ANRE’s abuse against gas suppliers

by Dumitru Chisalita

ANRE annually issues an Order by which it sets for each licensed supplier the obligation to store gas to guarantee the security of gas supply. This practice violates the legislation in force. The obligation to establish by the supplier a minimum gas stock in the storage facilities is a measure derived from the provisions of Directive 67/2004 concerning measures to safeguard security of natural gas supply and transposed in Romania by Law 346/3 December 2007. Law 346/3 December 2007 (which transposed the Directive 67/2004), provided in art. 16. (2) “The minimum level of gas stock is determined annually, by decision of the National Energy Regulatory Authority, with consideration mainly of existing storage capacities, consumption forecast, frequency and duration of periods with low temperatures, ensuring a level corresponding to domestic consumption”. This law enabled ANRE to issue orders to force suppliers to store gas in the period of 2008-2010. In 2010, EU Directive 67/2004, which was the basis of Law 346/2007 and entitled ANRE to force suppliers to store gas, was repealed by EU Regulation 994/2010 concerning measures to safeguard gas supply security. Regulation 994/2010 no longer requires application in Romania by issuing a law, being applied also in Romania as of the entry into force. Thus, Law 346/2007, which transposed the Directive 2004/67/EC, Directive repealed by Regulation 994/2010, was implicitly repealed. Moreover, art. 148 of the Constitution of Romania shows that European Regulations take precedence over any other regulation in Romania. Thus, accepting ANRE’s interpretation, that Law no. 346/2007 is not repealed (failure to repeal Law 346/2007 being an oversight of the Parliament of Romania), Regulation 994 will apply in Romania and not Law 346/2007, according to the Constitution of Romania. In conclusion, ANRE wouldn’t be entitled, as of 2011, to set the obligation for suppliers to store gas for conditions to safeguard gas supply security. Respectively, ANRE wouldn’t be entitled during 2011-2016 to fine gas suppliers for failure to comply with the obligation to store gas. Regulation 994/2010 established that as of 2011: a measure to ensure gas supply security to protected consumers in emergency situation is the establishment of a minimum stock by the Competent Authority in Romania. In 2013, under GD 429/2013, the Department for Energy was appointed as National Competent Authority to prevent and coordinate emergency situation in the field of natural gas, and with the disestablishment of the Department for Energy and takeover of its duties by the Ministry for Energy, Small and Medium Enterprises and Business Environment, this ministry was appointed under GD 42/2015 and subsequently the Ministry of Energy was appointed under GD 980/2015 as Competent Authority to apply the Regulation (EU) no. 994/2010 concerning measures to safeguard gas supply security. Thus, the institution that could force the establishment of a minimum gas stock in storage facilities at the level of suppliers (those who sell gas to household customers and only within the limit of covering with gas the emergency situation) as of 2013 was only the Department for Energy/Ministry of Energy. Moreover, Law 160/2012 on ANRE’s functioning does not list among ANRE’s duties the establishment of the minimum stock of gas stored or responsibilities in terms of gas supply security. Protected consumers provided by Regulation 994/2010 are all household consumers in Romania. Although Regulation 994/2010, gives the possibility for each state to appoint other protected consumers and communicate them to the European Commission, Romania has not adopted any act to appoint other protected consumers, so Romania accepted that the only protected consumers are those provided by the Regulation 994/2010, i.e. household consumers. Thus, there is a legal possibility as of 2011 to establish the obligation to set a minimum gas stock in the storage facilities, for emergency situation, exclusively in the obligation of the Competent Authority (the Department for Energy/the Ministry of Energy) and only for household consumers. The emergency situation in the gas market can be triggered only if gas demand of household consumers for one day is exceptionally high compared to the daily household consumption of the past 20 years. According to Regulation 994/2010, sizing the minimum mandatory stock to be stored is made:

– by the Competent Authority (not by ANRE),

– so that it ensures the exclusive storage of the difference between the amounts of gas consumed on average in a winter day and an expected consumption exceptionally high;

– exclusively to cover the following periods of time:

– for a period of seven days, if the exceptional demand is due to extreme temperatures statistically noticed every 20 years. (The probability of occurrence of this exceptional demand in the winter of 2016/2017 is average to low).

– for a period of 30 days, if the gas demand is exceptionally high, also determined by other causes than temperatures, statistically noticed every 20 years. (The probability of occurrence of this demand in the winter of 2016/2017 is low).

– for a period of at least 30 days, if there is a probability to affect the main gas infrastructure in normal winter conditions. (The probability of occurrence of this demand in the winter of 2016/2017 is low).

– and is exclusively applied by suppliers selling gas to household consumers (protected)

Regulation 994/2010 establishes that in case of inexistence of emergency situation (the situation of forecasted demand for one day much higher than the daily demand of the past 20 years), imbalance between supply and demand must be exclusively resolved based on market mechanisms (without allowing interventions in the market from any institution – Ed.). With the entry into force of Regulation 994/2011, the following are abusive in Romania:

– the obligation to establish the minimum stock to be stored by all suppliers;

– the modality of determining the minimum stock that suppliers must store,

– the modality of using the minimum stock.

But one should not neglect the responsibility of the gas supplier in ensuring gas supply security to customers from own portfolio. This responsibility is full and set by law and in the licensing conditions of the respective supplier. Thus, failure to safeguard supply security determines the violation of licensing conditions and results in fines and/or losing rights to supply gas in Romania. In order to comply with this obligation of the supply license, ANRE as issuer of the license is entitled to act without any indulgence, including by setting customized obligations for each licensed supplier, even of storage. Compliance with the Constitution, Regulations and Laws is an undebatable condition. It is necessary to restart the Gas Market and not to continue the practices of the past, even if it is considered that they are applied with good intentions. The project “Starting over in the gas market” aims to achieve this.

Romanian version: http://dumitruchisalita.ro/2016/03/06/abuz-al-anre-asupra-furnizorilor-de-gaze/