Dutch implementation of the European Third Energy Package

On 27 June 2011 legislative proposals to implement the Third Energy Package in the Netherlands were published and offered to the Lower House (the “Legislative Proposal”). The Third Energy Package was adopted by the European Parliament and the Council in July 2009. The deadline for implementation of the electricity and gas directives that form part of the Third Energy Package lapsed on 3 March 2011.

The Third Energy Package
The Third Energy Package consists of:

1. the Directive concerning common rules for the internal market in electricity (2009/72/EC);
2. the Directive concerning common rules for the internal market in natural gas (2009/73/EC);
3. the regulation on conditions for access to the network for cross-border exchanges in electricity (714/2009);
4. the regulation establishing an Agency for the cooperation of Energy Regulators (713/2009); and
5. the regulation on conditions for access to the natural gas transmission networks (715/2009).

Key features of the Third Energy Package include: (i) unbundling of energy supply and production from transmission network operations, (ii) ensuring fair competition between EU companies and third country companies, (iii) strengthening of the powers of the national regulators and (iv) creation of an European energy agency.

Proposed implementation legislation in the Netherlands
Dutch law already meets a number of the requirements of the Third Energy Package. Certain elements of the Third Energy Package have for instance recently been implemented in Dutch law by other Acts, such as the Act of 26 February 2011 to improve the working of the electricity and gas market and the Act of 2 December 2010 which amends the gas market, includes rules in relation to priority access for sustainable electricity and security of supply.

The Legislative Proposal specifically consists of:

• Amendments of the Electricity Act 1998 and the Gas Act (“E and G-Acts”) in relation to the existing rules in respect of unbundling of transmission networks
  The unbundling requirements pursuant to the E and G-Acts already exceed the requirements laid down in the Third Energy Package. The E and G-Acts require ownership unbundling of all electricity and gas networks and not only of the high voltage electricity and high-pressure pipeline networks. Unbundling is realised in the Netherlands through a so called “group-ban” that prohibits network managers to be part of the same group as the commercial gas and electricity companies. This group-ban however only applies to gas companies in case of the G-Act and to electricity companies in case of the E-Act. The Legislative Proposal now ensures that in both Acts the group-ban shall apply to both commercial electricity and gas companies, but only in relation to the transmission system operators. Furthermore, pursuant to the Legislative Proposal the group-ban shall no longer be limited to the Netherlands in relation to the transmission system operators, as is the case now.
  
  Secondly, the E and G-Acts currently provide that the network manager - excluding the transmission system operators - must have economic ownership of the managed networks. Pursuant to the current E and G-Acts the transmission system operators are not required to have economic (or legal) ownership of the networks. This will change since the Legislative Proposal provides that the transmission system operators must have full ownership of the managed networks. In practice, the ownership of most of such networks has already been transferred to the relevant transmission system operator, except for parts of these networks that form part of a cross border lease agreement. The Legislative Proposal contains grandfathering exception clauses in respect of cross border lease agreements.

• Amendment of the rules in relation to interconnectors
  Pursuant to the Legislative Proposal electricity interconnector managers will be introduced in the E-Act. The G-Act already appoints gas interconnector managers but additional rules in relation to these managers will now be included.
• The designation and independence of the national regulatory authority (in Dutch: nationale regulerende instantie, in short “NRI”) and the attribution of certain (new) tasks to this regulator
  For the Netherlands this requirement does not imply major changes. The National Competition Authority (NMa) is the national regulatory authority in the Netherlands and is already an independent regulator. The new tasks of the NMa emphasize a more active role instead of supervision in retrospect.
• The strengthening of consumers’ protection
  Dutch legislation already meets a number of the requirements of the Third Energy Package in relation to consumers’ protection. Some further stipulations will be added to the E and G-Acts and the Regulation consumers and monitoring E and G-Acts (In Dutch: Regeling afnemers en monitoring Elektriciteitswet 1998 and Gaswet).
• The introduction of closed distribution systems
  The current exemption scheme in relation to the obligation to appoint a network manager is not in conformity with the Third Energy Package. The Legislative Proposal introduces the concept of a “closed distribution system” and supply through a “direct line” and replaces the current exemption scheme by an exemption scheme in relation to closed distribution systems.
• The introduction of the “level playing field” clause in the E and G-Acts
  The Third Energy Package introduces the possibility for member states to take measures to ensure a level playing field. Any such measure must be approved by the European Commission. The Netherlands aims to ensure a level playing field by including an obligation in the E and G-Acts to report a change of ownership in respect of 250 MW production installations and LNG installations.
• The tightening of rules for the management of gas storage
  Where gas storage companies are required to give access to their installations, the Third Energy Package offers member states a choice between regulated or negotiated access. The Dutch legislator has in the Legislative Proposal opted for negotiated access.
• The strengthening European and regional cooperation
  An Agency for the cooperation of energy regulators is established (ACER) to reduce differences in energy regulation within the EU. Furthermore, to ensure an efficient management of the electricity and gas networks in the European Union, to promote the linking of markets and to coordinate investment plans, the European networks of transmission system operators (ENTSB) is established. New tasks of national regulators (including the NMa) include inter alia the cooperation with ACER, ENTSB, the European Commission and other national regulators.

For more information
The Legislative Proposal to implement the Third Energy Package in the Netherlands can be found at: Kamerstukken II 2010-2011, 32814, nr. 1 and Kamerstukken II 2010-2011, 32814, nr. 2. The supplementary notes to the Legislative Proposal (Kamerstukken II 2010-2011, 32814, nr. 3) contain an overview of the implementation of the directives and regulations of the Third Energy Package in the Netherlands, specified per article.