In the margin of a visit of president Medvjedev to Belgiuml, today Fluxys, the natural gas transmission system operator, and Gazprom signed a protocol agreement with the aim of investigating the economical and legal possibilities of Gazprom using the only available gas storage system in Loenhout for long term storage purposes. Such use will be subject to an amendment of the Gas Act and the approval by the federal energy regulator, the CREG.
At this moment, the storage facilities in Loenhout are first and foremost dedicated for the supply licence holders for supply on the distribution system (article 15/11, § 2, Gas Act). The government may however, upon advice of the CREG, limit the preferential allocation for distribution in case new storage facilities are being developed and provided that the allocation for distribution remains equal to the existing situation.
In the past, Gazprom and Fluxys already tried to obtain dedicated storage capacity for the Russian monopolist. The plans for using the planned Poederlee storage system was blocked by the CREG. In its advice of 17 April 2007, the CREG stated:
“One would miss the opportunity to remove barriers for market entry of the several existing and potential suppliers in Belgium and to increase or even maintain the national security of supply. (…) Refusing access to the most active market participants in Belgium (…) risks endangering the development of competition in the Belgian gas market on the long run. (…) The CREG notes that no open season procedure has been organised and that the sponsor of the project has decided to dedicate all available capacity to the main shareholder. However it is not proven that third party access to the capacity or part of it, is necessarily to be excluded for economical reasons.”
In this case, the protocol agreement is not related to new to build storage facilities, but to existing ones. For existing storage facilities, third party access, based upon regulated tariffs and transparent and non-discriminatory procedures is the only possibility.
From a legal perspective, assigning a privilege for using the storage facilities by one market player is unacceptable and contrary to the fundamental principles of European and internal law.
Wednesday 8 December 2010
Gazprom and Fluxys: no respect for fundamental liberalisation rules?
Saturday 30 October 2010
Renewable funds financed by the nuclear operators
At the end of 2009, the federal government requested from the nuclear operators (GDF Suez/Electrabel and EDF/SPE) to set up a fund with a working capital of EUR 250M for the support of renewable energy.
It turns out that both operators have each set up a fund.
The GDF Suez/Electrabel fund, BELGreen, has a working capital of EUR 213,300,200. GREENSTREAM is the fund of the EDF group, with a working capital of EUR 20,000 to be increased to EUR 36,699,800.
Four independent directors in the board of these funds and the government representative to these funds cannot be appointed in the absence of a new federal government.
Thursday 8 July 2010
Belgian Constitutional Court rules on transit of natural gas
Today, upon request by the Belgian energy regulator CREG the Belgian Constitutional Court decided to annul the Act of 10 March 2009 modifying the Gas Act.
As one might recall, the Act of 10 March 2010 aimed at i) the establishment of a tarifary system for transit activities in Belgium different from transport activities in Belgium and (ii) interpreting indirectly article 32.1 of the Second Gas Directive and the scope of the transit parties falling under the provisions of article 3 of the Transit Directive.
The Constitutional Court annulled both the different tarifary system and the interpretation of the parties having concluded historical transit contracts falling under the sanctity of contracts rule.
With regard to the different tarifary system, the Court decided that the 2005 Gas Regulation and the Second Gas Directive do not anymore distinguish between (internal) transport and (border to border) transit. The establishment of different tarifary systems for both activities infringes the non-discrimination principle.
With regard to the interpretation of article 32.1 Second Gas Directive and article 3 of the Transit Directive, the Court explicitly stated that Annex 1 of the Transit Directive, listing the companies responsible for high pressure natural gas grids, is exhaustive. Moreover, the Court decided that the Annex not only lists the companies responsible for high pressure natural gas grids, but also the companies responsible for import and export of natural gas! The Belgian Constitutional Court thus states that only contracts related to transit activities concluded before 1 July 2004 between the companies listed in Annex 1 of the Transit Directive fall under the scope of article 32.1 of the Second Gas Directive. This interpretation might be important in discussions on the transit regulation in other EU member states.
The consequences for the historical transit contracts are multiple:
- Tariffs to be paid before 1 January 2010: the contractual tariffs apply to four historical contracts (E.ON Ruhrgas and WINGAS Zeebrugge-Eynatten forward flow, GDF Zeebrugge-Blaregnies forward flow and GDF 's-Gravenvoeren-Blaregnies) that have been marked as such in the May and June 2008 decisions of the CREG. For all other contracts, both Fluxys tariff proposal and the final CREG tariff decision discriminate between transit and transport contracts and are thus invalid. For these contracts one could expect that failing any valid tariff decision, the contractual prices remain applicable. However it will be important to know the outcome of the procedures initiated by Fluxys against the tariff decisions of May and June 2008 before the Court of Appeal, which in turn has raised a prejudicial question to the Court of Justice.
- Tariffs to be paid as from 1 January 2010: the exemption for the aforementioned four historical contracts remains valid. The arguments of the CREG relating to the implicit provision of the Gas Regulation was not withheld by the Constitutional Court. For all other contracts, the regulated tariffs apply, until a decision by the Court of Appeal at the request of WINGAS, Distrigas or BG International.
Monday 28 June 2010
Best Lawyers
I just received the following e-mail:
Dear Tim Vermeir,
I would like to congratulate you on having been selected by your peers for inclusion in the second edition of the Best Lawyers® list for Belgium in the practice area of Energy.
Published for more than a quarter of a century, Best Lawyers in America® has been regarded as “the most respected referral list of attorneys in practice,” according to The American Lawyer.
Best Lawyers also reaches the largest, targeted audience of any peer review publication in the legal profession, more than 26 million influential readers. Best Lawyers is also excerpted monthly in Corporate Counsel Magazine, reaching more than 88,000 general counsel. An article will also be appearing in De Standaard regarding the Best Lawyers list.
Selection to Best Lawyers is based on an exhaustive and rigorous peer-review survey comprising more than three million confidential evaluations by top attorneys. Because no fee or purchase is required, being listed in Best Lawyers is considered a singular honor.
Again, congratulations on being selected by your peers for inclusion in Best Lawyers.
Alan Pearce
Editor
Best Lawyers
apearce@bestlawyers.com
T: 803-644-1688 | F: 803-641-4794
http://www.bestlawyers.com
Friday 21 May 2010
New rules on transit of natural gas published in the Belgian official journal
On 29 April 2010, parliament adopted a majority proposal to amend the Gas Act and to withdraw the Act of 10 March 2009. This Act is published in the Moniteur belge/Belgisch Staatsblad of today.
The 2009 Act provided for a different tariff regime for transit activities compared to transport activities. Following fierce reactions from the Belgian energy legislator CREG and letters from the European Commission, parliament decided to withdraw this differentiation.
The 2010 Act also abolishes the interpretation of article 15/19, reiterating the exemption of article 32.1 of the Second Gas Directive for historical transit contracts, concluded on the basis of the Transit Directive 91/296/EEC.
Finally, the 2010 Act stipulates that the exemption for those historical contracts expires on 2 March 2011. The executive can decide on an earlier date. Given the resignation of the federal government and the upcoming elections and coalition talks, this appears unlikely.
Wednesday 19 May 2010
Decision on Belgian internal burden sharing agreement postponed
The resignation of the federal government also has consequences for the agreement of the internal burden sharing agreement between the federal state and the three regions in view of reaching the EU climate targets. This decision (and the communication of this decision to the European Commission) had to be reached on 30 June 2010. The European Commission accepted a postponement until 30 December 2010.
Tuesday 18 May 2010
The postponement of the nuclear phase-out postponed
Due to the resignation of the federal government the legislative decision to amend the Act of 2003 that set the phase-out of the nuclear power plants is postponed awaiting the result of the general elections on 13 June 2010.
In October 2009, the federal government reached an agreement with GDF Suez on the postponement of the nuclear phase-out for the three eldest nuclear power plants (Doel I, Tihange I and Doel II). By way of compensation it was agreed that the nuclear operators (GDF Suez and EDF-SPE) would be a yearly contribution of 215-245 million euro until 2014. As from 2014 the yearly contribution would be set by a special follow-up committee. GDF Suez also promised to maintain employment in Belgium and to invest in renewable energy.
Earlier this year, the European Commission send a five pages long questionnaire to the Belgian government, raising substantial questions on the agreement in principle. The Belgian minister of energy responded to this questionnaire beginning of April.
Although the minister invoked a force majeure situation (insufficient production capacity if the three plants would shut down in 2015) and thus seemed to head for a prolongation of the life cycle by means of a simple royal decree, the minister clearly indicated in its response to the European Commission that the agreement in principle would have to be translated into a formal legislative text, adopted by parliament. The minister was preparing a draft text.
The resignation of the government makes that the resigning minister cannot propose such legislative text to its colleagues in the resigning government. The issue of the nuclear phase-out will be part of the negotiations in view of the formation of a new government.
Some political parties (amongst others the Flemish social-democrats and the Flemish and Walloon green parties) have indicated that they will oppose the execution of the agreement between GDF Suez and the resigning government. From their side, the nuclear sector indicated that the agreement would be binding in principle and that a new government cannot alter the principle of postponement engaged upon by the former coalation.
Thursday 25 March 2010
European Commission bombards Belgian government with questions on nuclear deal with GDF Suez
On 13 October 2009 the Belgian federal government decided to postpone the nuclear phase out of the three eldest nuclear plants (Doel I, Doel II and Tihange I) with 10 years. This would mean that all Belgian nuclear plants will close between 2022 and 2025.
As a favour in return, GDF Suez and Electrabel (hereinafter 'GDF Suez') would have agreed to pay between 215 and 245 M EUR per annum (until 2014). GDF Suez will also invest in R&D on CCS and nuclear waste, in renewable energy and in energy efficiency.
At the same time, a 'Follow Up Committee' will be installed. This Committee will be composed out of representatives of the nuclear producers, the government and the social partners, and of representatives of the National Bank of Belgium. The main tasks of this Committee will be to yearly evaluate the production costs of nuclear energy and to evaluate the electricity market prices. It will also have to verify that the household prices of all suppliers will in no way be higher than the average of the prices in the neighboring countries.
During a meeting in March 2010 between DG Energy's representatives and the cabinet of the Belgian minister of energy, DG Energy handed a long list of questions on the agreement between GDF Suez and the Belgian state. Amongst a lot of others, following questions appear to have been asked: Did the Belgian government contact other energy market participants? On which basis the contribution of 215 to 245 M EUR per annum was calculated? Is there a link with the profits of GDF Suez as a result of the postponement? Did the Belgian government calculate the value for GDF Suez of such a postponement? What were the results of such calculation and the eventual studies on which it was based?
The Belgian government must respond by 8 April 2010.
Tuesday 9 March 2010
Council of State decides that non-Flemish green electricity certificates cannot be used in the Flemish Region
In different decisions of 1 February 2010 the Council of State dismisses the argument invoked by electricity suppliers that the Flemish energy regulator VREG has to accept non-Flemish green electricity certificates (groenestroomcertificaten) allowing the suppliers to comply with their obligation to hand in a certain amount of those certificates in relation to the electricity they supplied the preceding year.
The Council of State explicitly refers to article 25 of the Flemish electricity decree. According to the Council of State, the Flemish government only has to accept such non-Flemish green electricity certificates if the underlying non-Flemish regulation gives the same guarantee as the Flemish regulation.
Tuesday 2 March 2010
Fluxys finally appointed as system operator
By ministerial decrees of 23 February 2010 Fluxys has been appointed as definitive transport system operator and as operator of the storage facilities in Loenhout. By ministerial decree of the same date, Fluxys LNG has been appointed as operator of the LNG terminal in Zeebrugge.
All three ministerial decrees were published in the Moniteur belge/Belgisch Staatsblad of today.
Monday 1 March 2010
Congratulations
I warmly congratulate colleague and energy law expert Prof. Marc Van der Woude with his nomination by the Dutch government for the post of Judge at the EU Court of Justice.
Tuesday 16 February 2010
Council of State opposes levies to decrease market share of Electrabel
The Belgian Council of State, the highest administrative body, rejects two legislative proposals aiming at curbing the market share of Electrabel.
Recently, members of parliament submitted two proposals aiming at curtailing Electrabel's market share in the Belgian electricity production market.
The first proposal intended to cap the market share of any electricity undertaking in the production market at 45%. In case an undertaking would hold more than 45% market share, this undertaking was subject to a levy equal to the annual turnover of the share above 45%. The second proposal intended the same, but did not opt for a levy. Instead, the electricity undertakings could avoid such levy by decreasing its market share.
The Council of State rejected the proposals. It was of the opinion that both infringe the European rules on free movement of capital and the fundamental ownership rights.
Thursday 28 January 2010
Tax on unused electricity production sites
Wednesday, minister Magnette responded to several questions relating to the tax (or levy) on the unused sites suitable for electricity production. This tax was established by the Act of 8 December 2006 and is levied on all plots of land on which a production installation with a capacity of 400 MW (gas fired), 250 MW (coal or biomass fired) or 250 MW (CHP) can be build. All existing unused sites are property of Electrabel. Aim of the Act was to incite Electrabel to sell these sites to competitors. Notwithstanding the fact that the amount of tax was 51,150,000 EUR (yearly) in 2006, 2007 and 2008, and 67,500,000 EUR/Year in 2009, Electrabel only sold one such site to E.ON. All others are still its property.
Electrabel unsuccessfully challenged the legality of the Act of 2006 before the Constitutional Court. It also challenged the amounts to be paid before the court of first instance in Brussels claiming that most of the sites do not fall under the conditions of the Act of 2006.
The minister declared that he is waiting for the judgment of the court before starting discussions with Electrabel on the compliance with the provisions of the Act.
Gas Code of Conduct
The publication of the new gas Code of Conduct proposed by the CREG in July 2009 and replacing the one of 12 June 2001, is delayed due to the consultation of the Regions. In response to a parliamentary question, minister Magnette stated that the consultation of the Regions is almost finished. The draft Code of Conduct will then be subject of approval by the federal governement, following advices of the Finance Inspection and of the Council of State. Magnette concluded that the text will be published within a foreseeable future.
Tuesday 26 January 2010
Carbon trading and pottholes
E2LawBlog (published by Greenberg Traurig) refers to an article in The Guardian in which this UK newspaper writes that "Banks are pulling out of the carbon-offsetting market after Copenhagen failed to reach agreement on emissions targets".
The post on E2LawBlog
The article in The Guardian
Monday 25 January 2010
New rules for transit of natural gas through Belgium
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