EU network codes - comitology amendments and legal status

28 May 2013

Peter Willis

On 22 May, the Council of the EU published in its register of documents a draft of the EU network code on Capacity Allocation Mechanisms in Gas Transmission Systems (NC Gas CAM).

Although drafts had previously appeared on the Commission's comitology website, its appearance in the Council register indicates that it is nearing its final form, in which it is expected to be adopted later this year. A number of interesting points emerge from the latest version and, as this is the first NC to make its way through comitology, it may indicate how other NCs, both gas and electricity, will be treated.

In particular:

> the code has undergone significant amendments in the comitology process. These include not only changes in structure and drafting, but also in the substantive approach to some major issues. Notably, the approach to bundling of capacity contracts has been considerably amended since the version submitted by ACER, with parties to existing agreements only "aiming" to reach agreement on bundling capacity, rather than being required to do so, and the 5-year "sunset clause" being replaced with an obligation on national regulators to report on progress regularly to ACER. It is therefore clear that NCs developed by the ENTSOs are not set in stone and may undergo quite significant further change in comitology. In this case, it should be noted that the sunset clause was a feature of the relevant ACER FG, approved by the European Commission. ENTSOG firmly opposed the sunset clause, and its continued opposition appears finally to have succeeded at this very late stage; and

> the draft NC is presented as a Commission Regulation, establishing a network code on gas CAM and supplementing Regulation 715/2009. It is intended to be a stand-alone Regulation. If a similar approach is adopted for other NCs, it is clear that they will not take the form of an Annex to Regulation 715 as has been suggested. Recital 6 of the draft NC explains: " this Regulation has been adopted on the basis of Regulation (EC) No 715/2009 which it supplements and of which it forms an integral part. References to Regulation (EC) No 715/2009 in other legal acts shall be understood as also referring to this Regulation". In practice the precise form of the NC is not material – what is important (whether it is adopted as a stand-alone Regulation or an Annex to Regulation 715) is that it has the legal status of a Regulation, which is directly applicable in the Member States. What remains unclear, however, is precisely how the NCs will interact with the complex series of existing national rules and codes.

Publication of the draft NC in what is intended to be a near-definitive form is an encouraging and useful development. It provides useful drafting guidance for subsequent NCs, clarifies the intended form and emphasises the scope for change even in the final stages of adoption of these important technical rules.

Willis-Peter

Peter Willis
Partner
peter.willis@twobirds.com

Authors