Gas Market Reformation

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ENERGY LAW-GAS MARKET REFORMATION Distribution Grid of Natural Gas It is the grid which is developed or is going to be developed in accordance with approved program of development Natural Gas Distribution Companies The companies which occupy with issues of natural gas distribution grid. Regulatory Authority of Energy (RAE) The Regulatory Authority for Energy (RAE) is an independent administrative authority, which enjoys, by the provisions of the law establishing it, financial and administrative independence. RAE was established on the basis of the provisions of L. 2773/1999, which was issued within the framework of the harmonisation of the Hellenic Law to the provisions of Directive 96/92/EC for the liberalization of the electricity market. The financial independence of RAE, which is an essential condition in order to preserve the Authority's independence, was effectively ensured by the provisions of L. 2837/2000, through which it is anticipated that the Authority possesses its own resources, i.e. revenue bonds from the regulated industry, participation to research projects etc. These resources are managed in accordance with the Presidential Decree 139/2001 "Regulation for the Internal Operation and Administration of RAE", while financial management is subject to ex-post auditing by Independent Auditors and the Court of Auditors. New competences and duties were assigned to RAE with respect to electricity and natural gas sectors by the Electricity Law 3426/2005 and the Gas Law 3428/2005, in alignment with the relevant provisions of the EC Directives 2003/54 and 2003/55, in particular with respect to access tariffs to electricity and gas networks, the terms and conditions for the provision of balancing services in natural gas, as well as on issues related to security of electricity and natural gas supply. Furthermore, on the basis of the modifications introduced with the abovementioned laws, RAE acts as a dispute settlement authority with respect to complaints against transmission or distribution system operator in both electricity and natural gas sectors. The main duties and responsibilities assigned to RAE relate to the following subjects:
  • Monitoring the operation of all sectors of the energy market (Electricity, Natural Gas, Oil Products, Renewable Energy Sources, Cogeneration of Electricity and Heat etc.).
  • Collection and processing of information from companies in the energy sector while respecting the principles of confidentiality.
  • Participation in the pre-parliamentary legislative process through recommendation to the Minister of Development of the appropriate measures related to compliance with competition rules and to the overall protection of the consumers in the energy market. RAE monitors in particular the management and allocation of interconnection capacity, the time taken by TSO and DSO for connections of users and repairs to the network, the publication of all appropriate information by the TSO and the DSO, the terms and tariffs for third party access, the unbundling of accounts, the level of transparency and competition in the energy market and the security of supply.
  • RAE issues a report every two years on security of supply both for electricity and natural gas, which is published and submitted both to the Minister of Development and the Commission, pursuant to the provisions of laws 3426/2005 and 3428/2005.
  • Advice under the form of a simple opinion, with respect to the enactment of the secondary legislation, with the exception of the Electricity Grid Operation Code, the Power Exchanges Code, the Distribution Network Operation Code, where RAE enjoys the right of a consenting opinion. Furthermore, with respect to natural gas, RAE gives a consenting opinion for the issue of the Operation Codes of the National Natural Gas System as well as of the Independent Natural Gas System, while it approves the appropriate methodologies and details for the implementation of both Operation Codes.
  • Advice under the form of a simple opinion, with respect to the terms and conditions for access to the transmission and distribution networks. Approval of the methodologies for the access tariffs to electricity transmission and distribution networks. The tariffs for third party access to electricity networks are approved by the Minister of Development following a consenting opinion of RAE, whilst RAE gives a simple opinion with respect to tariffs for third party access to natural gas systems. Regarding natural gas, RAE drafts the tariffs Regulation which is subject to approval by the Minister of Development, and regulates the terms and conditions for the provision of balancing services.
  • Participation, under the form of a simple opinion, in the process for the granting and revocation of licences for the discharge of electricity activities.
  • Monitoring of the exercise of the activities undertaken by licensees and access to information.
  • Advice, under the form of a simple opinion, in the procedure for the approval of electricity retail tariffs with the exception of access tariffs.
  • Approval of the generation adequacy studies conducted by HTSO to establish whether HTSO should issue tenders for new generation capacity.
  • Imposition of financial sanctions, particularly fines to the violators of the primary and secondary energy legislation.
  • Arbitral resolution of disputes between parties on electricity and natural gas legislation.
  • Dispute settlement authority with respect to complaints against electricity transmission or distribution system operators and the owner of the electricity network, as well as against Natural Gas System and Distribution Operators on infringements of primary and secondary electricity and natural gas legislation.
  • Cooperation with Regulatory Authorities of other countries, international Organisations and the European Commission.
  • Reporting on an annual basis to the Commission on market dominance, predatory and anticompetitive behaviour on the basis of the appropriate information submitted by the Competition Authority.
Finally, under Law 3054/2002 specific responsibilities were assigned to RAE regarding with the organisation and operation of the oil products market. RAE is obliged to comply with the legality principle. The decisions of RAE that are not solely advisory are subject to judicial review by the Athens Administrative Court of Appeals. Finally RAE publishes and submits to the Parliament via the Minister of Development an annual report giving detailed information about its functioning and acts. Natural Gas Distribution License When a company has a natural gas distribution company has the ability to construct the distribution grid of natural gas. Natural Gas Operation License A company which has this license can operate and exploit the Distribution Network Opportunity of renting a Distribution License A company which acquires a Distribution License has the ability to rent an Operation License from it’s owner through a financial return. Limitations in Licensing If there are two or more companies which are interested in getting a License then a competition is organized after RAE opinion and decision of YPEKA. At the end after the competition RAE decides which company is going to take the license. If there is an Operation License for an area then there are little opportunities a second license to be published. A company, which acquires Distribution and Operation License, can take part in a vertically integrated natural gas company if is independent from other sectors of the company Obligations of Natural Gas System Operator
  1. The reliability and the security of the System
  2. Technically and Financially feasible System
  3. Compliance of technical specifications
  4. Access for customers and suppliers
  5. Connection of the applicants to the System
  6. The procurement, installation, maintenance and proper functioning of measuring devices , which are installed in the Distribution System
  7. To provide to the Users of the Grid and to the Administrators of the Interconnected Systems and Distribution System of Natural Gas the necessary information for an effective Grid access.
  8. To avoid the discrimination between the Users of the System and especially in favor the companies that are connected with it.
  9. The cooperation with the Operators of the Interconnected and Distribution Natural Gas Systems for applying cooperation and communication protocols in order to secure the proper and the unencumbered function of the Distribution Systems , the fulfillment of their responsibilities, the function of the market and the cooperation with the operators of the organized markets
  10. The designation , the scheduling and the implementation of the development of the System taking into consideration the possibility of taking energy efficiency measures.
Operation Code of Distribution System By decision of the RAE, upon recommendation of the Distribution Network Operator, is established an Operation Code of Distribution System , whereby is carried out of it’s management, maintenance and development. The Code is published in the Government Gazette and may be amended either at the initiative RAE or at the request of the Administrator. Through the Operation Code can be adjusted the following:
  • Specifications and requirements of designation, operation and maintenance of the System and targets for the efficiency of the Distribution activity.
  • Terms and conditions through which the DSO is obliged to offer access to the System and simultaneously to secure the access of the customers to the System with financially efficient, direct and clear way.
  • Terms and conditions for the connection of the customer to the Distributed System in accordance with techno-economic basis and the process of the temporary denial to the connection to the System, which must be sufficiently justified.
  • The deadline till which the DSO must reasonably decide for the connection applications and inform the applicants about the decision
  • The quality standards and the conditions of the delivery conditions of Natural Gas which is distributed through the system
  • The obligations of the DSO in the case of extreme conditions and especially the priority order of interruption of the connected customers.
  • The schedule of maintenance and development of the distributed system and the procedures of informing the users of the system and the Operators of the Interconnected distribution systems.
  • Information and data related to the Operation of the system, which are given to the users of the system
  • The content of the standard connection and use agreement of the system
  • The procedures for issuing invoices and abidance and clearance of accounts
  • The implementing procedures of measures for the management of the capacity
  • The obligations of the Distribution Network Operator for monitoring the evolution of demand and the content and the process for filing reports to RAE
Changes in Natural Gas Market
  • From May 30 2015 begins the separation of the gas distribution sector (distribution system) both DEPA and the EPA Attica, Thessaloniki and Thessaly, and from October 1, 2015 accounting unbundled should be completed.
  • Until January 1, 2017 the legal and functional unbundling of distribution systems of Attica, Thessaloniki and Thessaly must have been completed and companies have to transport their distribution sector to the new CDG which is established. The EPA Thessaloniki and Thessaly can jointly transport their distribution sector to a common CDG in which they participate. The same applies to the distribution sector of DEPA for the rest of Greece.
  • It is going to be established four natural gas distribution companies without being prohibited either the merger of the companies or the establishment of new companies.
  • Distribution networks remain under the exclusive property of DEPA and their management is under CDG. The new projects and the extension of the DS which will constructed by CDG will remain under the property of CDG.
  • There is a 20-year extension to the license of CDG with the option of being extended further for 20 years.
  • There is tax exemption as regards the process of separation of distribution activities
Eligible Clients Previous Law Situation
  • The owners of a license of electric power production with the use of Natural Gas
  • All the non-domestic customers who are outside of the EPA’s responsibility boundaries
  • All the non-domestic customers and the big customers who are in areas with παρεκκλιση
  • All the domestic customers who are are outside of the EPA’s responsibility boundaries
  • The customers of the EPA when the license of the EPA is expired
  • The customers of an area with παρεκκλιση when παρεκκλιση is expired
  • The EPAs that are established after this law
New Proposal
  • All the customers that are outside of the three EPA’s responsibility boundaries.
  • All the customers that are into the three EPA’s responsibility boundaries and use the natural gas as a fuel to the engines of means of transportation
  • All the customers that are into the three EPA’s responsibility boundaries and use the natural gas as a fuel to the engines of means of transportation
  • All customers that are into the three EPA’s responsibility boundaries and purchase natural gas for industrial use, who had actually consumed more of 2,2 GWh per consumption site within the period preceding twelve consecutive months of that date.
  • From 1/1/2016 all the non-domestic customers with consumption greater than 2,2 GWh
  • From 1/1/2017 all the non-domestic customers without taking into account the consumption
  • From 1/1/2018 all the domestic customers
Consequences because of the changes in Natural Gas Market According to the bill four Distribution Companies (ECN) are established in Attica, Thessaloniki, Thessaly, and the fourth in the rest of Greece, to which is granted the exploitation of the distribution systems of the three EPA but DEPA remains solely the owner of those systems. The EPA will remain only as commercial companies that will supply natural gas to retail and the consumers will pay in them their bills. As a result it is gradually achieved the whole separation of the commercial activities from those which are associated with the construction and the management of the system both for DEPA and three EPAs. The separation of the systems starts from 30/5/2015 , while in 1/10/2015 the accounting unbundling of the distribution system activities should be completed. Until 1/1/2017 must have been completed both the legal and functional unbundling of the systems in Attica, Thessaloniki and Thessaly. The EPA Attica,Thessaloniki and Thessaly can jointly transport their distribution sector to a common CDG in which they participate. The same applies to the distribution sector of DEPA for the rest of Greece. The EPA and Distribution Companies have the ability through the bill to be merged. In the future it is not prohibited for the distribution system of the Greece to be bounded under one company operator, so as the cost to be decreased. Simultaneously, the monopoly of DEPA and EPA to source and sell natural gas to the customers is gradually finished. The following customers will be able to choose their supplier:
  • All the customers that are outside of the three EPA’s responsibility boundaries.
  • All the customers that are into the three EPA’s responsibility boundaries and use the natural gas as a fuel to the engines of means of transportation
  • All the customers that are into the three EPA’s responsibility boundaries and use the natural gas as a fuel to the engines of means of transportation
  • All customers that are into the three EPA’s responsibility boundaries and purchase natural gas for industrial use, who had actually consumed more of 2,2 GWh per consumption site within the period preceding twelve consecutive months of that date.
  • From 1/1/2016 all the non-domestic customers with consumption greater than 2,2 GWh
  • From 1/1/2017 all the non-domestic customers without taking into account the consumption
  • From 1/1/2018 all the domestic customers
The fact that three EPA lose their monopoly in distribution system and in supplying their clients is in contrast with the exclusivity of 30 years contract that they signed in 2000. As a result it is offered to EPA 20-years extension in the activity of the system with an option of further 20 years. This is happening in order not to arise ligitation problems and the shareholders not to seek for damages. In essence, this means that the licenses of EPA which expire in 2030 are extended until at least 2050. DEPA remain the exclusive owner of the systems but it can not have a financial return from the provision of the management and exploitation of the DS in Attica, Thessaloniki and Thessaly until the redemption of the right to use them. For a period of three years from the launch of the EDA and to facilitate the full development of its own services, the transferring company, whether DEPA either the EPA can support the function of providing the services, for a reasonable consideration will cover the cost of providing and approved by RAE. Within three months from the enactment of the Law, DEPA as a manager of the distribution system of the rest of Greece, and EPA Attica, Thessaloniki and Thessaly as managers of the systems of the respective geographical areas, recommend to the RAE, which must issue a series of additional provisions within three months from the time of submission. Such devices are the Pricing Rules of these systems, and the Code Management Distribution System. Also, within one month from the entry into force of the Regulation Invoice, DEPA and EPA Attica, Thessaloniki and Thessaly, submit for approval by RAE scales on which they receive in exchange for each key activity provide to their customers. Pending the entry into force of the new tariffs, the price for basic activities for users is 4 euros per MWh
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