Ref. Ares(2015)2066913 - 18/05/2015
EC Consultation Paper on the Revision
of Regulation (EU) No 99472010
concerning measures to safeguard
security of gas supply and repealing
Council Directive 2004/67/EC
8th April 2015
Questions and answers
1. Is the current N-1 rule fit to ensure a sufficient level of infrastructure for
security of supply purposes or do you believe that an alternative measure
replacing the N-1 standard should be investigated? (e.g. broader
infrastructure adequacy assessment at regional or pan-European level similar
to e.g. ENTSOG Winter Outlook)?
Yes, we do believe that N-1 formula is appropriate for such a purpose
although it would be convenient to clarify some issues about how calculate it,
for instance the export capacity to be considered at the interconnections.
Nevertheless not only entry point should be considered, but also transmission
capacity should be tested in order to guarantee that demand can be covered
in case of disruption.
The isolated contribution of ENTSOG as the analyses carried out in Winter
Outlook is not incompatible
. Furthermore,
the time horizon of the N-1
formula1 is wider, detecting potential shortages and weakness in the medium
and long term.
2. Is a regional approach to N-1 needed? If so, in which cases would it be
appropriate and how should regions be defined?
In general no, unless countries voluntarily consider it appropriate. For
instance, in case that the implementation of a regional approach helped a
neighbor country to fulfil with the N-1 formula and there would be enough
interconnection capacity, allowing to stablish a balancing zone
3. Do you believe that reverse flow is offered at all points where it is needed? If
not, why (what are the main obstacles)? At what points could it increase
supply security in a tangible manner
In Spain, all the connection with France and Portugal are reversible. In
addition, more alternative routes should be promoted that provide security
and diversification of supply, like for instance the “gas entry door” from the
South to Central Europe increasing the level of interconnection Spain-France,
reducing the effect of risk in the supply of the rest Europe.
1 The formula N-1 is incorporated as a criterion of design in the Spanish Mandatory Planning of the sectors of
electricity and gas.
2
4. As concerns exemptions from the reverse flow obligation2:
a.
Should these provisions be clarified and/or strengthened?
We do not detect need to clarify and specify additional issues into current
Procedure for enabling bi-directional capacity or seeking exemption
(Article 7 of Regulation (UE) 994/2010)
In addition to the reserve flow, another aspect to consider is the capacity
of interconnection.
b. Should the relevant authority analyse the benefits of reverse flows along
the whole transportation corridor?
The security of supply is one of the main criteria taken into account to
select the Projects of Common Interest (PCI’s), as well as the market
integration, competition and sustainability referred to in Article 4 of
Regulation on guidelines for trans-European energy infrastructure (Reg.
347/2013).
c. Should affected Member States even beyond the immediate borders be
involved in the assessment?
Yes, in accordance with the Regulation 347/2013
5. Is the current review possibility - every two years, in the framework of the
revised Risk Assessment - sufficient or should there be more regular checks
whether market conditions justify an exemption?
Two years is a reasonable timeframe to demonstrate the exemption, before
consolidated changes in the market conditions.
Nevertheless, in case of unexpected event / risk related to geopolitical
situation or technical changes, specific stress tests could be requested by the
European Commission and managed through the Gas Coordination Group.
6. Are the Risk Assessments and Preventive Action Plans in the current format
satisfactory means for identifying and preparing for supply risks? What core
elements could a possible template for the Risk Assessment and a Preventive
Action Plan contain (e.g. concrete harmonised scenarios to be addressed,
similar to the Energy Stress Tests, etc.)?
Yes, the current methodology allows to update the risks with new scenarios
that appear continuously, for instance, adverse weather events (cold spell
February 2012), updating the geostrategic context, evolving market
circumstances and the role of gas in the energy mix.
2 See notably Article 7(4) (a) of the Regulation.
3
In template the risk scenarios could be categorized in by two areas:
Global/European and national of each Member State. The global/European
scenarios could harmonize the same way as the Stress Test. Another issue to
consider would also be to concrete the parameters to assess the scenarios as
well as the effectiveness of measures to prevent and mitigate risk, in addition
to those aimed to increase the strength of the system.
Furthermore, the time frame of the Risk Assessment and Preventive Action
Plans could be fixed, being four years a reasonable horizon, due to the high
grade of uncertainty in the variables that affect the supply and demand in
long term, and the frequency of the biennial actualization.
7. How can the existing cooperation obligation be improved?
a. Do you think that regional plans for Risk Assessments and Preventive
Action Plans should be obligatory in the EU or at least in certain regions? If
you believe that regional plans should be introduced: how should the
regions be defined (e.g. criteria, who should coordinate the process)?
The paragraph 3, article 5 of the current Regulation, gives the possibility
to establish joint plans in addition to the plans in a nation level.
We think that it is not necessary the obligation to establish joint plans, but
it would be constructive to agree on risk chapter with influence among the
neighbouring Member States, as well as its preventive strategy. In this
regard, Spain and Portugal have fixed and coordinated the risk situations
that influence on both countries.
b. Should – at least in vulnerable regions – an obligation to agree on how to
share gas in case of a supply crisis with neighbours with whom a common
supply infrastructure is shared be included in the plans?
The shippers are responsible for ensure the supply of the market,
nonetheless, Spain has since years ago Mutual Assistance Agreements and
Operating Agreements, in reference to the Regulation 715/2009. This
regulation in its article 12, promotes the regional cooperation in order to
improve the management and coordination of the interconnections under
any situation.
In addition, for crisis situations, it may be convenient to establish
voluntarily agreements between neighbouring countries located in
vulnerable areas and which must be communicated to the Commission.
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8. Do you have proposals to simplify the administrative procedure for the Risk
Assessments and Preventive Action Plans (and Emergency Plans), e.g. in
terms of translation or alignment of the timelines? Should Risk Assessments,
Preventive Action Plans (and, possibly, the Emergency Plans) be merged into
one document and the procedural rules aligned respectively?
It should be translate into a common language at least the sections with
scope greater than the national level, setting enough time to reach the
reference deadline of the different plans to the Commission.
It could be beneficial the integration of both the Preventive Action and
Emergency plans, in order to encompass the necessary measures to eliminate
or mitigate the risk, and the actions to tackle the possible disruption of the
gas supply, avoiding cross-reference between both documents.
9. Do you think the current supply standard is defined and set appropriately with
a view to ensuring that the objective of securing supplies to protected
customers is met, taking into account sufficiently of differences in terms of
vulnerability between Member States? Please substantiate your reply. In case
you do not
think that the supply standard is defined or set appropriately:
what alternative design/tools could be envisaged to ensure the gas supply to
protected customers? Please substantiate your reply.
Yes, also the Article 8(2) allows increasing supply standard supported by Risk
Assessment.
10. Do you think that the scenarios defined for the calculation of the standard in
Article 8(1) (a) to (c) are still valid (for all Member States) or should they be
modified? Please substantiate your reply.
We believe that the failure of the main supply country, in average
climatological conditions, should be included in the standard supply cases.
11. Do you think that increased standards (e.g. manifested in longer and more
severe disruption scenarios) would be beneficial or could ultimately
jeopardize the security of supply in other Member States by reducing the
liquidity in gas markets? Please substantiate your reply.
The current standard is sufficiently demanding. An increase in the
requirements should be supported in an objective, transparent and non-
discriminatory manner; otherwise it might promote a reduction of liquidity,
limiting both the competitive and the sustainability and a higher cost for the
shipper
.
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12. Do you think that the result-oriented approach should be maintained or
should the supply standard become more prescriptive in how the
implementation and enforcement should be carried out? Please substantiate
your reply, taking into account the effects on prices, liquidity, competition and
security of supply.
The choice should be a decision of the Competent Authorities.
13. To what extent can a more active role of the Competent Authorities in the
monitoring of the supply standard contribute to resolve the identified issues,
notably should the Competent Authorities permanently verify that
measures/means to meet the standard put forward by undertakings are
appropriate? If so, how can this practically be realised, without unnecessarily
limiting cross-border trades and liquidity?
Yes, the Spanish Competent Authority has an active role in the monitoring of
supply standard through the control of abovementioned public service
obligations imposed on undertakings.
The monitoring should not be an inconvenient, unless derived from it, the
measures adopted by any competent authority could determine the proper
functioning of the internal gas market.
14. Should all undertakings be treated equally or should for instance small
undertakings be exonerated from the obligation to comply with the supply
standard? Please substantiate your reply.
Exceptions should not be made; each undertaking should be responsible and
therefore comply with supply standard according to the customers of its
portfolio.
Only shippers with a certain share of the supply may have a “diversification
obligation” in case the overall gas supplies to the country from a single source
surpass a certain threshold.
15. Do you think the supply standard should be met by the undertakings
responsible as a “going concern” in the context of their regular, day-to-day
supply activities? Please substantiate your reply.
It is a minimum and necessary requirement for the activity. In the current
Spanish legal framework (cf. Article 14 of the Royal Decree 1434/2002, of
27th December), the natural gas undertakings should be able to prove that
they have capacity to ensure supply at all time and the demand of its
customers, without supply disruption beyond extraordinary situations. In
order to accomplish that, they should have the contracts or the guarantee
from the gas supplier that could be used to cover the foreseen commercial
activities, ensuring the supply diversification needed.
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The implementation of the NC Balancing (cf. Regulation 312/2014) shall
deliver incentives on the network users that balance their balancing portfolios
efficiently. The network users shall be responsible to balance their balancing
portfolios in order to minimise the need for transmission system operators to
undertake balancing actions set out under this Regulation (Chapter II, article
4(1)).
16. To what extent can normal market conditions be relied upon by the
undertakings responsible to ensure that they will meet the supply standard
even in case of supply disruptions?
According to a system of sanctions and penalties. In the Spanish case, in
accordance with the stated on the Title VI of the Act 34/1998, of 7th October,
on the Hydrocarbon Sector.
In addition, strategic stock allows to contribute to the fulfilment of the
standard supply.
17. How can the ability of undertakings to supply protected customers be checked
in a "hub-based" gas world in practice, in particular:
a. To what extent can (long and/or short term) spot market contracts be
checked in a "hub-based" gas world in practice?
With a clear and precise procedure for execution the guarantees
b. How can a monitoring system avoid detrimental effects from
disproportionate guarantees/certificates for future supplies?
The monitoring system could avoid future risk situations for the security of
supply, but the guarantees for future supplies also depends on others
elements outside this monitoring, consequently its amount is not fully
linked to the same.
In Spain, Technical Manager of the Gas System (Enagás GTS) has, along
with other functions3:
i.
To determine and control the level of guarantee of supply in
the short- and mid- term.
ii.
To forecast the use of system facilities and gas reserves in
the short- and mid- term, according to demand forecasts.
3 The functions of the Technical Manager of the Gas System defined in the Royal Decree-Law 6/2000 of June
23rd of Urgent Measures for the intensification of the competition in markets of goods and services, were
updated in the Law 12/2007 of 2nd July, amending the Law on Hydrocarbons and then by the Royal Decree-
Law 13/2012 of 30th March
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c. Under what circumstances can a monitoring system based on
incentives/sanctions (i.e. without ex ante checks and guarantees) such as
described in Box 1 be effective? If so, what role should competent
authorities have under this approach?
The model described in Box 1 is used in emergency situations. This model
contributes to improve the efficiency of price signal and transfer the risk to
each one of the parts, although we think that a protected customer should
not be interrupted, even if, then he will be compensated significantly.
18. In order to protect the level playing field on the market, it may be appropriate
to entrust the transmission system operator with the role of supplier of last
resort under certain predefined circumstances and in compliance with strict
criteria. To what extent would such an approach be commendable in your
home market (please indicate which market that is)?
The transmission system operator does not have experience in the supply of
gas, this function should exclusively rest with the shippers. The transmission
system operator
is entitled to make trade balancing actions and procure
balancing services in order to meet the short term fluctuations in gas demand
or supply, without playing the role of the last resource that could distort the
market.
19. The current supply standard obligation under Article 8 and 2(1) of the
Regulation is a national obligation. Is the current approach sufficiently open to
cross-border solutions or could a "regional" approach to the supply standard
for protected customers be considered in the Regulation?
The regional approach is complicated in the supply standard for protected
customers, when its definition and the volume of gas varies depending on
each Member State, as well as the different grade of market liberalization in
each of the states, and therefore divergence in the measures to reach the
minimum standard of supply.
In the current regulation framework, the Competent Authority could promote
agreements with others countries in order to seek cross-border solutions in
emergency situations where supplies of protected customers are threatened.
20. Please provide your substantiated view relative to the various implementation
forms of the supply standard currently in use throughout the EU today. Please
indicate your experience with these measures (i.e. storage obligations,
strategic stocks, diversification obligations) and consider factors such as
overall costs, effectiveness, enforceability, impact on market, competition and
prices and compatibility with other SoS measures.
The Spanish natural gas system has a foreign dependency of almost 100%.
Due to that reason the system needs three lines of action intended to security
of supply:
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Diversification of supply, limiting the share from the same country
Saving and energy efficiency, with the dual aim of reducing external
dependence and improving economic competitiveness
Maintaining minimum strategic stock and measures for operation as
obligation stock in winter (Winter Plan)
Interruptible contracts
These measures have ensured the supply, promoting interconnections,
boosting infrastructure and allowing complete liberalization of the market.
Therefore, each country should be able to incorporate, maintain and dispose
of these measures.
21. Which role could LNG play in situations where the market cannot be relied
upon to fulfil the supply standard:
a. Can it play a role in effectively addressing an emergency situation? If so,
in what form?
Spain has an extensive experience in the infrastructures and supply of
LNG, proving a reliable and effective option for normal and emergency
operation.
Highlight that during 2014, the Spanish gas system received gas from 11
different origins, which is a guarantee of energy supply in a dependent
country and which has allowed it to become a logistics center LNG,
registering more than 50% of recharges performed worldwide.
b. What are the main barriers for LNG to play such a role (e.g. destination
clauses, transparency, price)?
LNG market has evolved rapidly in recent years allowing a flexible,
sustainable and easily relocatable supply, unlike the flows via pipeline, and
with large number of importing countries.
To take advantage of potential LNG is adequate the improvement of the
interconnection between countries.
22. The range of available measures to ensure the supply standard is much wider
in mature markets than in non-mature markets, where further regulatory
interventions may be required:
a. Do you agree that there could be a need to differentiate between mature
and non-mature markets for meeting the supply standard? If so, how
should mature and non-mature markets be defined?
No, it is likely to be very difficult to establish a clear differentiation of the
maturity of markets; also it depends on other factors such as
infrastructure
development.
Furthermore,
it
could
encourage
discriminatory situations.
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b. Do you think that an obligation of diversification for those Member States
that are highly dependent on one single supplier should be considered and
what would be an appropriate level of diversification (e.g. a percentage or
a minimum number of sources)?
In Spain it has been a measure implemented many years ago and
supported by the development of LNG plants, where gas from any source
is able to be received.
23. How can regional solutions be fostered where they are more efficient than
individual national solutions? Should legal measures (e.g. obligation to
evaluate regional solutions) be considered? How should the costs of such
regimes be shared?
It is difficult to find regional solutions when the maturity of markets is
different, the grade of interconnection is limited and the national regulatory
frameworks could be disparate in terms of cost.
It would only be possible if the regulation forces to establish agreements
between countries, not in general.
24. How could a coordinated gas reserve mechanism be designed:
In general it would not be easy the design and the establishment of a joint
mechanism. Such mechanisms should be compatible with national
requirements and may disturb the correct performance of the market due to
the variation of price signals.
In the event that a coordinated gas reserve mechanism would be established,
should be European and supervised by the EU, as well as have a uniform
definition of protected customer at EU level.
Gas reserves and storage infrastructure for emergency situations should be
established in function of economic and technical criteria, for example which
be transportable from storage to the target point of consumption. The
procedure for the activation, performance and funding should be clearly
defined
a. How could a mechanism that pools gas storage ("virtual" shared
reserve) across Member States be designed? Please describe such
mechanism in detail.
b. Is there a need for joint gas or LNG purchasing agreements between
different gas companies? Do you see rather benefits or risk of such joint
purchases in an emergency situation?
c. Should such mechanisms be regional or is there a case for an EU-wide
mechanism? Who would be the actors in such systems and what would be
their role (companies, Member States, EU)?
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25. Do you agree with the possible conditions for non-market-based measures
listed below? Which conditions would you add or delete?
-
they can only be used when it is demonstrated that gas traders are
not able to provide the necessary supply standard.
Yes, besides the competent authority can decide to include non-
market based measures to guarantee an optimum protected level.
-
they can only be used at a national level if no solutions for shared
use of storage resources with other Member States is possible.
Yes, provided that the solutions market-based, including
interconnection agreements, are not enough to solve the emergency
-
it should be ensured that the measure is open to participation of
suppliers from other countries.
Yes, in order to foster competitiveness and sustainability of the
measure
-
the capacities should be acquired on a non-discriminatory basis
(tender) and should take into account cross-border sources of
flexibility.
Yes
-
the TSO(s) is most likely to be the best placed person to acquire
such means given his control over the system, overview of the flows
and independence.
Yes
26. Should the distinction between market-based and non-market-based
measures be further clarified? Should the use of non-market-based measures
be restricted, for instance by being made subject to the fulfilment of certain
criteria and regulatory oversight?
The current wording is sufficiently clear in this respect and is not necessary a
further clarification.
Furthermore, the use of non-market-based measures should be restricted to
the criteria and supervision of the Competent Authority.
27. Concerning the definition of protected customers:
a. Do you believe that there is a need for a more harmonized definition of
protected customers and their consumption? Please substantiate your
answer.
Yes, it would be necessary to specify more accurately the definition of
protected customers at EU level. In this way, discriminatory situations
would be avoided.
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b. Should the definition of protected customers be stricter in order to avoid
that single Member States declare almost all customers as protected?
Yes, in order to maximize the coverage of protected customers in the
event that a national/European crisis was triggered and necessary
collaboration and coordination with other states in the management of the
crisis were necessary.
c. What do you think about a regional definition of protected customers (e.g.
in closely interdependent areas)?
From our point of view, a regional definition of protected customers
doesn't make sense due to we agree with a uniform definition at European
level.
28. In some 'meshed' distribution grids it is technically difficult to make a physical
separation between protected and non-protected customers: What could be a
solution to limit the protection to the actually protected customers (e.g.
orders to non-protected DSO-connected customers not to consume gas,
shielded by sanctions, etc.)?
The regulatory framework of each country should promote that Transmission
System Operators (TSOs) and Distribution System Operators (DSOs) have
emergency plans for the security of supply. These plans should contain the
procedure of communication and both technical and human resources to
prepare a disruption where the supply to protected customers is maximized
In order to guarantee the effectiveness of such plans, simulation exercises
should be performed regularly.
29. Do you see merits in laying down one or more of the following solidarity
measures: a. an obligation on Member States to agree upfront on bilateral or
multilateral crisis measures to deal with imminent disruptions of protected
customers (e.g. sharing of costs, roles and responsibilities, etc.), in order
to prevent alleged "free-riding";
It is considered more appropriate that, if it would be necessary the use of
bilateral crisis measures ex ante it should be established a clear and
detailed model of execution of the measures.
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b. a prohibition for Member States to close their borders or reduce
interconnection capacity in case protected customers on the other side of
the border are still at risk (combined with efficient provisions against "free-
riding" such as upfront agreements, see a) )?
Competent authority and the Crisis Manage Group in each country should
have capacity to decide the most adequate management for the
interconnection points in crisis situation. The capacity should not be
limited unless it has been previously agreed between neighboring
countries.
c. What other solidarity measures do you believe can improve levels of
security of supply without unnecessarily impacting market functioning?
Currently, we do not know other measures of solidarity that do not impact
on performance of the market.
However, it would be good to establish crisis drills between countries
neighboring to check the effectiveness of the solidarity measures.
30. Do you agree that the development of emergency plans at regional level
would be an appropriate way to ensure consistency and to enable preparation
to react to common and correlated risks? How should the regions for security
of gas supply be best defined? Please substantiate your reply.
Risk assessment identifies those risks in common with other member states.
It would be advisable that the Risk assessment had a chapter coordinated
with neighboring countries where the common risks are addressed. Therefore,
emergency plans must include the mechanisms used to cooperate with other
Member States at every level of crisis, such as agreements on
interconnections.
We think the approach should be at European level, not being needed the
definition of regions, which is not inconsistent with the coordination with
neighboring countries to coordinate gas flows.
a. Should mandatory regional emergency plans complement the national
emergency plans or replace them?
No, unless some countries voluntarily detect a clear advantage over
national plans
b. Do you think that a template for regional emergency plans would ensure
that more detailed and relevant information is provided (e.g. similar to the
template used in the recent Energy Stress Tests)?
The templates could help to establish a clearer and more accurate manner
to deal with risk and in that way strengthen transparency and allow
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evaluating at European level the measures to reduce the impact of a
supply disruption.
31. Do you agree with the introduction of a threshold based mechanism or more
specific indicators to trigger the declaration of the different crisis levels?
Please substantiate your answer.
Yes, trying to obtain a common declaration of the different “states” at
European level. However, the wide varieties of different risk situations which
could take place, and the characteristic of the grid (mesh and supply) can
make very difficult establish indicators to define the various operational
states. After the initial assessment of the situation considering all the
variables, the declaration of each of the crisis levels should be established on
the basis of the measures required by the system to return to normal state
operation.
32. Should the right for Member States to intervene in markets though non
market-based measures be extended to alert-level situations or remain
limited to emergency situations? Should the list of possible non market-
based measures in Annex III of the Regulation be changed or clarified?
We believe that the current division collected in the Regulation is appropriate,
promoting market measures in the management of the situation as much as
possible. Just in case the market is not able to provide the gas supply of the
protected customers, the Competent Authority will activate non market based
measures.
33. Should the declaration of national emergencies be subject to an appeal
mechanism, e.g. to the Commission? Should the Commission's
recommendation on the national measure have a binding character
The Competent Authority, in addition to dispose of all the information, must
have the faculty for the declaration of national emergencies. In addition to,
the Competent Authority should be coordinated with the Commission and
implement the measures set for by the Commission in order to manage the
emergency.
34. Is the current allocation of responsibilities and tasks among the Commission,
Member States, TSOs and natural gas undertakings in a Union or regional
emergency in the Regulation clear enough? Do you see a specific role for
ENTSOG or the Gas Coordination Group in a Union or regional emergency?
Please substantiate your answer.
Yes, the current allocation of responsibilities is adequate.
The functions and responsibilities of the competent authority are defined
clearly, being one of them to take part in the “Gas Coordination Group”.
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In that group, competent authority will provide the information included in the
article 13 of the regulation and send to the Commission a detailed assessment
in the case of the activation of an emergency. The assessment will reflect the
effectiveness of the measures, the impact on the electricity sector and the
assistance provided to, or received from, the Union and its Member States
and will be reflected in the updates of the Preventive Action Plans and
emergency plans.
With reference to the second question, we believe that it is not necessary
ENTSOG have a specific role, although the Gas Coordination Group may
require occasional support when deemed necessary its collaboration.
35. Should clearer rules be introduced on the consequences of declaring regional
emergency for those Member States where the market is still functioning?
Yes, in emergency situation it would be convenient to establish clear rules in
order to minimize the impact in the markets.
36. The Regulation currently foresees the possibility to declare only an
"emergency" at regional or Union level: Do you see a need for an additional
regional/EU-wide "early warning" or "alert" level?
Initially is not detected the need to extend regionally and Pan European the
levels of early alert and alert. The market is still able to solve the crisis by its
own, and the declaration of either crisis level could determine the behavior of
markets
37. Should the Commission have more sophisticated information tools (e.g. a
broader vision of actual gas flows in certain regions) and investigative powers
in and before a regional /EU-wide emergency at its disposal in order to have
the necessary information available to assess the cross-border effects of the
national measures?
It is reckon that it is not necessary, due to the Commission can obtain from
the Competent Authorities all the information necessary and convenes the
managers of Member States affected by the emergency, in addition to
consulting the Gas Coordination Group.
38. Should an obligation for the regional coordination of decisions in a regional
/EU-wide emergency be created?
The current wording of Article 11 of the Regulation is clear and precise, and
we think it is not necessary to introduce additional obligations for the
coordination of decisions at regional / EU level in emergency situations that
exceed the national scope.
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39. Are the Commission powers in case of a regional or EU-emergency sufficient
or should they be increased in view of the experience with previous crises? Do
we need a separate emergency body for the coordination at regional or
European level?
No, the current attributions of the Commission and the Gas Coordination
Group are sufficient to address a crisis situation.
40. Should the emergency procedures of different transmission system operators
be aligned in order to ensure more effective and efficient response to cross-
border emergencies?
Yes, in accordance with Article 12 of Regulation 715.
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