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