Climate and energy highlights of the new Belgian federal coalition agreement

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.

Climate and energy highlights of the new Belgian federal coalition agreement

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

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..."

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

Proposals for a constitutional reform – failed but interesting

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.

Proposals for a constitutional reform – failed but interesting

Gazprom and Fluxys: no respect for fundamental liberalisation rules?

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.

Gazprom and Fluxys: no respect for fundamental liberalisation rules?

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.

Renewable funds financed by the nuclear operators

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.

Belgian Constitutional Court rules on transit of natural gas

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

Best Lawyers