Transparency Obligations Of European Storage System Operators

Pursuant to the Article 13(1) paragraph (d) of the EU Directive No. 73/2009, the Storage System Operators (SSOs) have the obligation to provide the storage facility users the necessary information for efficient access to the gas storage facilities. The transparency information provided by SSOs must include both commercial and operational information in accordance with the requirements of the EU Regulation No. 715/2009 and the Guidelines for Good TPA Practice for Storage System Operators issued by ERGEG in 2005 and subsequently amended by ERGEG and CEER in 2011¹.

Commercial Information

SSOs must publish on their website the following commercial information:

1. Tariff Information and Commercial Conditions Relating To TPA Regime

Pursuant to the Article 33 of the EU Directive No. 73/2009, the European SSOs must provide access to their storage facilities on a negotiated or regulated basis. The provisions of Article 33 of the EU Directive No. 73/2009 on access to storage apply also to the part of LNG facilities used for storage, including the LNG peak shaving facilities² and the part of LNG terminals which store LNG for peak shaving, e.g. FSRU OLT Offshore LNG Toscana, because the definition of "storage facility" in the Article 2(9) of the EU Directive No. 73/2009 includes also the part of LNG facilities used for storage³.
In the case of negotiated access regime (nTPA), the SSO sets the tariffs and conditions for access to storage services without the involvement of the NRA (National Regulatory Authority). Pursuant to the Article 33(3) of the Directive No. 73/2009, in the case of negotiated access regime SSOs have the obligation to publish their main commercial conditions for the use of storage, including the prices for standard services in order to ensure that all storage facility users are equally treated and the SSOs will not charge different prices to the storage facility users.
In the case of regulated access regime (rTPA), the tariffs proposed for storage services shall be submitted first to the storage facility users for consultation and then submitted to the NRA for approval. Pursuant to the Article 33(4) of the Directive No. 73/2009, in the case of regulated access regime SSOs have the obligation to publish the tariffs for storage services upon the approval of NRA.
The obligation to publish tariff information is also stipulated in the Article 19(5) of the EU Regulation No. 715/2009. GGPSSO require SSOs to provide on their website user-friendly instruments for calculating charges for a specific service, e.g. tariff calculator.

2. Services Offered

GGPSSO and Article 15(2) of the EU Regulation No. 715/2009 stipulate that the SSOs must offer on the primary market the following services:
- bundled services of storage space, injectability and deliverability;
- injection, storage and withdrawal services offered separately as unbundled services; the unbundled services can be offered to capacity holders as additional services (e.g. additional injection service, additional storage service, additional withdrawal service) when the bundled services need to be combined with unbundled services for the proper utilisation;
- both firm and interruptible storage services, e.g. firm injection capacity, firm storage capacity, firm withdrawal capacity, interruptible injection capacity, interruptible storage capacity, interruptible withdrawal capacity.
The storage services offered by SSOs shall be developed after a proper consultation of the storage facility users to take into account the market demand.
Pursuant to the Article 19(1) of the EU Regulation No. 715/2009, the SSOs have the obligation to make public a detailed information regarding the services they offer, i.e.
- injection, storage and withdrawal services offered under the form of Standard Bundled Units (SBUs) and the composition of the Standard Bundled Units (i.e. whether the SBUs are composed of firm services only or includes also the interruptible services);
- the additional injection, storage and withdrawal services offered separately as unbundled services.

3. Storage Access Code

The Storage Access Code shall describe
- the main standard conditions for each service outlining the rights and responsibilities of the SSO and storage facility users,
- the storage capacity allocation rules,
- the congestion management mechanisms,
- the rules for storage capacity trade on the secondary market,
- the rules and charges applicable to storage penalties from storage users and compensation payments from the SSO to storage users,
- the quality specifications for the natural gas injected into the storage facility.

Storage Capacity Allocation Rules

The Article 17(2) of the EU Regulation No. 715/2009 stipulates the SSOs` obligation to implement and publish non-discriminatory and transparent capacity allocation rules.
In order to ensure a non-discriminatory and transparent participation of all interested storage customers in the subsequent allocation procedure, the allocation process shall always start with an open subscription period (OSP) to determine the market demand for the offered storage services. The actual capacity allocation mechanism applied shall be determined by SSO following the open subscription procedure based on the market demand.
If the demand exceeds the offer, and unless the national legislation provides otherwise, auctions should be implemented for allocation of all of the capacity offered⁴.
If the demand is less than or equal to offer, the allocation shall be made straightforward. In such a case, the allocation shall be made by auction or a transparent CAM "which best considers the market conditions".
Prior to each allocation window, the SSO shall publish on its website the offered storage services, including the contract period and the date when the storage users can start to use the subscribed capacity, and the mechanism applied for the allocation of storage services offered. After the allocation procedure, the SSO shall confirm the results of the allocation procedure to the participants.
The SSOs shall use their best efforts to ensure the compatibility of storage services with the related transport services of the connected TSOs in respect of the contract duration. A combined storage and transport service should be offered if there is market demand for such a service and SSO can cooperate in this regard with the connected TSO(s).

Congestion Management Mechanisms

The Article 2 of the EU Regulation No. 715/2009 makes a difference between the "physical congestion" and "contractual congestion".
The "physical congestion" occurs when the capacity is fully booked, it is being used but any additional demand cannot be accommodated.
The "contractual congestion" occurs when the capacity is fully booked, but a proportion of it remains unused (it is not nominated) while there is still demand for capacity.
In order to maximise the amount of capacity available to the market and avoid the contractual congestion, SSOs should adopt measures to facilitate the trade of capacity rights on the secondary market⁵.
The Article 22 of the EU Regulation No. 715/2009 stipulates the obligation of SSOs to take reasonable steps to allow the capacity rights to be freely tradable and to facilitate such trade in a transparent and non-discriminatory manner. Therefore, the SSOs should give the storage facility users the possibility to sell or acquire storage services on the secondary market by providing an online bulletin board, where the storage facility users can post the services they wish to sell or buy on the secondary market, and a web-based trading platform where the storage facility users can trade the storage services on the secondary market.
A secondary market platform should be set up for each storage facility and eventually a national platform where all storage capacity in the market can be traded. SSO shall keep a record of all transactions on the secondary market. The collected information shall be communicated to the NRA on request.
Another measure recommended to avoid the contractual congestion is to offer the unused capacity (non-nominated injection capacity and withdrawal capacity) on the primary market. SSO must offer the unused capacity at least on a day-ahead and on interruptible basis. In such case the unused capacity is not lost permanently by the original capacity holder, but falls back to the original capacity holder at the moment he nominates it for use.
SSOs should publish the procedure applicable in the event of an interruption of interruptible capacity, including the timing, extent and ranking of individual interruptions.
The storage facility users should use their best efforts to make timely nominations to the SSO on the capacity that will be used, "timely" meaning earlier than the latest possible official nomination time which is usually the day preceding the gas flow day. The storage facility users should therefore make initial non-binding nominations on weekly basis and if possible also on monthly basis. This will allow the SSO to make a timely prediction of any unused capacity.
SSO should publish on a website the information on the amount of nominated and non-nominated storage capacity on an aggregated level.
The data relating to the nominated storage capacity should be provided by SSO on a day-ahead basis.
The data relating to the non-nominated storage capacity should be updated due to the possibility that the original capacity holders can make re-nominations at short notice.
SSOs should provide on their website user-friendly instruments for verifying online the level of available and/or unused storage capacity.

Operational Information

The operational information must be provided by SSO for a given storage facility or for a group of storage facilities in the same balancing zone where the access to this group is provided via an online information system. SSOs must publish the following operational information:

1. A map indicating the location of the storage facility and the connecting point(s) of the storage facility to the transmission network.

2. Type of storage facility (i.e. salt caverns, depleted gas fields, aquifer structures, LNG storage facility)

3. Technical capacity
- in the case of underground gas storage facilities: working gas volume, injection capacity, withdrawal capacity;
- in the case of LNG storage facilities: LNG storage capacity, daily send-out capacity, injection capacity. The information about the injection capacity can be provided only by the LNG terminals that have a liquefaction plant. In the case of LNG terminals that do not have a liquefaction plant, the physical injection of natural gas from the transmission system is not possible due to the fact that the gas cannot be liquefied.

4. Capacity available for TPA: working gas volume, injection capacity, withdrawal capacity.

5. Capacity not available for TPA pursuant to the provisions of the Article 2(9) of the EU Directive No. 73/2009: working gas volume, injection capacity, withdrawal capacity.

6. Contracted and available storage capacities: i.e.
- number of SBUs subscribed by the storage facility users;
- number of SBUs available on the primary market;
- contracted working gas volume, injection capacity and withdrawal capacity;
- available working gas volume, injection capacity and withdrawal capacity (firm and interruptible).

Pursuant to the Article 19(2) of EU Regulation No. 715/2009, this information must be provided on a regular and rolling basis (i.e. daily, monthly, quarterly and annually) and in a user-friendly standardised manner.
SSOs should also publish on their website the method used for the determination of the available storage capacity.

7. Daily Storage Data

The Article 19(4) of the EU Regulation No. 715/2009 require SSOs to provide daily updates on the gas stock level in each storage facility or group of storage facilities, inflows (quantity of gas injected in storage facility) and outflows (quantity of gas withdrawn from the storage facility) and the available storage facility capacity (i.e. available working gas volume, injection capacity and withdrawal capacity). This requirement applies to all storage facilities, including to storage facilities exempted from third-party access.

8. Historical capacity utilisation rates
- gas stock level;
- quantity of gas injected in the storage facility;
- quantity of gas withdrawn from the storage facility;
- available working gas volume, injection capacity and withdrawal capacity⁶.

9. Maintenance Information

SSO should publish the planned maintenance periods over the year that might affect the storage facility users` rights from the storage contracts and the corresponding operational information with adequate advance notice. During the maintenance period, the SSO should publish regularly updated information on the details, expected duration and effect of the maintenance.
Where unplanned disruptions in access to the storage services occur, the SSO shall ensure that the storage facility users are notified as soon as possible (through UMMs).

by Vlad Cioarec, International Trade Consultant

This article has been published in Commoditylaw`s Gas Trade Review Edition No. 2.

Endnotes:

1. See the Amendment of the Guidelines of Good Practice for Third-Party Access (TPA) for Storage System Operators published by ERGEG in February 2011; Amendment of the Guidelines of Good Practice for Third-Party Access (TPA) for Storage System Operators – Guidelines for CAM and CMP, published by the Council of European Energy Regulators (CEER) in July 2011.
2. But excluding the LNG peak shaving facilities used exclusively by TSOs in carrying out their functions, e.g. the LNG storage faciltiy operated by Gasunie, Dutch TSO, at the Maasvlakte site in the Port of Rotterdam.
3. See the European Commission Staff Working Paper "Interpretative Note On Directive 2009/73/EC Concerning Common Rules For The Internal Market In Natural Gas – Third – Party Access To Storage Facilities". The Directive No. 73/2009 makes a distinction between the temporary storage of LNG necessary for the regasification process (operational storage) and the LNG storage services for other purposes. An LNG terminal that provides only the temporary LNG storage service necessary for the regasification process is considered only an LNG facility. See Article 2(11) of the Directive No. 73/2009. An LNG terminal that in addition to the temporary LNG storage service necessary for the regasification process provides also other LNG storage services is considered not only an LNG facility but also a storage facility. See Article 2(9) of the Directive No. 73/2009. Therefore the LNG terminal operators could be considered not only LNG system operators but also storage system operators if in addition to the operational storage they provide additional storage services such as the LNG storage for peak shaving, LNG storage for reloading, LNG storage for berth-to-berth transshipment and LNG storage for loading of LNG bunkering vessels.
4. In EU Member States with public service obligation on storage, SSOs may be required to use alternative allocation arrangements to meet the public service obligations.
5. See the Article 17(3) of the EU Regulation No. 715/2009.
6. See AGSI/GIE Transparency Platform for Storage at www.gie.eu