Blixt - Climate and energy law

Climate and energy highlights of the new Belgian federal coalition agreement

2011-12-03T14:26:00.001+01:00

The new government will plead for a EU reduction objective of 30% of the greenhouse gas emissions in 2020 and of 80 to 95% in 2050 compared to 1990.If need be, the federal energy regulator can propose a temporary maximum price, which should reduce Belgian prices to the average of the prices in the neighbouring countries while maintaining competition.The government will prune away the nuclear profits. The revenue will be used, among others, to support investments in renewable energy projects in the North Sea and in energy efficiency of federal public buildings.The Government will investigate legal ways to temporarily put at the disposal of the market a production share of the depreciated nuclear power plants. The government confirms its intention to phase out the nuclear power plants in accordance with the Act of 2003. It will draw up a development plan for new production capacity from diversified energy sources in order to safeguard in a credible manner the security of supply in electricity for the country in the short, medium and long term. Potential investor will be guaranteed of a connection of new production capacity to the system within terms conceivable with the phase out of the nuclear plants.

Sustainable Energy Law Notebook: 24th European Energy Law Seminar (11-12 April 2011...

2011-03-04T22:09:00.000+01:00

Sustainable Energy Law Notebook: 24th European Energy Law Seminar (11-12 April 2011...: "The 24th European Energy Law Seminar is organised on 11-12 April 2011 in Noordwijk, The Netherlands. The seminar reviews the key development..."

Proposals for a constitutional reform – failed but interesting

2011-02-07T20:27:00.001+01:00

Since the last federal general elections, held on 13 June 2010, the Belgian federal level still has no ruling coalition. Talks have been going on for 239 days without any perspective for a government to be form in the near future.

Professor in law and minister of state Johan Vande Lanotte lead the discussions for the biggest part. His proposal, which was ultimately not acceptable for the Flemish nationalists and the Flemish Christian-democrats and was substantially questioned by the French-speaking social-democrats and Christian-democrats, was published last week in the French-speaking newspapers Le Soir and La Libre Belgique.

In the field of energy, the proposal aimed at the regionalisation of the setting and supervision of the regulated tariffs for the use of the natural gas and electricity distribution systems. Although the regions are competent for the distribution of electricity, up to now it was the federal regulator that approved the distribution tariffs.

At the request of the Flemish parties, the proposal wanted to implicate the Flemish region in the offshore energy activities. [As from the low water mark, the territorial sea and the exclusive economic zone are federal competence.]

The proposal remained a proposal, as in 2007.

Gazprom and Fluxys: no respect for fundamental liberalisation rules?

2010-12-08T13:59:00.002+01:00

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.

Renewable funds financed by the nuclear operators

2010-10-30T11:11:00.000+02:00

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.

Belgian Constitutional Court rules on transit of natural gas

2010-07-08T17:35:00.002+02:00

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.

Best Lawyers

2010-06-28T18:25:00.002+02:00

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

New rules on transit of natural gas published in the Belgian official journal

2010-05-21T10:57:00.000+02:00

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.

Decision on Belgian internal burden sharing agreement postponed

2010-05-19T20:40:00.002+02:00

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.

The postponement of the nuclear phase-out postponed

2010-05-18T16:09:00.000+02:00

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.

European Commission bombards Belgian government with questions on nuclear deal with GDF Suez

2010-03-25T20:49:00.003+01:00

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.

Council of State decides that non-Flemish green electricity certificates cannot be used in the Flemish Region

2010-03-09T20:08:00.002+01:00

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.

Fluxys finally appointed as system operator

2010-03-02T09:34:00.002+01:00

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.

Congratulations

2010-03-01T19:21:00.003+01:00

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.

Council of State opposes levies to decrease market share of Electrabel

2010-02-16T10:50:00.002+01:00

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.

Tax on unused electricity production sites

2010-01-28T11:17:00.000+01:00

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

2010-01-28T05:56:00.000+01:00

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.

Carbon trading and pottholes

2010-01-26T22:24:00.005+01:00

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

New rules for transit of natural gas through Belgium

2010-01-25T07:26:00.000+01:00

The Commission for economical affairs of the Belgian Chamber of Representatives has adopted rules regarding transit of natural gas in Belgium.

Following the infringement procedure initiated by the European Commission, the new text makes no longer any tarifary distinction between internal transport and border to border transport.

With regard to the historical contracts, the new act abolishes the interpretation given by the act of 10 March 2009 but, correctly, safeguards the protection of historical transit contracts until the final implementation date of Directive 2009/73/EG, 3 March 2011.

Climate change

2010-01-02T21:21:00.001+01:00

A wonderful photo essay on climate change by Magnum Photos.

Happy New Year

2010-01-01T00:12:00.001+01:00

Happy New Year and Best Wishes!

De Standaard - GDF Suez betaalt nucleaire heffing maar vecht die ook aan

2009-12-31T22:36:00.000+01:00

Op De Standaard Online: De Standaard - GDF Suez betaalt nucleaire heffing maar vecht die ook aan

Update on the current legal status of transit of natural gas in Belgium

2009-12-30T08:56:00.003+01:00

Following the CREG’s decisions of 15 May 2008 and 6 June 2008 imposing regulated tariffs on transit of natural gas (transit meaning the border-to-border transmission of transport of natural gas), Fluxys, Distrigas and some other shippers instigated legal proceedings before the court of appeal of Brussels requesting the suspension and annulment of these decisions.

At the beginning of the summer 2008 Distrigas sold its transit subsidiary Distrigas & Co to Fluxys.

On 11 November 2008, in the procedure initiated by Fluxys, the court of appeal decided to suspend both decisions. In the court’s view:
(i) there is no legal framework allowing a different set of tariffs for transit and transport; and
(ii) the CREG does not have competence to qualify transit service contracts as regulated or exempted.

On 10 March 2009, the Belgian legislator adopted a new act amending the Belgian Gas Act, establishing a different tariff system for transit activities in Belgium and (ii) interpreting indirectly article 32.1 of the Second Gas Directive by specifying that all contracts concluded before 1 July 2004 between (i) Fluxys, Distrigas or a subsidiary thereof and (ii) transit shippers are exempted contracts in the sense of article 32.1 of the Second Gas Directive and article 15/19 of the Gas Act.

The CREG decides to seek the annulment of the Act of 10 March 2009 by the Constitutional Court. On 2 October 2009 it issues a press release that its decision was motivated by referring to “the need to clarify the legal situation of natural gas transit in the interests of the market and the end consumers".

A week later, on 8 October 2009, the European Commission opened an infringement proceedings against Belgium concerning its gas transit system because Belgian legislation would discriminate between transit and transport of natural gas.

Notwithstanding its own criticism and the arguments of the European Commission, CREG reaches a compromise with Fluxys on the new transport tariffs as from 1 January 2010. In the joint press release of 29 October 2009, CREG and Fluxys state that the new tariffs will be “highly competitive compared to others across Europe and at the same time provide a reasonable return on capital investment made by Fluxys”. In the decision of 22 December 2009, officially approving the tariff proposal by Fluxys, the CREG also approved the maintaining of the difference between border-to-border transport and internal transport.

In the beginning of December 2009, Ms Katrien Partyka, a christian-democrat member of parliament, and a few colleagues, submitted a proposal to amend the Gas Act aiming at the abolition of the Act of 10 March 2009, thus responding to the request of the European Commission. At the same time this proposal aims at lifting all exemptions for historical contracts as from 1 January 2010. This proposal is currently debated in the competent commission of the Parliament.

Postponement of the nuclear phase out

2009-10-14T20:24:00.004+02:00

On 13 October 2009 the Belgian federal government decided to postpone the nuclear phase out of the three eldest nuclear plants with 10 years. This would mean that in the soon to be adopted new regulatory framework all Belgian nuclear plants will close between 2022 and 2025.

As a favour in return, GDF Suez and Electrabel would have agreed to pay 170 M EUR per annum from 2010 until 2014. The other nuclear market participants (EDF Belgium, SPE and eventually E.ON) will have to pay the remaining 45 to 75 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 neighbouring countries.

The decisions still must be transposed into formal legislation. Nevertheless, some ideas can raise concerns about the development of a liberalised energy market in Belgium and about the position of other market players (will they contemplate building new power plants? will they be able to raise their market share?). From a legal point of view, it remains to be seen whether this decision to postpone the nuclear phase out will stand the test of EU law and of Belgian constitutional law.

In any case, interesting regulatory and legal times lay ahead.

A free English translation of the relevant excerpt from the governmental declaration will be send to you at first request. Please e-mail me.

Transit and the European Commission

2009-10-08T16:09:00.001+02:00

No further comment:

The Commission opens infringement proceedings against Belgium concerning its gas transit system

The European Commission decided today to commence infringement proceedings against Belgium as the Belgian Law of 10 March 2009 which lays down exemptions for natural gas transit contracts infringes Community law establishing an internal market in natural gas. Since 2004 under Community law the concept of transit has ceased to exist and all transmission of natural gas is now subject to the setting of tariffs to be determined by the independent regulatory authority of each Member State.

Non-discriminatory third-party access to the natural gas transmission network has become a central aspect of the opening up of the markets to competition. Community law no longer makes any distinction between transmission of gas involving transit of natural gas and the transmission of gas intended for national customers.

Article 2 of the Belgian Law of 10 March 2009 introduces exemptions from the general rules on access to the network for the transit of natural gas and provides for negotiated tariffs which apply for a period fixed by contract. In addition, the law makes it possible to set a fair profit margin for transit which is clearly higher than that applicable to other transmission activities and makes a distinction between existing and future installations.

The Law of 10 March 2009 discriminates between network users carrying on similar activities, a practice which is incompatible with Community law.

Community law concerning the internal market in natural gas provides for third-party access to the natural gas transmission market in order to enable new suppliers to enter the market in a transparent and non-discriminatory manner on the basis of tariffs negotiated between the gas transmission network operator and the regulator and published in advance. Since the markets were fully opened up to competition on 1 July 2007, alternative providers can thus offer to supply potential customers.

In the first phase of the partial opening up of the markets, Community law allowed access to be negotiated between network operators and suppliers, but this has not been possible since 2004. Since then, exceptions to regulated access have been strictly controlled under Community legislation.

CREG seeks the annulment of the 2009 Natural Gas Transit Act

2009-10-02T14:26:00.001+02:00

The CREG announced today that it has requested the Constitutional Court to annul the Act of 10 March 2009 (that, as you might recall, modified the tarifary system for new transit activities and that also excluded all pre 2004 transit contracts from the scope of the Second Gas Directive).

The Constitutional Court normally renders its judgement within a year from the lodging of the appeal.

All concerned parties lodged an appeal against the 250M EUR nuclear tax

2009-09-29T21:31:00.002+02:00

The federal minister of energy declared today that Electrabel, SPE, EDF and Synatom, have lodged an appeal with the Constitutional Court to annul the act imposing a tax on nuclear producers. This tax, voted in 2008, has a total value of 250 M EUR.

New Flemish government and direct lines, closed distribution systems and private networks

2009-08-18T10:51:00.002+02:00

Following the citiworks/Flughafen Halle-Leipzig judgement of the EC Court of Justice (Case C-439/06) and the compromise on the new directives for electricity and natural gas, allowing exemptions for closed distribution systems, the new Flemish Government in the coalition agreement agreed to "pay special attention" to these kinds of private initiatives.

Flemish energy regulator consults the market on proposal for new technical code

2009-08-17T15:25:00.000+02:00

The VREG, the Flemish regulator for electricity and natural gas had opened a public consultation on draft amendments to the Flemish electricity and natural gas technical codes.

The proposal aims at:
- Leaving out all reference to direct lines and direct pipelines, and private networks (or closed distribution systems) as these are not yet legally regulated in the Flemish region;
- Submitting all contracts and regulations of the distribution system operators to the review of the VREG;
- Giving sufficient attention to decentralised production;
- Inserting a conciliation procedure.

Energy Undertakings Cannot Hold More Than 24,99% of the Fluxys' shares

2009-07-01T08:35:00.002+02:00

On the basis of an act, voted by Belgian parliament last week and amending the Gas Act, at the latest on 31 December 2009 all supply undertakings, electricity producers, electricity suppliers, intermediaries, and affiliated companies of the aforementioned companies cannot hold solely or jointly more than 24,99% of the shares of the natural gas transmission system operator (Fluxys).

Moreover, the bye-laws and statutes of the transmission system operator cannot grant special rights to the aforementioned undertakings.

CREG Examines EDF's Share In SPE

2009-06-03T10:15:00.002+02:00

Following a question by federal representative Tinne Van der Straeten, the federal minister of energy, Mr Magnette, yesterday declared that the CREG, the federal energy regulator, is examining the take-over by EDF of Centrica's shares in Segebel, the majority shareholder of SPE. According to the minister, the CREG is looking at the consequences of the operation on the competition of the Belgian electricity production market. If the CREG would raise objections, it will propose the necessary measures to the Competition Council or the minister of energy.

Belgian view on private networks after citiworks

2009-05-27T21:28:00.004+02:00

Contrary to our neighbouring countries, the different competent authorities have not yet been able to formulate a vision on the consequences of the citiworks/Flughafen Leipzig-Halle judgement of the Court of Justice.

In response to a parliamentary question, the Belgian (federal) minister of energy, Paul Magnette, declared
- The federal state and the regions will meet to decide who will be competent;
- The minister will ask the CREG and the regional regulators to give their advice on the issue of private networks;
- The implementation of article 27bis of the Third Package Electricity and Natural Gas Directives on small distribution systems must also be discussed between the federal state and the regions.

Levy On Unused Electricity Production Sites

2009-05-13T07:12:00.002+02:00

In 2006, the Belgian federal legislator imposed a levy on unused sites for electricity generation. In 2008 the amount of this levy was approximately EUR 50M. The Constitutional Court declared that the imposition was in line with the Belgian Constitution.

The aim of the levy was to force the incumbent electricity producer, Electrabel, to sell some or all of this sites to competing energy undertakings.

In 2008, the federal legislator amended the amount of the levy. As from the entry into force, this amount would be increased with EUR 20M.

In response to a question of Katrien Partyka (CD&V), the minister of energy acknowledged that imposing the levy did not reached the goals of releasing or selling these sites to other energy undertakings. All sites are still property of Electrabel and remain unused.

New legislation in the Flemish Region

2009-05-05T06:12:00.000+02:00

Last Thursday the Flemish Parliament adopted four new energy related Decrees.

- A decree modifying the existing Energy Performance of Buildings Decree of 22 December 2006 (EPB Decree);
- A decree modify the system of renewable energy certificates (green electricity certificates);
- A decree coordinating all the existing decrees on energy (the “Energy Decree”), comprising a new chapter on the application of the EU Emission Trading System/ETS on aviation; and
- A decree on the deep subsoil, aiming at regulating the exploration and extraction of hydrocarbons (including Coal Bed Methane, CBM) and possible new initiatives on Carbon Capture and Storage, CCS.

New Proposal for Gas Code of Conduct

2009-04-28T08:39:00.002+02:00

The CREG, the federal energy regulator, published a new proposal for the natural gas code of conduct relating to the transmission system, the storage installation and the LNG terminal. This document is available in Dutch and in French.

Legal500

2009-03-29T09:19:00.001+02:00

What does the Legal500, edition 2009, say about my practice:

Tim Vermeir has moved from Loyens & Loeff to Publius where clients include Wingas GmbH, carving out a key niche in EU energy law, as an alternative to larger practices in dealing with regulators.

Amendments To Flemish Renewable Energy Support System

2009-03-18T12:03:00.004+01:00

The Flemish government submitted a proposal for amendments of the Flemish Electricity Decree aiming at a modified support system for renewable energy. If this proposal will be adopted by parliament, the following system will be applicable as from the entry into force of the decree:

1. PV-installations on domestic buildings that are not properly isolated will not be eligible for green electricity certificates that can be used by electricity suppliers to fulfill their obligations to hand in a number of certificates in relation to the amount of electricity supplied in the preceeding year. Consequently, no minimum support can be given to these certificates.

2. The minimum support that distribution system operators must give to producers of electricity from PV-installations will decrease after 1 January 2010:
350€ in 2010 during 20 years;
330€ in 2011 during 20 years;
310€ in 2012 during 20 years (and an evaluation of the non-performing peak);
290€ in 2013 during 15 years (unless otherwise decided by the Flemish government);
250€ in 2014 during 15 years;
210€ in 2015 during 15 years (and an evaluation of the non-performing peak);
170€ in 2016 during 15 years (unless otherwise decided by the Flemish government);
130€ in 2017 during 15 years;
90€ in 2018 during 15 years (and an evaluation of the non-performing peak);
50€ in 2019 during 15 years (unless otherwise decided by the Flemish government);
10€ in 2020 during 15 years.

New Transit Act Almost Finally Adopted By Parliament

2009-02-05T05:24:00.003+01:00

The draft act aiming at (i) the establishment of a different tarifary system for transit activities in Belgium and (ii) interpreting indirectly article 32.1 of the Second Gas Directive was approved last week by the competent commission of the Belgian Senate.

250M EUR levy on the electricity producers in Belgium

2008-10-09T11:17:00.002+02:00

Last week, the federal Council of Ministers agreed upon an one time indirect levy on the nuclear electricity producers in Belgium (SPE and Electrabel). The federal state will charge Synatom, the company responsible for the provisions for the phase-out of nuclear installations, for 250M EUR. Within 15 days, the nuclear electricity producers are obliged to reimburse Synatom with 250 M EUR. If the companies do not reimburse Synatom, a penalty of 2% of their annual income could be imposed upon them. The act prohibits passing the charge on in higher prices for the final customers.

Powers of the energy regulator strengthened

2008-10-09T11:12:00.002+02:00

Last week, the Council of Ministers adopted a draft act awarding the CREG, the federal energy regulator, judicial powers for supervising the functioning of the energy markets in Belgium through the appointment of judicial police officers within its organisation.

Belgian prime minister states that Suez' share in LNG-terminal must decrease

2008-07-04T11:09:00.003+02:00

In the Belgian parliament, the prime minister declared yesterday that new legislation will impose a decrease of the participation of Suez in the LNG Terminal of Fluxys (of which Suez yesterday sold 12,5% to Ecofin).

The federal government slaughters the CREG

2008-05-26T13:51:00.002+02:00

Last Friday, the federal governement decided to suspend the decision of the CREG on the interim transit tariffs, claiming that this decision is "contrary to the energy interests of Belgium" and would have "an unfavourable impact on the investment policy in the natural gas sector". The suspension increases the value of D&Co (in which Suez holds an indirect stake of 57%) with 500 MEUR to 700 MEUR.

The CREG has now fifteen days to issue a new decision, in which it has to follow the motivated suspension decision of the government.

Today, the federal minister of energy announced that he reached an agreement with the electricity producers. They will contribute to the budget 2008 by paying a tax of 250 MEUR. Suez is the major electricity producer in Belgium (market share of 96%).

Silly coincidence, isn't it?

CREG's reaction on the negative reactions on transit tariffs

2008-05-22T14:55:00.002+02:00

The CREG issued a press release today in which it concluded:

The different decisions of the CREG in relation to the transport and transit tariffs have been taken in the general interest:

The natural gas consumers are being protected against a take over price of the transit contracts of Distrigas & Co by Fluxys that might be too high;
A return on investment of 9% for a monopoly is a stimulus to keep on investing in the natural gas transmission system; in this way, Fluxys has the perspective for a higher profit margin for the planned investment projects (VTN/RTRbis and North-South);
Lower transit tariffs will attract foreign companies with a real chance of synergies on the Belgian market;
Belgium gains attractiveness as a transit country for natural gas, which will enforce the security of supply and the Belgian economy;
A balanced distribution of the costs of transport and transit will lead to a substantial decrease of interior transport tariffs for all Belgian gas consumers;
The non-regulated monopolistic profits of Distrigas&C°, which have never been reinvested in the gas network, will decrease;
The profits of the transit activity will finally be Fluxys’s, who will be able to invest in its transmission system.

Reactions on the reactions on the CREG's decision on transit tariffs

2008-05-21T09:35:00.001+02:00

In the competent commission of the Chamber of Representatives, the Minister of Energy stated today:

“This week, the CREG has set the transit tariffs. The spokesman of the CREG was pleased that the tariffs were reduced by 70 to 75%. Nonetheless, as politically responsible person before the representatives of the Nation, I would like to ask the CREG who will pay the transit tariffs. It will be the international transit shippers. To whom will the transit tariffs be paid? To the TSO. What will he do with the money? He will invest in the modernisation and development of the network. He could also decide to set beneficiary transport tariffs for the consumers. Today, thanks to the tariffs set by the CREG, it is cheaper for Gazprom to have its gas transited to Belgium than to have it transported within Belgium. I see no logic in this decision. I do not think that it serves the general interest. I confirm thus that I am not convinced that impartial regulators always work in the general interest. Sometimes, they work in function of doctrines or calculated objectives and it is quite happy that a political authority conserves a certain margin, to be able to restart the debate, like I will do on the transit tariffs in the following days."

Some comments:

The “doctrine” is laid down in the Second Gas Directive and in the Gas Act, voted an accepted by the representatives of governments and members of parliaments;
If the role of Zeebrugge is of extreme importance for the government (as set out in the governmental agreement of last April), than lower tariffs will certainly enhance this role;
If there will be no cross subsidisation between transport and transit, because only the transit shippers pay the transit tariffs, than how would it be possible that transit revenues would support the enlargement or development of the transport network or how the revenues be used for lower transport tariffs;
The CREG has stated before that the interconnection between the transit and transport network in Belgium, and the limitations on the use of the transit network are burdensome for the development of a liberalised gas market in Belgium;
Following the CREG’s decision, all but four contracts will not only be subject to regulated tariffs, but also to the code of conduct and the technical regulations on the gas market. This would normally allow shippers to access more easily the transit network, and, given the interconnection, the transport system.

Who’s general interest is the minister talking of?

Monitoring of costs by the CREG (II)

2008-05-20T11:05:00.001+02:00

The chamber of representatives adopted an act granting new powers to the CREG.

The CREG will monitor the compliance of every energy undertaking, supplying electricity or natural gas to off takers situated in Belgium, with the competition regulation and with the fair trade practices. These undertakings, individually or upon concertation with other undertakings, will refrain from all non-competitive behavior or unfair trade practices that could have an impact on the good functioning of the energy market in Belgium. If the CREG would establish an infringement to the competition regulations or the fair trade practices, it will send a report with its findings and with a proposal for remedies to the minister. The CREG will also inform the Competition Council of the content of its report (including the confidential preparatory documents).

With regard to unfair trade practices, based upon the proposal by the CREG, the federal executive can adopt the urgent measures the CREG could take. More generally, the CREG can formulate advices and propose all measures necessary to safeguard the good functioning of and the transparency on the energy market.

The undertakings must adopt an objective accountable ratio of the prices to the costs of the undertaking. The CREG will judge the ratio based upon a comparison of the costs and the prices of the undertaking with the costs and prices of comparable undertakings, if possible also internationally. In the event that an undertaking is a related undertaking, an abuse of dominant position is suspected if it proposed discriminatory prices and/or conditions to non related undertakings.If the CREG determines that there is no objective accountable ratio of the prices to the costs, it will send a report to the minister with its findings and the measures it proposes. The CREG will also inform the Competition Council of the content of its report (including the confidential preparatory documents). Based upon the proposal by the CREG, the federal executive can adopt the urgent measures the CREG could take.

The CREG can request from the undertakings all reports and information it judges necessary to be received within thirty days of its request. If the undertaking does not procure the information within these term, the CREG can visit the undertakings to review the necessary information and documents and can copy these documents.

CREG's position on Transit of natural gas

2008-05-20T09:42:00.002+02:00

The CREG issued its decision imposing provisional tariffs for the transport, storage and transit activities of Fluxys. It is the first time the CREG decides upon tariffs for transit activities. These activities are being operated by Fluxys for the account of Distrigas & Co.

In its decision, the CREG states that only four transit contracts fall under the scope of article 32.1 of the Second Gas Directive, that sets out that transit contracts which are concluded pursuant to article 3 of the Directive 91/296/EEC remain valid and implemented in accordance with the provisions of said Directive. These contracts are:
- The Contract between Distrigaz NV and WINGAS of 27 November 1996 related to the transit from Zeebrugge to Eynatten;
- The Contract between Distrigaz NV and Ruhrgas of 13 December 1996 related to the transit from Zeebrugge to Eynatten;
- The Contract between Distrigaz NV and Gaz de France of 30 June 1998 related to the transit from Zeebrugge to Blaregnies;
- The Contract between Distrigaz NV and Gaz de France of 27 April 1967 related to the transit from Poppel to Blaregnies.

Nuclear phase out in Belgium

2008-04-15T07:03:00.002+02:00

Notwithstanding the three existing studies and the alarming messages from the CREG, the federal energy regulator, on the risk of shortages in electricity production in Belgium, the federal governemental parties decided to launch another study on the nuclear phase-out, as foreseen by the Act of 2003.

In the competent commission of the Belgian parliament, representatives recently questioned the minister of Climate en Energy on his statements that the phase-out might be postponed.

The minister responded that given the variety of existing studies and the discrepancies in the conclusions, there is a need for a new, "impartial" commission to look at the nuclear question. Since most researchers in Belgium are (in)directly connected to stakeholders, the minister wants to liaise with foreign researchers.

Monitoring of costs by the CREG

2008-03-28T15:43:00.004+01:00

As set out in a previous blog, the federal government has submitted a draft act allowing the CREG to monitor the electricity and natural gas prices in Belgium.

The draft act modifies the Electricity Act and the Gas Act and stipulates that electricity and natural gas prices must be in reasonable proportion to the costs of the electricity and natural gas undertakings. The CREG will evaluate the relation between the costs and the prices by comparing the costs and prices of comparable undertakings, if possible also in an international context. If electricity or natural gas undertakings are affiliated companies, an abuse of a dominant position is suspected if it offers discriminatory prices or conditions to third parties.

If the CREG judges that there is no objective reasonable relation between the costs and the prices, it will draft a report for the minister of energy that will include its findings and the measures it proposes. The CREG will also communicate the alleged infringements to the Competition Council.

It goes without saying that the new draft act leaves more questions open than answered.

New federal coalition agreement

2008-03-20T21:57:00.000+01:00

The new federal government resolutely chooses sustainable development as guideline for her policy and acting. Therefore, she will develop a federal policy concerning sustainable energy in cooperation with the Regions and Communities.

She will tackle the problem of global warming and supports the “EU 2020” target: the EU needs to cut 20% of its greenhouse gases by 2020 and 20% of the EU energy needs to come from renewable energy sources by 2020. Therefore, the federal government as well as the regional governments will develop a climate plan to decrease the greenhouse gas emissions. The federal government will also stimulate other industrialised countries to act accordingly. To ensure that the targets will be achieved, a group of national and international experts will examine the ideal energy mix on the medium and long term. The Government will support the extension of a grid for decentralized electricity production.

Investments in renewable energy such as offshore windenergy will be increased. The government will encourage investments in sparing energy and create jobs in that sector. The whole plan will be based on third-party financing from investments in sustainably building and energy-efficiency.

The government also ensures the access to biofuels and stimulates its use. In addition, the government makes it possible for new electricity producers to develop on the Belgian market and to create real competition conditions, which means reasonable prices for consumers. The government chooses for the independence of grid operators and for an autonomous management of the transmission grids. The strengthening of the competition, in the advantage of consumers and companies, will be coupled with a real social energy policy that allows private persons and more specifically persons with a modest income to pay their bill and to keep up their consumption

Private persons and companies will be encouraged to limit their energy expenses. The government will launch an extensive plan to facilitate energy efficiency (buildings, vehicles, public tender, transfer of services). She will develop a taxation policy that encourages a well-balanced environmental behaviour, whereby tax advantages will be granted to energy efficient users. For example: encouragements to install a soot filter in the car, incentives for energy saving building improvements, etc.

The government approves the product standards which allow decreasing the amount of waste at source and the energy consumption. She stimulates a more sustainable mobility, opposing the use of cars for commuting between home and work and instead stimulating public transport, carpooling, etc.

All these measures will contribute to a decrease in the greenhouse gas emissions and thus stimulate a sustainable development.

Future monitoring of the gas and electricity prices by the CREG

2008-03-20T10:19:00.001+01:00

The Minister of Climate and Energy, Paul Magnette, wants to extend the competences of the CREG, more specifically, the monitoring of prices as well as the permanent monitoring of the gas and electricity markets. This monitoring also consists in the control of data that allows the CREG to determine the indexparamaters. Furthermore, it implies that they have a periodically access to the real costs, commodity and commodity exclusive, from all licensed producers, importers and suppliers of the Belgian gas- and electricity market.

For to the Minister, this system will lead to a more transparent market and will give the competent authorities the opportunity to improve this market.

The monitoring of the price evolution seems in se useful and necessary. However, the collection of information re costs and especially the details about the origin of these costs, needs to be limited. Since the energy market is very international, there exists a potential risk that currently Belgian companies would move to other countries, only to avoid the excessive control.

Therefore, Mr. Bart Laeremans emphasized that it is necessary to balance the decision, taking into account the possible contra productive consequences.
The reports of the CREG and the ‘Competition Authority’, currently not published yet, will probably give a better view on the situation.

Pax Electrica II Agreement between Electrabel and SPE

2008-03-12T05:39:00.002+01:00

In the framework of the “Pax Electrica II”, Electrabel and SPE reached an agreement in principle on the conditions for the putting at the disposal of SPE of 635 MW nuclear capacity of Electrabel. The first 100 MW consists of a swap with Chooz. The next 250 MW will be sold to SPE. The last 285 MW will be object of a long term supply contract “until 2025 at the earliest”. The agreement will be submitted for approval to the Belgian and European competition authorities and must be fully implemented by the end of the Summer 2008.

It is curious to note that this agreement in principle implicitely neglects the fact that the Act of 2003 on the nuclear phase-out foresees that the last nuclear reactors (Doel 4 and Tihange 3) will have to be shut down in 2025. By stating "until 2025 at the earliest", SPE, Electrabel and Verhofstadt, the Belgian prime minister present at the signing of the agreement, confirm that the nuclear phase out will without any doubt be reviewed by the next governement.

The new Belgian Energy Minister is no big fan of a liberalised market

2008-01-08T12:52:00.001+01:00

Paul Magnette, the Belgian (federal) Minister of Climate and Energy appears very reluctant toward the liberalisation of the energy market.

In an interview with De Morgen (a Flemish quality newspaper) he declared on a question about the willingness of Electrabel to sign an “ecological pact”:

"I do not know whether this is necessary. For me, free competition is no sacred principle. Even although Europe is fighting so hard for it. I am un homme de gauche. In some sectors, competition was wholesome, like in the telecommunications sector, but in the energy sector it did not lead to any advantage for the small customer. I also do not know very well how to organise competition with a natural monopoly. We cannot build new pipelines next to existing ones, can’t we? Europe has made a distinction between producers, grid operators and suppliers, but this has not given any positive effect. The quality has not increased, the invoices only became more complicated.
“If we want competition to work, there is above all things a need for a strong governmental regulator. Especially in sectors with a quasi-monopoly. We also must impose social and environmental aims in these sectors. That is more important than the competition in itself.."

Best wishes for 2008

2008-01-02T12:19:00.000+01:00

I wish everybody the best in 2008: a good health, a nice working environment and, of course, good energy!

Energy in the governmental declaration of the "interim"-government Verhofstadt III

2007-12-26T17:06:00.000+01:00

The CD&V-N-VA, PS, Open VLD, MR and cdH agreed upon the following passus on energy and climate in the governmental declaration:

"6. Climate and energy will also be on top of the interim government's agenda. Next to measures with regard to spending power and in view of affordable prices and a guaranteed supply, we shall take additional measures to increase the stake of the consumers in the energy market. Belgium ranges itself with the goals of the second Kyoto-allociation plan and with the new goals for renewable energy. It will negotiate thereto with the European Commission on an ambitious and realistic contribution of our country. In the same spirit, the federal government will support the regions, the industry and the European community in finding solutions for the problems related to the allocation of CO2-quota for the 2008-2012 period. Furthermore it will activate and enlarge instruments to reduce the emission of CO2 in the residential sector and to decrease the bills of the families."

New federal climate minister

2007-12-21T09:28:00.000+01:00

Belgium finally has an "interim" government, with an expiry date on 23 March 2008.

The new minister for energy (officially: Minister for Climate and Sustainable Energy) is Paul Magnette. For a short CV, see the page on Wikipedia.

Unbundling and the standpoint of Belgium

2007-12-10T12:40:00.000+01:00

Contrary to some rumors in the press, it appears from a discussion in the Belgian Senate on 6 December 2007 that Belgium is still opting for an ownership unbundling of the system operators. Only if the Member States would soften the principle of ownership unbundling, Belgium would not oppose this idea, provided that an efficient market functioning is guaranteed.

Maximum prices for the Belgian energy market

2007-11-30T10:47:00.000+01:00

Yesterday the federal Chamber of Representatives refuses to adopt a proposal introduced by the social-democrats and the green parties aiming at giving the executive the powers, upon advice of the regulator, the CREG, to impose maximum prices on the wholesale market. The majority of liberal-democrats and Christian-democrats argued that such proposal would not distort competition in the market. Both parties agreed that Belgium needs more investments in new energy production.

IPCC, Climate and Energy

2007-11-19T11:25:00.000+01:00

In its Summary for Policymakers of the AR4 Synthesis Report, the Intergovernmental Panel on Climate Change proposes "a wide variety of policies and instruments available to governments to create the incentives for mitigation action". With regard to Energy Supply, the Summary mentions:

Improved supply and distribution efficiency; fuel switching from coal to gas; nuclear power; renewable heat and power (hydropower, solar, wind, geothermal and bioenergy); combined heat and power; early applications of Carbon Dioxide Capture and Storage (CCS) (e.g. storage of removed CO2 from natural gas); CCS for gas, biomass and coal-fired electricity generating facilities; advanced nuclear power; advanced renewable energy, including tidal and wave energy, concentrating solar, and solar photovoltaic.

The following policies, measures and instruments show to be environmentally effective:

Reduction of fossil fuel subsidies; Taxes or carbon charges on fossil Fuels; and
Feed-in tariffs for renewable energy technologies; Renewable energy obligations; Producer subsidies

The Key Constraints for these policies are:

Resistance by vested interests may make them difficult to implement; and
May be appropriate to create markets for low emissions technologies

Partial governmental agreement on energy and sustainable development

2007-11-05T11:01:00.000+01:00

The would-be federal political majority has not yet finalised the coalition agreement for the formation of a new federal government. However, a partial agreement on Energy and Sustainable Development was reached at the end of October.

"The federal government endorses the climate change goals set by the European Union (20% less emission of greenhouse gases, 20% more energy efficiency, 20% more renewable energy production). A national climate change commission will elaborate a multi annual climate plan. The Belgian government will use its international influence to have all industrialised countries participating in a reduction of greenhouse gases with 30%.

The government makes sure that the dominant player will observe nothing less than the obligations entered into vis-à-vis the previous government.

The government will closely follow the evolution of the energy prices and will create the conditions to allow an adequate competition. To that end, several additional electricity producers must be present on the Belgian market each having the possibility to acquire a considerable market share. The government will contribute to that as follows:
– To incite the dominant player to swap assets with competitors abroad; and/or
– To put at the disposal or to sell to other players, under the supervision of the CREG and against reasonable market conditions, a considerable share of the capacity (in MW) of the depreciated power stations; and/or
– To offer to other players (trough actioning or exchange) a considerable production share (in MWh) of the dominant player, under the supervision of the CREG, against a price composed of the production costs including the maintenance and replacement investments and a fair profit margin; and/or
– To create the preconditions allowing and encouraging other players to develop additional production capacity in Belgium (inter alia sites and access to natural gas and electricity grids);
– To put in all efforts to realise as soon as possible interconnectivity at the borders in order to obtain true competitive natural gas and electricity markets on a European level.

Moreover, the government encourages companies wanting to construct alone or in consortium a production unit for electricity.

The competition on the wholesale market for electricity must improve considerably. The electricity exchange BELPEX must be offered more marketable volume increasing the available liquidity for the suppliers. By analogy with the electricity market, the wholesale market for natural gas must become competitive. This will be realised by creating a gas exchange (GASPEX), on the basis of what currently exists and with safeguards for sufficient transparency, that will dispose of sufficient marketable volumes.

The government will give the federal regulator CREG the necessary independence to act against and to supervise ex ante an actual competition on the production and supply market and to monitor the price evolutions closely. It will evaluate the functioning and the tasks of the CREG. The government will grant a clear and plain strategical mandate to develop a long term vision.

The federal government will give the CREG a mission to monitor the tariffs. Moreover, the CREG will be able to propose to the government every measure contributing to the improvement of the functioning of the regulated activities and the applicable tariffs.

The government resolutely opts for the independence of the system operators and for an independent operation of the transport systems by reducing gradually the share of producers/suppliers under 25% and with a substantial presence of the public sector. Energy companies can obtain shares but cannot, individually or collectively, have or use a blocking minority for example through a shareholders agreement or special share related (voting) rights, nor can they appoint independent directors.

The network system operators must have disposal of sufficient financial elbow room for carrying out replacements and new investments and to carry out the necessary maintenance to the grids, inter alia to allow Belgium to continue its development as junction of the European transit and transport grid. The system operators must fully independently allow equal access to the grids to all market players.

The government will invite the regions to tune the different systems of renewable energy certificates guaranteeing at the exchangeability, inter alia to promote the lowest price for the Belgian consumers. The government will improve the fiscal measures in favour of sustainable energy, inter alia by organising a system of take-along or of tax credits for investments that encourage energy efficiency and/or sustainable energy sources (...).

The government will take care that equal access conditions exist for competitors to import, store and transport natural gas. In order to guarantee the natural gas supply, the government will see over a tariff policy by the CREG (...) allowing the transport system operators to invest in natural gas storage capacity and in interconnections. The government continues the conversion of the Zeebrugge Hub enforcing its position as international spill for the natural gas supply. In general, the government take care that the policy of the CREG allows the system operators to guarantee an optimal quality of the networks without this leading to an excessive price increase of the distribution grid tariffs.

The government will discuss with the regions the consequences of a progressive replacement of L-gas by H-gas.

The government maintains the nuclear phase out of the existing nuclear facilities as set out in the Act of 31 January 2003. In order to comply with the goals of reducing greenhouse gases and to guarantee the affordability and security of supply, it will extend the operational term of some nuclear reactors for a limited time and in safe circumstances. In dialogue with all stakeholders, the government wants to obtain a national transversal multi annual alternative for fossil energy and nuclear energy, also translating the CO2 reduction goals. In the meantime, it will have carried out all necessary investments in the electricity power stations guaranteeing a safe exploitation and it will have modernised the existing very polluting power stations in order to reduce the pollution per MWh. The revenues of the taxes on the exceptional profits of the production of the depreciated nuclear and coal power plants will partially be used in a new fund “depreciated energy production” for the production and development of alternative energy sources and energy efficiency, the roll out of decentralised grids, the decrease of the federal contribution, the technique of carbon sequestration, the support of the MYHHRA-project, a social energy policy.

In the framework of the discussions about the prolongation of some nuclear installations, the government will have thought for the problem of the final price for the consumers."

Network aspects of the new proposals to liberalise the energy markets

2007-10-01T13:38:00.000+02:00

On 19 September 2007, the European Commission published the long awaited “Third Legislative Package” for the electricity and natural gas markets. This package is in line with the conclusions of the Energy Sector Inquiry, with the Commission’s document “Energy for a New Future” and with the conclusions of the European Council's Spring Summit.

After ten years of liberalisation of the energy markets, the European Commission is of the opinion that the process of developing real competitive markets is far from complete. In practice, too many of the EU's citizens and businesses lack a real choice of supplier. Market fragmentation along national borders, a high degree of vertical integration and high market concentration are at the root of the lack of a truly internal market.

Key elements in the liberalisation of the energy markets is the separation between energy production and the supply of energy to end consumers, on the one hand, and the network activities, on the other hand. Network operators are not allowed to produce or sell energy. Vice versa, producers and suppliers of energy cannot perform network activities.

Before liberalisation, network operators, suppliers and producers were part of the same unbundled companies. In the first two stages of liberalisation, functional and legal unbundling had to allow access for new entrants to the market. However, it appears that the network operators that still are part of integrated companies can be less keen in investing in the conveyor belt in order to avoid congestion and to give access to new entrants. The market share of historical operators remains high.

Where the network operator is a legal entity within an integrated company, three types of problems arise: (i) the operator may treat its affiliated companies better than competing third parties. (ii) non-discriminatory access to information cannot be guaranteed as there is no effective means of preventing operators releasing market sensitive information to the generation or supply branch of the integrated company and (iii) investment incentives within an integrated company are distorted. Consequently, the Commission proposes an effective separation of supply and production activities from network operations.

For the Commission, the main option is ownership unbundling: the same person or persons cannot exercise control over a supply undertaking and, at the same time, hold any interest in or exercise any right over a network operator or system. An alternative option is the "Independent System Operator". This option enables vertically integrated companies to retain the ownership of their network assets, but requires that the network itself is managed by an undertaking or entity entirely separate from the vertically integrated company, performing all the functions of a network operator.

A temporary derogation to ownership unbundling will remain possible for new projects (eg the construction of another LNG-terminal in Zeebrugge).

Responding to the alleged threats to the security of supply, the Commission also proposes to insert a “Gazprom” clause in the new legislation. No supply or production company active anywhere in the EU can own or operate a network in any Member State of the EU. This requirement applies equally to EU and non-EU companies. This reciprocity obligation obliges companies from third countries to demonstrably and unequivocally comply with the same unbundling requirements as EU companies.

In the Belgian context, the new legislative proposals would oblige the Suez-group either to divest its interests in Fluxys, the network operator for natural gas, and in Elia, the network operator for electricity, or to leave the management of the networks to an independent operator.

It remains to be seen whether the proposals of the European Commission will be acceptable for the Member States. Already before the publication of the Third Package, France and Germany made it clear that ownership unbundling and even an “Independent System Operator” would be a step too far. Although Belgium is part of the supporters of the Commission's proposals, in the last version of the draft coalition agreement for the formation of a new federal government, the parties did choose for the independence of the network operators, but did not adopt a clear ownership unbundling. The draft stated that independence had to be achieved “through a predominant public ownership and a public operation of the systems and by reducing the share of the producers/suppliers below 25%. Energy sector companies can acquire shares, but cannot have or use a blocking minority, for example by means of a shareholders agreement or special voting rights, nor can they appoint independent directors.”

New draft governmental agreement

2007-08-08T17:03:00.000+02:00

Today, the Belgian media publish the new draft on their respective websites. Below is a (free and quick and almost literal) translation of the part on the TSO's:

The Government resolutely chooses for the independence of the TSO’s through a predominant public ownership and a public operation of the systems and by reducing the share of the producers/suppliers below 25%. Energy sector companies can acquire shares, but cannot have or use a blocking minority, for example by means of a shareholders agreement or special voting rights, nor can they appoint independent directors.

The TSO’s must have sufficient financial means to carry out replacements and new investments and the necessary maintenance to the system, inter alia in order to allow Belgium to continue its development as junction of the European transmission system.

The government watches over the promotion of interconnections at the borders.
The government will provide non-discriminatory access conditions to competitors for the import, storage and transport of natural gas. In order to safeguard our natural gas supply, the government will see to it that the policy of the CREG relating to the monitoring of the costs of the TSO’s allow the latter to invest in natural gas storage capacity and interconnection capacity. The government will continue the transformation of the Zeebrugge hub in order to strengthen the position as international pivotal point for the supply of natural gas. In general, the government will see to it that the policies of the CREG allow SO’s to guarantee an optimal quality of the systems.

The new federal government and the nuclear phase-out

2007-08-02T13:00:00.000+02:00

According to press articles, the negotiators for the formation of a new federal government agreed upon maintaining the phase-out for Doel I (392-393 MW) and II, but decided to postpone the phase-out for the remaining nuclear reactors in Belgium (Tihange I, II and III, and Doel III and IV). The negotiators want to levy taxes on the remaining nuclear reactors and use the proceeds for investments in renewable energy.

Investigation by the CREG on the retail price increases announced by Electrabel

2007-08-01T16:33:00.000+02:00

After the announcement by Electrabel of a price increase of electricity and natural gas on the retail market in Belgium, the federal minister of energy, Marc Verwilghen, requested an investigation by the CREG, the federal energy regulator, and the Competition Council.

Today, the CREG issued a press release with the telling title: “The CREG finalises its investigation on the price increases announced by Electrabel, notwithstanding the limited cooperation of Distrigas”.

The CREG concludes that the reasons invoked by Electrabel to justify the retail price increases of natural gas “are sometimes but not always equally pertinent”:
- The higher fuel prices were already charged to the end consumers;
- The new natural gas contract between Electrabel and Distrigas entered into force on 1 January 2007. Consequently, eventual negative price effects arising out of this contract would have been noticed at that date and will not have effect only as from 1 September 2007;
- Only the part of the price increase related to a fixed term in the new natural gas contract was not yet charged to the end consumers.
- The CREG has noticed that at the moment of the opening of the Walloon and Brussels energy market (1 January 2007) Electrabel has set its prices very low, which could imply predatory pricing. Although there are indications for such predatory pricing, the CREG is unable to prove this due to of the limited cooperation by Distrigas. Lacking the necessary cooperation, the CREG was also unable to conclude that Electrabel tried to provoke a price squeeze. The CREG asks the Competition Council to investigate this further.

The reasons invoked by Electrabel to justify the retail price increases for electricity for professional customers are again “sometimes but not always equally pertinent”:
- The prices Electrabel wants to increase differ on the basis of parameters taking into account the fuel and employment costs. These parameters are less volatile than parameters based upon more volatile price changes on the exchange. Electrabel invokes the increased wholesale prices. According to the CREG it is “strange” that Electrabel uses parameters in its contracts with industrial customers different from the increased wholesale (exchange) prices.
- The price increase seems to be inspired by the concern of Electrabel to safeguard its profit margin.

The CREG gives some recommendations:
- Price regulations can be temporarily adopted;
- Structural measures to improve competition must be adopted;
- CREG’s competences must be strengthened (including the possibility to conduct market monitoring);
- Part of Electrabel’s production capacity must be put at the disposal of other market players;
- The independence of the system operators must be strengthened;
- Investments in production, transmission/transport, distribution and transit must be carried out.

National Petroleum Council on the future of energy: not bright...

2007-08-01T11:26:00.000+02:00

Jérôme Guillet, director energy at Dexia, posted last week his comments on the report "Facing the hard truths about Energy" (attention: 11 MB pdf-file!) of the US National Petroleum Council on the Oil Drum.

He concludes:

"So I'd chalk this report as a major step forward in the acknowledgement that there is indeed a supply problem for both oil&gas."

EC Commission proceedings against E.On and Gaz de France

2007-07-30T15:49:00.000+02:00

The Commission decided to launch a proceeding against E.On and Gaz de France for a suspected breach of the EC Treaty's rules on restrictive business practices (Article 81 EC Treaty). The possible infringement, which will be further investigated, takes the form of a suspected agreement and/or concerted practice between E.ON and Gaz de France whereby they agreed not to sell gas in each other's home market.

More information can be found on the EC Commission's website or in the press release.

European Commission initiates procedures against Electrabel

2007-07-26T17:11:00.000+02:00

In its press release of today (26 July 2007), the European Commission announces that it initiated proceedings against Suez (Electrabel) concerning a suspected infringement of Article 82 EC Treaty.

"The suspected infringement takes the form of long-term contracts concluded by the SUEZ group with final consumers of electricity in Belgium, in particular but not limited to large industrial consumers. It is suspected that in combination these contracts prevent customer switching thereby significantly foreclosing the market(s) concerned."

Proposals for the new federal government

2007-07-24T09:28:00.000+02:00

Yesterday Yves Leterme presented his memorandum for negotiations with a view of the formation of the next Belgian federal government.

In his memorandum, two pages are dedicated to the energy market.

At first sight, Leterme did a good job in hiding his understanding of the liberalised energy markets.

A short overview of his proposals:

- SPE must be "structurally strenthened";
- Next to SPE and Electrabel, only one third producer must enter the market;
- Both SPE and the third producer must be able to buy together a 30% stake of the nuclear capacity at a cost plus price;
- Producers and suppliers cannot hold more than 25% of the shares of the TSO;
- The import and transport of natural gas must be based on non-discriminatory conditions for all parties;
- The federal state will invest in storage capacity and interconnection capacity;
- Zeebrugge must remain an important hub;
- The nuclear phase-out is softened;
- The CREG must be strengthened, but also more monitored.

On my Dutch weblog I give a full overview of and some first comments on the memorandum.

European Parliament endorses Commission's view on unbundling

2007-07-11T16:55:00.001+02:00

Yesterday during its plenary session, the European Parliament accepted the Resolution on Prospects for the internal gas and electricity market.

With regard to unbundling, the Parliament "considers transmission ownership unbundling to be the most effective tool to promote investments in infrastructures in a non-discriminatory way, fair access to the grid for new entrants and transparency in the market".

It "underlines however that this model might not address all of the issues at stake such as interconnections or congestion points".

The Parliament therefore "calls on the Commission to present an analysis in which the expected costs of ownership unbundling for the Member States, the expected effects on investment in the networks, as well as the benefits for the internal market and consumers are demonstrated". This analysis should address the question whether (and if so what) problems or costs would arise if no unbundling is carried out and should consider what the advantages would be of an ownership unbundling compared to the independent regional market operator approach.

Finally, the Parlieament "insists that no third country company should be allowed to purchase energy infrastructure unless there is reciprocity with that country".

The full text of the parliamentary debate can be found here.

Final report of Commission Energy 2030

2007-06-27T12:17:00.000+02:00

The Commission 2030 set up to make a study and a report which should lead to the elaboration of the Belgian energy policy by the year 2030 has published its final report.

I tried to summarise the "Key Messages in a Nutshell":

The objective of a sound energy policy is to offer energy services for a variety of applications, based on an energy basket that guarantees a firm security of supply, at an acceptable cost for society, and in an environmentally friendly way.

The Belgian energy policy will have to consist of a balanced mixture of contributing elements. Four groups of “energy sources” [(energy savings, carbon-based resources, nuclear and renewables)] have to be considered, each having their specific merits and limitations[.] (…) Omitting one of them will likely lead to a sub-optimal solution.

On security of supply, four aspects are to be focused on as priorities: Diversity of supply of primary sources and technologies (…); a stable investment climate (…); TSOs and DSOs must be 'allowed' to invest in extensions, adaptations, and preventive maintenance (…); a comprehensive study to find the appropriate energy mix (…) must be carried out.

The liberalization process for electricity and gas in Belgium must be continued in line with the European common energy market concept. Industry has to be enabled to fully participate in the European wholesale energy market, by co-investing in generation assets, by long-term contracts, by establishing a liquid wholesale market, supported by sufficient transnational transmission capacity. Sufficient retail market access should develop over time to reach a good mix of suppliers in Belgium. Regulated capped prices at the retail level are advised against.

Strict supervision by a competent and independent Regulator is necessary while accounting for the development of a European regulatory institution. (…)

Belgium should devote much more research & development means to energy. (…)

Upon lifting the nuclear phase-out law, an agreement with the owners of the Belgian nuclear power plants is to be sought for, to establish a "correct" nuclear-extension concession fee, the revenues of which could be used for stimulating investments in energy savings & demand-side management, for development in renewable energy, for development & research in emerging energy technologies and carriers.

New Flemish Energy Minister

2007-06-27T09:49:00.000+02:00

Tomorrow, 28 June, Hilde Crevits will be sworn in as the new Flemish Energy Minister. Crevits was Alderman inter alia for utilities and energy in the City of Torhout. She was also recently appointed as member of the board of directors of Distrigas as a representative of Publigas.

Abundance of new regulation

2007-06-20T11:34:00.000+02:00

Yesterday, 19 June 2007, the Belgian State Gazette (Belgisch Staatsblad/Moniteur belge) published an abundance of new energy regulation (all texts are available in Dutch and French only):
- The Royal Decree of 8 June 2007 on the tariffs for the use of the gas transmission system, the LNG-terminal and the storage facilities;
- The Royal Decree of 8 June 2007 on the tariffs for the use of new gas transmission facilities, LNG-terminal facilities and storage facilities;
- The Royal Decree of 8 June 2007 setting the amounts for the financing of the CREG;
- The Ministerial Decree of 30 March 2007 setting the maximum princes for the supply of natural gas to protected customers;
- The Ministerial Decree of 5 June 2007 approving the by-laws of Apetra;
- The Decree of the Flemish Parliament of 25 May 2007 modifying the Electricity Decree and the Natural Gas Decree.

Since I'm still reading trough these new regulations, I will comment (if necessary) later on this blog.

Something from The Netherlands

2007-06-18T15:39:00.000+02:00

Belgium energy legislation continues its winter sleep awaiting the formation of a new government.

Last week, the new Dutch governement presented its policy note (in Dutch) for the next four years.

On Belgisch Energierecht I given an excerpt of the most interesting issues from an energy policy perspective (in Dutch).

Support for ecological investments

2007-06-07T11:44:00.000+02:00

During the last week, the Flemish Government was heavily critised for revoking the existing support mechanism for ecological investments by companies. In my blog Belgisch Energierecht I give an overview (in Dutch) of the different positions taken by the sector and the Flemish government.

Pax Electrica Ter?

2007-06-05T10:16:00.000+02:00

During the "big debate" in view of the federal elections next Sunday 10 June 2007, prime minister Verhofstadt said that he is convinced, based upon his discussions with the French president Sarkozy and the French prime minister Fillon, that the merger between Suez and Gaz de France will not take place.

Nevertheless, Verhofstadt is of the opinion that even in the event the merger would not succeede, the Belgian government should enter into discussions with Suez in order to agree upon a new Pax Electrica, aimed at the release of 30% of Electrabel's production capacity in Belgium to two other players. Strangely enough, it still appears that one of the two potential candidates is already known: the Belgian company SPE.

New tariff system for the Electricity TSO

2007-06-05T09:59:00.000+02:00

On 1 June 2007, the Belgian federal government held its last cabinet meeting before the elections of next Sunday. During this meeting, the draft royal decree laying down the procedures for the setting of the electricity transmission system tariffs of Elia was adopted (French text), thus executing the new provisions of the Electricity Act of 29 April 1999, as modified by the Act of 1 June 2005.

Because of the federal elections, the King will not sign this royal decree until the formation of a new government has succeeded. Consequently, it might not enter into force before the fall.

The new royal decree also develops the “four years” tariffs, allowing greater stability for the use of the transmission system.

However, it appeared from an article in the Flemish newspaper De Standaard (registration required) that in its advice on the draft royal decree the Council of State was very critical on the possibility of setting tariffs for four years. This seems strange, since this new tariffs-system was one of the cornerstones of the Act of 1 June 2005.

Transit of natural gas

2007-05-31T13:53:00.000+02:00

Last Tuesday I had the honour to speak on transit of natural gas during the 20th annual European Energy Law Conference in Noordwijk-aan-Zee (The Netherlands). The privilege was even greater since my intervention came after the intervention of Mr. Walter Boltz, head of the Austrian regulator E-Control GmbH. While Mr. Boltz mainly focused on the future developments and regulatory necessities in the field of transit of natural gas, I spoke mainly on the exemption provision of article 32.1 of the 2nd Gas Directive and, related hereto, on the scope of the Transit Directive 91/296/EEC.

I will send my presentation to whoever at first request.

Op zoek naar de Nederlandstalige blog? Ga naar www.belgischenergierecht.blogspot.com.

Poverty and the right to energy

2007-05-24T11:18:00.001+02:00

The Flemish Parliament adopted yesterday a new regional act that modifies the existing legislation on the protection of poor people, following its own recommendations of 2005.

You can find more information (in Dutch) on my Belgisch Energierecht-blog.