In its ruling on Wednesday 20 December in case C-226/16, the European Court of Justice (ECJ) said that member states cannot require natural gas suppliers to hold sufficient natural gas stocks to fulfil obligations exclusively on national territory but they can, however, widen the group of customers for which gas supply is safeguarded beyond households and SMEs (see EUROPE 11837).
The applicants – the companies ENI, ENI Gas & Power France and UPRIGAZ – applied to the French Conseil d’État (Council of State) for annulment of a French decree which, according to them, improperly extends the definition of “protected customers” laid down in Regulation 994/2010 on security of gas supply (essentially defined by the regulation as households connected to a gas distribution network as well as, if member states so choose, other categories including SMEs).
The companies submit that the French decree includes in its definition of “protected customers” non-domestic customers connected to a distribution network which have not contractually accepted an interruptible supply and that such customers are not necessarily SMEs.
The definition of “protected customers” is important, as it imposes a whole series of obligations on gas suppliers to safeguard, in the event of crisis, security of gas supply to the most vulnerable customers.
In addition, the companies in question argue that, in order to ensure continuity of gas supply to customers, the decree requires suppliers to hold sufficient stocks of natural gas in France, which implies, in essence, that 80% of their storage rights must be held on national territory.
The Council of State asked the Court of Justice whether the provisions at issue of the decree are compatible with the regulation.
In its judgment, the Court first points out that the regulation (994/2010) allows member states to impose “additional obligations” on natural gas undertakings for reasons of security of gas supply. It follows that member states may impose an additional obligation on natural gas undertakings to hold gas stocks for customers who are not necessarily “protected customers’”, as defined in that regulation.
However, the Court observes that the imposition of such an additional obligation is subject to compliance with a number of conditions: it must be based on a risk assessment, must not unduly distort competition or hamper the functioning of the internal market in natural gas, and must not impact negatively on the ability of any other member state to supply its protected customers in the event of a national, EU or regional emergency. It will be for the French Council of State to determine whether the decree in question complies with those conditions.
Next, the Court declares that legislation which requires natural gas suppliers to hold sufficient gas stocks necessarily and exclusively on national territory is incompatible with the regulation, as the said regulation prohibits the competent authorities from taking account solely of infrastructure located on national territory.
However, since the decree in question allows the French authorities, within the context of the obligation to hold gas stocks on French territory, to take account of “other regulatory instruments”, the Court requests the Council of State to determine whether that possibility under the decree ensures that the suppliers concerned can, in fact, meet their obligations at regional level or at EU level. If that were to be the case, then the obligation to hold stocks on national territory could be compatible with the regulation. (Original version in French by Emmanuel Hagry)