TSO Certification: Specific Issues

Certification of TSOs

Opinions of the European Commission

Brief overview

Disputed issues

Thomas Starlinger

Content

Background

General

Definition of the VIU

Core tasks of a TSO

Outsourcing

Service provision of the VIU to the ITO

Definition of VIU – production assets

ITO

Independence of the board members

Participation in another transmission system

Ownership

ITO

ISO

Thomas Starlinger, 14.3.2014 3

Background

Third Energy Package 2009

Unbundling of TSOs OU

ISO

ITO

ITO +

Deadline 03.03.2012

77 opinions issued from November 2011 until December 2013

• Nordeuropäische Erdgasleitung: 3 September 2009

• Scottish Transmission companies: ITO+


Nordeuropäischen Erdgas-Leitung (NEL), C(2013) 7019, 18.10.2013, Nr. 74. TSOs in Scotland: C(2012) 3284, 14.5.2012, Nr. 14.

Definition of the VIU

Art 2 (20) Directive 2009/73/EC (Art 2 (21) Directive 2009/72/EC identical)

a VIU is “a natural gas undertaking or a group of natural gas undertakings

where the same person or the same persons are entitled, directly or

indirectly, to exercise control, and where the undertaking or group of

undertakings perform at least one of the functions of transmission,

distribution, LNG or storage, and at least one of the functions of production

or supply of natural gas”.

“Open Grid Europe GmbH”

Part of the VIU is every associated entity regardless of

the scope of their business


Open Grid Europe GmbH, C(2013) 6444, 30.9.2013, Nr. 71.

Core tasks of a TSO

Art 13 (1) (a) Directive 2009/73/EC (Art 12 (1)

(a) Directive 2009/72/EC

Each TSO shall “operate, maintain and develop under economic

conditions secure, reliable and efficient transmission […] facilities

to secure an open market, with due regard to the environment,

ensure adequate means to meet service obligations”

outsourcing?


Outsourcing?

OU

“Vorarlberger Übertragungsnetze GmbH”

no sub-contracting of core tasks

should carry out „administration of the transmission system“

and „control room services“ itself

“Premier Transmission Limited”

“… have sufficient resources to oversee, control and provide

instructions to the subcontractor. Only entities which meet the

unbundling requirements for gas transmission system operation

should be eligible to provide such services.”


Vorarlberger Übertragungsnetze GmbH, C(2012) 2244, 29.3.2012, Nr. 9. Premier Transmission Limited, C(2013) 4657, 16.7.2013, Nr. 64.

Outsourcing?

“Premier Transmission Limited”

“either if the transmission system is operated jointly as part of a

wider transmission system or

if a fully resourced transmission system operator makes an

independent commercial decision to sub-contract services on

efficiency grounds.”

Addition according to the opinion on the “Moyle Interconnector”:

“Only other TSOs which meet the unbundling requirements …

can provide this joint operation. … However it remains important

that each … continues to have the necessary powers and

resources both to develop their own system and satisfy

themselves that the operation of their system is being carried out

in a non-discriminatory way.”


Premier Transmission Limited, C(2013) 4657, 16.7.2013, Nr. 64. Moyle Interconnector Limited, C(2013) 4398, 8.7.2013, Nr. 63.

Outsourcing?

ISO

„responsible“ for third party access, operation,

maintenance and development of the pipeline

system

“TAG”

supervision and independence of the subcontractor

not in a way that owner is exercising core tasks


Trans Austria Gasleitung GmbH, C(2013) 649, 4.2.2013, Nr. 43.

Outsourcing?

ITO

“Only if the ITO has employed a sufficient number of

staff members for day-to-day handling of these

activities may it, in specific circumstances and by way

of exception, conclude contracts with third-party

service providers for legal, IT, or accountancy

services. The same applies to specific services

relating to, for example, the development and repair

of the network” (Interpretative Note)


Outsourcing?

ITO

“BOG“

“… must have all the necessary resources to ensure that it can

adequately fulfill its tasks as an ITO independently. In the present

case, the Commission observes that key functions are not

exercised by BOG. De facto, the operation of WAG is split over

BOG and GCA.”

“Thyssengas“

“The Commission furthermore agrees that the aforementioned

services are to be carried out by the TSO itself as the assessment

and decisions regarding investments and infrastructure projects

constitute a core task of a TSO and should be taken without being

potentially influenced by undertakings with supply or production

interests”.


Baumgarten-Oberkappel Gasleitungsges. m. b. H, C(2013) 963, 15.2.2013, Nr. 47. Thyssengas GmbH, C(2013) 570, 30.1.2013, Nr. 42


Art 17 (1) (c) Directives 2009/72(73)/EC

General prohibtion

“exceptional circumstances“

Such derogation should be

construed narrowly,

not go beyond what is strictly necessary to protect

overriding interests,

no other service provider,

transitional nature and

transactions occur at arm’s length.



Open Grid Europe GmbH

• Assessment depends on the relation of the task to

the TSO activities

• “In principle however, tasks that are not closely related

to the transmission activity raise less of a concern,

because in such cases the risk of compromising the

independent network operation is small.”


Open Grid Europe GmbH, C(2013) 6444, 30.9.2013, Nr. 71.

Definition of VIU – production assets

Geographic scope

E.g. participations located in the US

(Swedegas (OU), 50 Hertz (OU), National Grid (OU))

Significance

Swedegas: waste treatment company – limited

quantities of electricity as a by-product, pre-

established prices (similar 50 Hertz)

Red Eléctrica (OU): regulated framework, small size

(0.1375%)


Swedegas AB, C(2012) 3009, 30.4.2012, Nr. 13. 50 Hertz Transmission GmbH, C(2012) 6260, 6.9.2012, Nr. 21.

National Grid Companies, C(2012) 2735, 19.4.2012, Nr. 10. Red Eléctrica de España, S.A.U., C(2012) 3526, 24.5.2012, Nr. 15.

Potential for discrimination?

Participation in storage facilities, activities in

exchanges

• Energinet.dk (OU): “ownership and operation of a gas

storage facility falls outside of the scope of relevant

activities listed in Article 9(1)b(ii) juncto Article 9(3)”

• Operation of power and gas exchanges cannot be

qualified as “supply”


Energinet.dk, C(2012) 88, 9.1.2012, Nr. 6

ITO - Independence of the

Management/Supervisory Board

Art 19 (3) Directive 2009/72(73)/EC – cooling on 3

years

Austrian Gas Act 2011, German EnWG: only applicable

to appointments after March 3, 2012

Commission: not in line with the Directive, independence

has to be ensured

German EnWG interests in VIU can be kept by the

management until March 31, 2016

Commission: not in line with Directive, financial interests

should at least be given in the hands of a trusteeThomas Starlinger, 14.3.2014 16

Participation of an ITO in another

transmission system?Objective of unbundling?

Effective and efficient separation of networks from

activities in production and supply

“BOG” in corporate law terms, the ITO remains part of the

VIU, therefore the ITO-model can be chosen

with regard to the prohibition of the rendering of

services the shareholder GCA as effectively

unbundled ITO should not be considered as ordinary

“other part” of the VIU; the possibility of a conflict of

interest is minimized


Baumgarten-Oberkappel Gasleitungsges. m. b. H, C(2013) 963, 15.2.2013, Nr. 47.

ITO - Ownership of network

„Bruchteilseigentum“

• Co-ownership is possible, if co-owner has the same

degree of independence as the TSO which co-owns.

• Bundesnetzagentur: TSO has to be able to act both

legally and de facto in a manner comparable to that

of an owner.

Pipe-in-Pipe concept (jordgas, GRTgas)

• Pipeline is virtually splitted into several pipelines

• Joint control and rights of use and disposal

equivalent to those of an owner

• Independent operation and development

jordgas Transport GmbH, C(2012) 6255, 6.9.2012 , Nr. 27. Open Grid Europe GmbH, C(2013) 6444, 30.9.2013, Nr. 71

GRTgaz Deutschland GmbH, C(2012) 6257, 6.9.2012, Nr. 26 Thyssengas GmbH, C(2013) 570, 30.1.2013, Nr. 42

Gasunie Deutschland Transport Services GmbH, C (2012) 9102, 3.12.2012, Nr. 37


ISO - Partial ownership of the

transmission system

„Transelectrica“ and „Transgaz“

• Transmission system partially owned by the state

and by the TSO

• „not the typical background for which the ISO

model was established“

• Conclusion that ISO-model is not appropriate for

such a situation

• Preference of the OU-model


Companiei Naţionale de Transport al Energiei Electrice “Transelectrica” S.A. , C(2013) 6891, 14.10.2013, Nr. 73.

Societatea Națională de Transport Gaze Naturale Transgaz S.A., C(2013) 8485, 25.11.2013, Nr. 76.

Thomas Starlinger

A-1060 Wien, Am Getreidemarkt 1

Telefon: +43 1 582 580

Telefax: +43 1 582 582

E-Mail: [email protected]

TSO Certification: Specific Issues

Law

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