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Klima-, Energi- og Bygningsudvalget 2014-15 (1. samling)
KEB Alm.del Bilag 229
Offentligt

Danish opinion further to the joint comments of the Competent Authorities

of Belgium, Denmark, Germany and the Netherlands to the European

Commission’s Consultation Paper on the Revision of Regulation (EU) No

994/2010) concerning measures to safeguard security of gas supply and re-

pealing Council Directive 2004/67/EC.

Denmark prioritizes



a more flexible definition of non-protected customers, allowing

for critical parts of the consumption to be protected,

obligations on Member States to ensure that restrictions are not

introduced on gas flow at cross-border interconnections, and

an unchanged division of competences between Commission,

Member States, TSO’s and gas undertakings in an emergency

situation.

General Remarks

Denmark welcomes the Commission’s intentions to amend the EU Regulation

994/2010 concerning measures to safeguard security of gas supply. Denmark

finds that the main instruments of the regulation should be market-based, thus

supportive of the EU’s endeavours to achieve a well-functioning internal mar-

ket for gas. Only in an emergency where the market is not able to meet the gas

demand due to a significant supply disruption non-market based measures

might be introduced.

Denmark also finds that more flexibility is needed regarding provisions that

could have negative effects on growth and employment.

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A final general remark is that Denmark supports initiatives in relation to the

amendment of the Regulation to improve energy efficiency and fuel-switching

to renewable energy from natural gas. Energy savings is a cost-effective tool to

improve energy security and so is fuel-switching.

Main points

The role of Commission, Member States, TSO and gas undertakings

Denmark finds that the current regulation has an appropriate division of re-

sponsibilities between the Commission, Member States, TSO’s and gas under-

takings. Denmark appreciates the Commission’s active role in monitoring and

coordinating the security of gas supply situation in the current geo-political sit-

uation, including the risk of serious interruption of gas supplies to Europe. The

Commission’s monitoring and coordination are important tools for Member

States, TSO’s and gas undertakings for enabling them to promptly take the nec-

essary national actions in order to limit the damage to society of a serious in-

terruption of gas supplies.

There are major differences between Member States with regard to the role of

gas in the national energy mix, number of gas suppliers and the liquidity of the

gas market. Therefore the Regulation should take the national circumstances

into account and become more flexible.

Solidarity

In case of an emergency situation it is vital for neighbouring countries that re-

strictions are not introduced on gas flow at cross-border interconnections. The

revision of the Regulation should deal with this issue in order to allow for cross-

border trade to function freely also in an emergency situation.

Definition of non-protected costumers – market based model

Denmark believes that households, essential social services, small and medium-

sized enterprises and also district heating plants should be protected custom-

ers as these customers are normally not able to switch to other fuels. The chal-

lenge in the Danish gas market is to establish the most socio-economical way to

define the non-protected consumers.

To ensure a well-functioning gas market a new model to define non-protected

customers should be based on the market mechanism. This can be achieved by

introducing e.g. a market based auction approach to identify partly or fully

commercially interruptible customers in an Alert and Emergency situation and

compensate them economically for their fuel flexibility. The auction should be

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open for the entire group of potentially non-protected customers and the auc-

tion could be carried out on a regional level in order to maximize the economic

benefits for the entire group of potentially non-protected costumers. A market

based model would thus be more efficient in meeting the needs of the custom-

ers and maximizing the benefit for industry and society. The Danish TSO in co-

operation with the Danish Energy Agency is working on such a model in order

to have it in place from October 2015.

The current regulation has a rigid administrative approach to the definition of

non-protected customers, in that non-protected customers cannot be “partly

protected”. Danish non-protected industrial customers have explained that

part of their gas-fuelled production is completely dependent on gas delivery

without any possibility for fuel-switching due to the natural gas specific com-

bustion technique. Therefore it is a huge problem for some industries if the en-

tire supply of gas is interrupted in case of an emergency situation. This will

cause damage to the production assets and in some cases the entire produc-

tion must stop as a consequence of missing gas to a smaller “critical supply”-

part of the production. This could be remedied through a more flexible defini-

tion of non-protected customers, allowing for critical parts of the consumption

to be protected. As an example it may be mentioned that a leading global

health care company has explained that the entire production of some medi-

cine products has to be closed down in case the entire supply of gas is inter-

rupted. If they can maintain 10-15 % of the gas supplies the whole production

can be maintained in an emergency situation.

Storage

Denmark calls for initiatives to ensure that the market is given the right incen-

tives to use gas storage facilities in an optimal way by ensuring that the level of

gas in storage is sufficient to meet the needed gas demand in case of emergen-

cy situations. However, legal provisions are needed to ensure the right market

price signals to gas undertakings.

The Danish TSO and the Energy Agency is at request of non-protected costum-

ers investigating whether it would be possible for non-protected consumers to

have gas on storage to be withdrawn and supplied to non-protected costumers

in case of an emergency.

Responsibility and efforts to reduce demand

Solidarity goes hand in hand with responsibility. Denmark finds that focus on

reducing demand in an emergency situation is needed. The revision could

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therefore include an obligation for Member States to have in place plans to re-

duce gas demand for e.g. heating purposes in households in an emergency and

to let rising market prices have immediate effect on consumer prices.

Other points

Regional co-operation

Denmark agrees that strengthening the regional co-operation is an important

tool to improve the security of gas supply on regional and Union level. Regional

emergency plans is an option that might further improve the security of gas

supply and preparedness on a regional level and might ensure supplies to pro-

tected consumers in one Member State instead of supplying non-protected

customers in another Member State.

Preventative action and emergency plans

In order to improve and uniform the national plans and ensure fast and smooth

consultations between neighbouring countries the plans should be based on

common obligatory templates and compulsory English translations. This would

make the consultations more transparent and meaningful to the benefit of the

regional co-operation.

Supply Standard

Denmark believes that the separation of the infrastructure standard and supply

standard is essential. N-1 is an excellent indicator concerning infrastructure.

However, the current definition of the supply standard in Article 8 should be

tightened. It is e.g. a fact that natural gas undertakings in reality are not able to

guarantee supply to the protected customers in case of a major disruption of

gas supplies from third countries if the contractual gas obligations are not ful-

filled.

Furthermore, gas is delivered by private companies and e.g. traded at gas hubs

without public control. This has led to divergence between physical gas flows

and trade flows and it is more or less impossible for the Competent Authorities

to monitor and control that the natural gas undertakings meet the require-

ments.