensed with due regard to the environment and public safety,

(b)  not discriminate between system users or classes of system users particularly in favour of related undertakings,

(c)  provide any natural gas undertaking with sufficient information to ensure that transport or storage of natural gas may take place in a manner compatible with the safe secure and efficient operation of the natural gas system,

(d)  without prejudice to any legal obligation to disclose information, preserve the confidentiality of commercially sensitive information obtained in the course of carrying out its business,

(e)  in the case of the holder of a licence of a type specified in subsection (1)(a)(iii) or (iv), shall prevent information about its own activities which may be commercially advantageous being disclosed in a discriminatory manner,

(f)  in the case of the holder of a licence of a type specified in subsection (1)(a)(iii), (iv), (v) or (vi) provide system users with the information they need for efficient access to the system,

(g)  in the case of the holder of a licence of a type specified in subsection (1)(a)(iii) procure the energy they use for the carrying out of their functions according to transparent, non-discriminatory and market based procedures,

(h)  in the case of the holder of a licence of a type specified in subsection (1)(a)(iii) or (iv), where the system operator is responsible for balancing the gas system--

(i)  adopt rules for that purpose which are objective, transparent and non-discriminatory, including rules for the charging of system users of their networks for energy imbalance, subject to approval by the Commission,

(ii)  ensure that terms and conditions, including rules and tariffs, for the provision of balancing services, are established pursuant to a methodology compatible with Article 25(2) of the Directive in a non-discriminatory and cost-reflective way, and

(iii) publish such terms and conditions, including rules and tariffs,

and

(i)  provide all documents, records, accounts, estimates and other information, whether oral or written, requested from time to time by the Commission, in the form and at the times specified by the Commission, for the purpose of verifying that the holder of the licence is complying with the conditions of the licence, or as may be required by the Commission in the performance of its duties or functions imposed under this Act.”,

and

(d) by inserting after subsection (17) the following:

“(18) A natural gas undertaking shall comply with any directions made by the Commission under this Act or the Gas Act 1976 within such time period as may be specified by the Commission in the direction.”.

Unbundling of Accounts of Natural Gas Undertakings

11. The following is substituted for section 17 of the Act of 2002:

“17.--(1) (a) Every natural gas undertaking, except for an undertaking engaged in the production of natural gas and no other natural gas activity, whatever its system of ownership or legal form, shall--

(i)   where the Companies Acts 1963 to 2003, applies to it, draw up, submit to audit and file its annual accounts in accordance with the requirements of those Acts, or

(ii)   where it is not required to conduct an audit or file annual accounts under the Companies Acts 1963 to 2003, it shall cause its annual accounts to be audited as if it were a company to which paragraph (a) applied and make available for inspection at its head or principal office in the State by any member of the public a copy of the accounts it would be obliged to file if it were a company to which paragraph (a) applied.

(b) The audit of accounts referred to in paragraph (a) shall, in particular, verify that the obligation to avoid discrimination and cross-subsidies referred to in subhead (2) is respected and the auditor shall include a certificate in the report accompanying the audited accounts in relation to such matters.

(c) Paragraph (b) shall apply with effect from the first accounting period commencing after 1 July 2004.

(2) (a) For the purpose of avoiding discrimination, cross-subsidisation and distortion of competition, natural gas undertakings shall, in their internal accounting--

(i) keep separate accounts for their transmission, distribution, LNG, storage, shipping and supply activities;

(ii) keep accounts, which may be consolidated, for other natural gas activities not related to transmission, distribution, LNG, storage, shipping and supply;

(iii) where appropriate, consolidated accounts for other, non-natural gas activities, as they would be required to do if the activities in question were carried out by separate companies; and

(iv) specify the revenue from ownership of transmission and distribution pipelines.

(b)  In preparing the accounts referred to in paragraph (a), natural gas undertakings shall include a balance sheet and a profit and loss account for each activity to which that paragraph relates.

(c)  Natural gas undertakings shall specify in notes to the annual accounts the rules for the allocation of assets and liabilities and expenditure and income, as well as for depreciation, which they follow in drawing up the separate accounts referred to in paragraphs (a) and (b).

(d)  The rules mentioned in paragraph (c) may be amended only with the approval of the Commission and any amendment to which this paragraph relates shall be mentioned and duly substantiated in the notes to the annual accounts.

(e)  The annual accounts of natural gas undertakings shall indicate in notes to their annual accounts any transaction of a certain size (being a size, which, in the opinion of the Commission, would have a significant commercial impact) conducted with related undertakings, within the meaning of Article 2.22 of the Directive.

(3) (a)   Without prejudice to the generality of subsection (2)(a)(i), natural gas undertakings shall keep separate accounts in relation to the supply of natural gas to eligible customers and customers that are not eligible customers.

(b)  In paragraph (a), ‘eligible customers’ means persons who have a right to be made an offer by a facility or pipeline operator to enter into an agreement for third party access.

(4) (a)   The Commission, for the purpose of Article 16 of the Directive, shall--

(i)  have the right to require the preparation of and to have access to the accounts kept in accordance with this section of natural gas undertakings in whatever form may be required to discharge its functions under this Act, and

(ii)  preserve the confidentiality of commercially sensitive information.

(b)  The Commission shall determine that which constitutes commercially sensitive material and may provide for the disclosure of such information where this is necessary in order for it to carry out its functions.

(5) Without prejudice to the generality of subsection (4) natural gas undertakings shall provide all documents, records, accounts, estimates or other information, whether oral or written, in relation to such activities requested, from time to time, by the Commission, for the purpose for verifying that the undertaking (or a subsidiary of the undertaking) is complying with the conditions of any licence granted or any direction given to it by the Commission, or as may be required by the Commission in the performance of its functions under this Act.”.

Functions of the Commission

12. (1) Section 9 of the Act of 1999 is amended by inserting after subsection (1A) the following:

“(1B) The Commission shall be responsible for ensuring non-discrimination, effective competition and the efficient functioning of the natural gas market, by monitoring in particular--

(a) the rules on the management and allocation of interconnection capacity, in conjunction with the regulatory authority or authorities of those Member States with which the interconnection exists;

(b) any mechanisms to deal with congested capacity within the national gas system;

(c) the time taken by transmission and distribution system operators to make connections and repairs;

(d) the publication of appropriate information by transmission and distribution system operators concerning interconnectors, grid usage and capacity allocation to interested parties, taking into account the need to treat non-aggregated information as commercially confidential;

(e) the effective unbundling of accounts to ensure that there are no cross subsidies between transmission, distribution, storage, LNG and supply activities;

(f) the access conditions to storage, linepack and to other ancillary services;

(g) the extent to which transmission and distribution system operators fulfil their functions;

(h) the level of transparency and competition.

(1C) The Commission shall in its annual report under paragraph 25(c) of the Schedule, include details on the outcome of their monitoring activities of the natural gas market referred to in subsection (1B).”.

(2) The Act of 1999 is amended by inserting after section 9 the following:

“Approval of terms and conditions

9A.--The Commission shall be responsible for determining or approving prior to their entry into force, at least the methodologies used to calculate the terms and conditions for the provision of balancing services in relation to the natural gas system.”.

EXPLANATORY NOTE.

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

These Regulations transpose the non-discretionary provisions of Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC relating to, inter alia, consumer protection, natural gas licences, accounting procedures and the functions of the independent regulator.

¹ O.J. No. L 176, 15.7.2003, p. 57.

¹ O.J. No. L 176, 15.7.2003, p. 57.

² O.J. No. L 204, 21.7.1998, p. 1.