UK government changes legislation to meet EU Gas Directive

Jul 21, 2000 02:00 AM

Changes to legislation announced will keep Britain well ahead of the requirements of the EU Gas Directive. The changes improve third party access to upstream and downstream pipelines and ancillary facilities such as gas processing terminals and gas storage facilities.
The main requirement of the Directive is for at least 33 % of national gas markets to be open to competition by 2008. Britain has had 100 % competition in the gas market since 1998. However, they have had to make certain limited technical changes to our legislation to meet the Directive's requirements in full.
Helen Liddell, Minister for Energy and Competitiveness in Europe, said: "Britain has shown Europe the way in liberalising its energy markets. Competition offers long term benefits for domestic and industrial consumers alike. The amendments to the regulatory framework which I have announced - which guarantee improved access by third parties to upstream and downstream pipelines, gas processing terminals and gas storage facilities - will ensure that we continue to set the standard for our European partners."

1. The Gas (Third Party Access and Accounts) Regulations 2000 were made on 19 July and laid before Parliament on 20 July; they are effective 10 August. They were made under Section 2(2) of the European Communities Act 1972. This Section allows Ministers to make Regulations which amend primary legislation in order to meet EU obligations. The Regulations are subject to negative resolution procedure in both Houses.

2. The Regulations amend primary legislation, with the following effects:
a) access to the downstream gas market:

* licence applications:
(i) a new provision to set out procedures for the Director General of Gas Supply/Ofgem (and legal successors) to follow in cases where they propose to refuse a licence application is included in the Utilities Bill now before Parliament;
(ii) the procedures and criteria against which applications for licences are judged to be formalised and published by the DGGS/Ofgem;
(iii) refusals to be notified to the Commission;

* third party access: a duty to facilitate negotiated third party access to apply to six facilities/kinds of facility, viz.:
-- transmission pipelines which are excepted or exempted by order from the requirement for a PGT licence (through amendment of the Pipe-lines Act 1962) (dispute settlement authority to be the Secretary of State);
-- LNG facilities (including import facilities) (through amendment of the Gas Act 1986 (as amended)) (dispute settlement authority to be the DGGS);
-- the interconnectors (viz. UK/Belgium, and UK/Republic of Ireland) (through amendment of the Petroleum Act 1998) (dispute settlement authority to be the Secretary of State);
-- offshore storage facilities (i.e. Rough) (through amendment of the Petroleum Act 1998) (dispute settlement authority to be the DGGS);
-- onshore storage facilities (through amendment of the Gas Act 1986 (as amended)) (dispute settlement authority to be the DGGS);
--gas processing facilities (through amendment of the Gas Act 1995) (dispute settlement authority to be the Secretary of State), with provision for the interconnectors and storage facilities to be exempted from the duty in certain circumstances;

* non-discrimination: a new duty (linked to the new duty to negotiate third party access) to be imposed on certain categories of natural gas undertaking:
(i) owners of capacity in "offshore downstream pipelines" (i.e. the interconnectors) (in practice, owners of an interconnector pipe-line or of the capacity in the "pipe-lines within the pipe-line" who have capacity rights for one year or more);
(ii) owners of certain onshore pipelines which are either excepted or exempted from the requirement to have a PGT licence;
(iii) owners of offshore and onshore storage facilities, including LNG facilities;

* accounts: the owners of certain storage undertakings (including LNG) to be placed under a new duty (also linked to the new duty to negotiate third party access) to keep separate internal accounts. Owners of excepted or exempted pipe-lines to have a new duty to provide financial information if so requested by the dispute settlement authority;

* competent authorities (dispute settlement): to be the Secretary of State or the DGGS/Ofgem, depending on the legislation (for details see above); b) access to upstream pipelines:

* the Pipelines Act 1962 to be amended to allow its access provisions to apply to pipelines of any length (there is currently no access provision for pipelines under 16.093 km in length);

* the Pipelines Act 1962 to be amended to ensure that there is consistency between it and the Petroleum Act 1998 in respect of apparatus associated with access to gas and oil pipelines;

* both Acts to be amended to make clear that the Secretary of State has a dispute settlement role (this is currently implicit but needs to be spelled out);

* both Acts to be amended to give the Secretary of State a duty to take into account certain matters and a right to demand certain information as set out in Article 23;

* both Acts to be amended to make clear that there should be negotiation between pipeline owners and applicants for access to pipelines prior to any request for intervention by the Secretary of State acting in his capacity as the dispute settlement authority; and that any request to the Secretary of State should be made only after commercial negotiations have failed to achieve a satisfactory outcome;

* the Petroleum Act 1998 to be amended to allow for the settlement of cross border disputes.
In addition, upstream pipelines often carry a complex mix of hydrocarbons from which gas and oil is extracted at processing facilities. Because of this it is not practicable to operate separate access regimes for upstream pipelines carrying gas and upstream pipelines carrying oil to processing facilities. It is therefore intended to apply the provisions of Article 23 also to pipelines carrying oil from a production project to a processing facility.

3. The Regulations implement into GB law the requirements of the EU Gas Directive (Directive 98/30/EC). DTI carried out non-statutory consultations on its proposals for the upstream and downstream implementation of the Directive earlier this year.

Source: M2 Communications Ltd. via Newspage
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