S.I. No. 630/2011 - European Communities (Internal Market in Natural Gas and Electricity) Regulations 2011

• (a) the entity concerned complies with the requirements of these Regulations, and

• (b) granting the certification will not put at risk the security of energy supply in the State or in the European Union.

In considering this security of energy supply, the Commission shall take into account—

• (i) the rights and obligations of the European Union with respect to that third country arising under international law, including any agreement concluded with one or more third countries to which the European Union is a party and which addresses the issues of security of energy supply,

• (ii) the rights and obligations of the State with respect to that third country arising under agreements concluded with it, insofar as they are in compliance with European Union law, and

• (iii) other specific facts and circumstances of the case and the third country concerned.

• (5) The Commission shall notify the draft decision to the European Commission, in writing without delay, together with all the relevant information with respect to that decision.

• (6) The Commission shall, before it adopts a decision on the certification to which this Regulation applies, request an opinion from the European Commission on whether—

• (a) the entity concerned complies with the requirements of Article 9 of the Natural Gas Market Directive, and

• (b) granting the certification will not put at risk the security of energy supply to the European Union.

• (7) The Commission shall, within a period of 2 months of receiving an opinion of the European Commission with respect to its draft decision on the certification pursuant Article 3(1) of the Natural Gas Market Regulation or, if the European Commission has not provided its opinion in the required timeframe set out in Article 3(1) of the Natural Gas Market Regulation, within 2 months of the date of expiry of that timeframe, adopt its final decision on the certification. In adopting its final decision, the Commission shall take utmost account of the European Commission’s opinion (if provided). The Commission shall have the right to refuse certification where granting the certification puts at risk Ireland’s security of energy supply or the security of energy supply of another Member State of the European Union.

• (8) The Commission’s final decision and the European Commission’s opinion shall be published together. Where the final decision diverges from the European Commission’s opinion, the Commission shall provide and publish, together with that decision, the reasoning underlying such divergence.

• (9) Nothing in this Regulation shall prevent the Commission or the Minister from exercising, in compliance with European Union law, national legal controls to protect legitimate public security interests.

• (10) In this Regulation, a “third country” means a country which is not at the relevant time a member of the European Union.

PART 6 Enforcement of these Regulations and Certification Regulations

Functions of Commission

“Certification Regulations” means the European Communities (Internal Market in Electricity) (Certification and Designation of the Transmission System Operator) Regulations ( S.I. No. 570 of 2011 );

“transmission system operator”, in relation to gas, means a transmission system operator designated pursuant to Part 3;

“electricity transmission system operator” means the transmission system operator designated pursuant to the Certification Regulations;

“transmission system owner”, has the same meaning as in the European Communities (Internal Market in Electricity) (Certification and Designation of the Transmission System Operator) Regulations 2011 ( S.I. No 570 of 2011 ).

• (2) The Commission shall ensure that—

• (a) BGÉ Corporate and the ITO comply with the requirements of these Regulations and the Natural Gas Market Directive,

• (b) transmission system operators comply with the requirements of Part 3 and of the Natural Gas Market Directive, and

• (c) the electricity transmission system operator and electricity transmission system owner, comply with the requirements of these Regulations, the Certification Regulations and the Electricity Market Directive.

• (3) The Commission shall monitor the operations of—

• (a) BGÉ Corporate and the ITO,

• (b) transmission system operators to which Part 3 applies, and

• (c) the electricity transmission system operator and the electricity transmission system owner.

• (4) In performing its monitoring obligations under paragraph (2), the Commission shall ascertain the following:

• (a) whether the ITO is conducting its operations in a manner consistent with Regulation 18;

• (b) whether the ITO engages in discriminatory behaviour, in particular as regards other entities that are part of, or are related to, BGÉ Corporate;

• (c) whether BGÉ Corporate engages in behaviour as regards the ITO that is not consistent with Regulation 18;

• (d) whether transmission system operators are conducting their operations in a manner consistent with Part 3;

• (e) whether the electricity transmission system operator is conducting its operations in a manner consistent with its designation under the Certification Regulations.

• (5) If the Commission forms the opinion that—

• (a) the ITO or BGÉ Corporate is not conducting its operations in a manner consistent with Regulation 18,

• (b) the ITO or BGÉ Corporate is engaging in discriminatory behaviour,

• (c) a transmission system operator is not conducting its operations in a manner consistent with Part 3,

• (d) the electricity transmission system operator is not conducting its operations in a manner consistent with the Certification Regulations, or

• (e) the electricity transmission system owner is not conducting its operations in a manner consistent with Article 9 of the Electricity Market Directive,

the Commission shall, by notice in writing given to the relevant party, require it to take such measures to rectify the situation as the Commission specifies in the notice.

• (6) A notice under paragraph (5) may include a requirement directing a relevant party to modify its operations and, in the case of the ITO, the compliance programme, to such extent, and in such respects, as are specified in the notice.

• (7) A relevant party to whom a notice under paragraph (5) is given shall comply with a requirement, if any, imposed on it in accordance with paragraph (6).

• (8) The Commission may, subject to the protection of the confidentiality of any information which the Commission considers confidential, publish, in such manner as it thinks fit, any notification given by it under this Regulation.

Complaints to Commission

• (2) Any party having a complaint against the electricity transmission system operator, and a person as respects matters specified in section 9(1B) in relation to electricity, may refer the complaint to the Commission in accordance with section 34(b) of the Act of 1999.

Powers of Commission in enforcing Part 2

• (a) to monitor communications between the ITO and BGÉ Corporate so as to ensure compliance of the ITO and BGÉ Corporate with their respective obligations under these Regulations;

• (b) to act as a dispute settlement authority between BGÉ Corporate and the ITO in respect of any complaint submitted pursuant to Regulation 33;

• (c) to monitor commercial and financial relations including loans between BGÉ Corporate and the ITO so as to ensure compliance of the ITO with obligations under these Regulations;

• (d) to approve all commercial and financial agreements between BGÉ Corporate and the ITO which comply with market conditions;

• (e) when notified by the compliance officer in accordance with Regulation 24, to request justification from BGÉ Corporate and such justification shall, in particular, require the inclusion of evidence that no discriminatory behaviour to the advantage of BGÉ Corporate has occurred;

• (f) to carry out inspections, including unannounced inspections, on the premises of BGÉ Corporate and the ITO so as to ensure compliance of the ITO and BGÉ Corporate with its respective obligations under these Regulations;

• (g) to assign all or specific tasks of the ITO to an independent system operator appointed in accordance with Article 14 of the Natural Gas Market Directive where there has been a persistent breach by the ITO of its obligations under these Regulations, in particular, in the case of repeated discriminatory behaviour to the benefit of BGÉ Corporate.

Commission may apply to High Court for compliance order

• (a) a provision of these Regulations,

• (b) a determination, requirement or direction imposed or given under such a provision, or

• (c) a provision of the Certification Regulations,

it may apply to the High Court for a compliance order against the person.

• (2) An application under this Regulation shall be in writing and shall specify—

• (a) the provision, determination, requirement or direction that has been, is being or is about to be contravened or has not been, is not being or is about not to be complied with; and

• (b) the acts or omissions that, in the Commission’s opinion, constitute or would constitute the contravention or failure to comply.

• (3) An application under this Regulation may not be heard unless the High Court is satisfied that the person concerned has been served with a copy of the application. On being served with a copy of the application, that person becomes the respondent to the application and is entitled to appear and be heard at the hearing of the application.

• (4) The High Court may, as it thinks fit, on the hearing of the application referred to in subsection (1) make an order compelling compliance with the provision, requirement, determination or direction or refuse the application. An order of the High Court compelling compliance may stipulate that the provision, requirement, determination or direction must be complied with immediately or may specify a reasonable time limit for compliance and may also stipulate appropriate and proportionate measures aimed at ensuring compliance.

• (5) An application for an order under subsection (1) shall be by motion on notice and the High Court when dealing with the matter may make such interim or interlocutory orders as it considers appropriate.

• (6) The High Court shall not deny any interim or interlocutory relief referred to in paragraph (5) solely on the basis that the Commission may not suffer any damage if such relief were not granted pending conclusion of the action.

(7)(a) An application for an order under subsection (1) may include an application for an order to pay to the Commission such amount not exceeding—

• (i) 10per cent of the annual turnover of either the ITO, a transmission system operator to which Part 3 applies or the electricity transmission system operator, or

• (ii) 10per cent of the annual turnover of either BGÉ or the electricity transmission system owner,

by way of financial penalty, as the Commission may propose as appropriate in the light of the non-compliance.

• (b) In deciding on such an application, the High Court shall decide the amount, if any, of the financial penalty which should be payable and shall not be bound by the amount proposed by the Commission.

• (c) Any financial penalty ordered by the High Court to be paid by a person under this paragraph shall be paid to and retained by the Commission as income.

• (d) In deciding what amount, if any, should be payable, the High Court shall consider the circumstances of the non-compliance, including—

• (i) its duration,

• (ii) the effect on other electricity or natural gas undertakings,

• (iii) the submissions of the Commission on the appropriate amount,

• (iv) the amount of any fine imposed by a court in respect of a prosecution relating to the same matter,

• (v) any undue hardship which the penalty may cause to the business of the person, and

• (vi) any excuse or explanation for the non-compliance.

PART 7 Revocations and Consequential Amendments to Natural Gas Legislation in respect of ITO

Revocations

• (a) the European Communities (Internal Market in Natural Gas) (BGÉ) Regulations 2005 ( S.I. No. 760 of 2005 );

• (b) the European Communities (Internal Market in Natural Gas) (BGÉ) (Amendment) Regulations 2007 ( S.I. No. 377 of 2007 ); and

• (c) the European Communities (Internal Market in Natural Gas) (BGÉ) (Amendment) Regulations 2008 ( S.I. No. 239 of 2008 ).

Amendment of Gas Act 1976

• (a) by inserting after the definition of “harbour authority” the following:

‘ “ITO” has the meaning given to it in the Natural Gas Market Regulations;’, and

• (b) by inserting after the definition of “natural gas” the following:

‘ “Natural Gas Market Regulations” means European Communities (Internal Market in Natural Gas and Electricity) Regulations 2011 ( S.I. No. 630 of 2011 );’

• (2) Section 8 of the Gas Act 1976 (No. 30 of 1976) is amended by substituting for subsection (3A) (inserted by Regulation 23 of the European Communities (Internal Market in Natural Gas) (BGÉ) Regulations 2005 ( S.I. No. 760 of 2005 )) the following:

• “(3A) From the transfer date fixed under the Natural Gas Market Regulations—

  • (a) the ITO has such of the functions of the Board under or pursuant to this or any other Act as are necessary to enable it to carry out its responsibilities under those Regulations, and

  • (b) the Board continues to have all such functions as are conferred on it under or pursuant to this or any other Act other than functions that are necessary with respect to the ownership and operation of the ITO.”.

• (3) A pension scheme that complies with paragraph 3 of Schedule 2 shall be deemed to be a scheme permitted by section 18 of the Gas Act 1976 (No. 30 of 1976).

Certain References to BGÉ and Gaslink in legislation

(2)(a) Without prejudice to the generality of paragraph (1), in construing the Gas Act 1976 (No 30 of 1976):

• (i) section 8(4) shall apply also to the ITO to the extent that it subscribes or guarantees money for charitable or benevolent objects or to, or for, any institution or for any public, general or useful object;

• (ii) section 20 shall apply also to the members and officers of the Commission and to the servants, advisors or consultants of the ITO;

• (iii) section 26 shall apply also to officers of the ITO or any other person appointed in writing by the ITO to be an authorised officer of the Commission for the purposes of that section;

• (iv) references to the “Board” in sections 8(6), 27, 30, 31, 32, 33, 39, 39A and 42 shall be read instead to refer to the ITO;

• (v) references to the “Board” in sections 21(3), 28, 29, 38 and 41 shall be taken to include the ITO;

• (b) Without prejudice to the generality of paragraph (1), reference to the “Board” in section 72(4) of the Registration of Title Act 1964 (No. 16 of 1964) shall be taken to include the ITO.

• (3) No subscription or purchase of shares in the ITO by any member of BGÉ Group shall be or be deemed to be a purchase or subscription for the purposes of section 60 of the Companies Act 1963 (No. 33 of 1963).

PART 8 Other Repeals and Consequential Amendments to Natural Gas and Electricity Legislation

Further amendment of Gas Act 1976

• (a) in subsection (1), by substituting for the definition of “Directive” the following:

‘ “Directive” means Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009¹ .’,

• (b) in subsection (2), by substituting “Article 36 of the Directive” for “Article 22 of the Directive”,

• (c) in subsection (4)(e), by substituting “operator;” for “operator; and”,

• (d) in subsection (4), by substituting for paragraph (f) the following:

• “(f) publication by a storage operator of information on the specific storage facility, or the parts of the storage facility, or the ancillary services to which access is offered;

• (g) publication by an operator of information on the access procedure proposed; and

• (h) any other matters which the Commission considers necessary or expedient for the purpose of making an offer for third party access, or connection to a facility.”,

• (e) by inserting after subsection (4) the following:

• “(4A) The Commission shall—

  • (a) define the non-discriminatory criteria according to which access to a storage facility may be determined,

  • (b) determine, based on non-discriminatory criteria, what constitutes ‘circumstances where the Commission considers that it is technically or economically necessary for providing efficient access to the natural gas system for the supply of customers’ referred to in paragraph (c) of the definition of third party access in subsection (1) of section 10A, and

  • (c) ensure that the non-discriminatory criteria at paragraphs (a) and (b) are published.”,

• (f) in subsection (7) by substituting “Subject to subsection (7A), an operator may refuse” for “An operator may refuse”,

• (g) by inserting after subsection (7) the following:

• “(7A) The transmission system operator shall not be entitled to refuse the connection of a new storage facility, LNG facility or industrial customer on the grounds of possible future limitations to available network capacities or additional costs linked with necessary capacity increase. The said operator shall ensure sufficient entry and exit capacity for the new connection within a reasonable timeframe.”,

• (h) by substituting for subsection (19) the following:

“(19)(a) Notwithstanding the generality of subsections (3) and (17), the Commission may, on a case by case basis, following an application in writing by an operator of an interconnector to another Member State, an LNG or a storage facility, constructed after the making of these Regulations, grant an exemption on such terms and conditions as the Commission considers appropriate to an operator from the provisions of those subsections in relation to the terms, conditions and charges for access to the facilities under the control of that operator.

• (b) An operator that proposes to expand or modify existing infrastructure to provide for a significant increase of capacity may also apply for an exemption under paragraph (a) of this subsection.

• (c) Any request under paragraph (a) or (b) shall be transmitted to the European Commission, in writing.

• (d) When granting an exemption under paragraph (a), the Commission shall ensure that—

  • (i) the investment enhances competition in gas supply and enhances security of supply,

  • (ii) the level of risk attached to the investment is such that the investment would not take place unless an exemption was granted,

  • (iii) the infrastructure referred to at paragraph (a) is owned by a natural or legal person which is separate at least in terms of its legal form from the system operators in whose systems that infrastructure will be built,

  • (iv) charges are levied on users of the infrastructure referred to at paragraph (a),

  • (v) the exemption is not detrimental to competition or the effective functioning of the internal market in natural gas or the efficient functioning of the natural gas network to which the infrastructure is connected, and

  • (vi) it acts in accordance with the rules and mechanisms for the management and allocation of capacity at (e).

• (e) Before granting any exemption under paragraph (a), the Commission shall decide rules and mechanisms for management and allocation of capacity, in particular—

  • (i) that all potential users of the infrastructure shall be invited to express their interest in contracting capacity in the infrastructure,

  • (ii) that no capacity allocation shall occur prior to receipt by the Commission of expressions of interest being sought, and

  • (iii) that any unused capacity shall be offered on the market with users of the infrastructure being entitled to trade their contracted capacities.

• (f) In making a decision in regard to an exemption at paragraph (a) the Commission shall follow the procedures laid down in Article 36(8)(a) to (e) of the Directive.

• (g) On completion of the review procedure under Article 36 of the Directive referred to in paragraph (f), the Commission shall publish its decisions in respect of any application made to it pursuant to paragraph (a).

• (h) Any decision by the Commission in regard to an application under paragraph (a) shall be subject to review by the European Commission in accordance with the review procedure laid down at Article 36(9) of the Directive.

• (i) Where an application under paragraph (a) is from an operator located in the territory of more than one Member State, the Commission shall comply with the procedures at Article 36(4) of the Directive.

• (j) An operator that makes an application under paragraph (i) is also bound by the procedures at Article 36(4) of the Directive.

• (k) The Commission, shall by direction, provide for the procedures and conditions under which access to the storage facility under the control of the operator shall be negotiated.

• (l) The holder of an exemption under paragraph (a) shall negotiate the terms, conditions and charges for access to the storage facilities under the control of that operator in good faith and in accordance with the procedure and conditions referred to in paragraph (k).

• (m) The Commission shall direct the holder of an exemption under paragraph (a) to publish, on a publically available website, the main commercial conditions for the use of the facilities under his or her control within 6 months of the grant of that exemption and on an annual basis thereafter.

• (n) The Commission shall determine, in its sole determination, that which constitutes the ‘main commercial conditions’ referred to in paragraph (m).”.

• (2) Section 10B (inserted by section 14 of the Gas (Interim) (Regulation) Act 2002 (No. 10 of 2002)) of the Gas Act of 1976 (No 30 of 1976) is amended—

• (a) in subsection (1)(a), by substituting “Article 36 of the Directive” for “Article 22 of the Directive”,

• (b) in subsection (8), by substituting “Article 36 of the Directive” for “Article 20 of the Directive”, and

• (c) in subsection (19), by substituting for the definition of “Directive” the following:

‘ “Directive” means Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009¹ ;’.

Amendment of Electricity Regulation Act 1999

• (a) by inserting before the definition of “authorisation” the following:

“Agency” means the agency set up under the Regulation (EC) 713/2009 of the European Parliament and of the Council;”,

• (b) by inserting after the definition of “electric plant” the following:

‘ “Electricity Market Directive” means Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009¹ ;

“Electricity Market Regulation” means Regulation (EC) 714/2009 of the European Parliament and of the Council of 13 July 2009;’,

• (c) by inserting after the definition of “licence” the following:

‘ “linepack” means the storage of gas by compression in gas transmission and distribution systems, but not including facilities reserved for transmission system operators carrying out their functions;’,

and

• (d) by inserting after the definition of “Minister” the following:

‘ “ natural gas exchange” means a virtual trading location for the purchase and sale of natural gas;

“Natural Gas Market Directive” means Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009;

“Natural Gas Market Regulation” means Regulation (EC) 715/2009 of the European Parliament and of the Council of 13 July 2009;’.

• (2) Section 9 of the Act of 1999 is amended—

• (a) by substituting for subsection (1)(da) and (db) the following:

• “(da) to monitor the level and effectiveness of market opening and the development of competition in the supply of electricity and gas to final customers, which shall include but is not limited to monitoring—

  • (i) final tariffs charged to domestic customers including those on prepayment systems,

  • (ii) rates of customer switching between licensed electricity and gas suppliers,

  • (iii) disconnection and de-energisation rates,

  • (iv) charges for, and the execution of, maintenance services,

  • (v) complaints by domestic customers,

  • (vi) any distortion or restriction of competition in the supply of electricity and gas to final customers,

  • (vii) whether the development and operation of competition in the supply of electricity and gas is benefitting final customers, and

  • (viii) the level of market opening and of competition on natural gas exchanges,

• (db) to take any actions which the Commission, on foot of the monitoring in paragraph (da), has determined to be necessary in order to—

  • (i) prevent a distortion or restriction of competition in the supply of electricity and gas to final customers, or

  • (ii) ensure that final customers are benefiting from competition in the supply of electricity and gas,”,

• (b) by inserting after subsection (1)(di) the following:

• “(dj) to publish recommendations, at least annually, in relation to compliance of supply prices with Article 3 of the Natural Gas Market Directive and Article 3 of the Electricity Market Directive,

• (dk) to monitor the implementation of rules relating to the roles and responsibilities of transmission system operators, distribution system operators, suppliers and customers and other market parties pursuant to the Electricity Market Regulation and the Natural Gas Market Regulation,

  • (dl) to respect contractual freedom with regard to interruptible supply contracts as well as with regard to long-term contracts provided that they are compatible with European Union law and consistent with European Union policies,

  • (dm) to monitor the occurrence of restrictive contractual practices, including exclusivity clauses which may prevent large non-household customers from contracting simultaneously with more than one supplier or restrict their choice to do so and, where appropriate, to inform the Competition Authority of such practices,

• (dn) where applicable, to monitor technical cooperation between electricity transmissions system operators and third-country electricity transmission system operators.”,

• (c) by substituting for subsection (1)(f) the following:

• “(f) to contribute to the development of the internal market and to the development of compatible regulatory frameworks between regions of the European Union, by engaging, co-operating and consulting with other national regulatory authorities, the Agency and with the European Commission in regard to cross-border issues,

• (fa) to share information, as necessary for the fulfilment of its functions, with other national regulatory authorities and the Agency,

• (fb) to co-operate with other regulatory authorities, at least at a regional level, to—

  • (i) foster the creation of operational arrangements in order to enable optimal management of the electricity and gas networks,

  • (ii) promote joint electricity and gas exchanges and the allocation of cross-border capacity,

  • (iii) co-ordinate the development of network codes for electricity and gas transmission system operators and electricity and gas undertakings,

  • (iv) develop rules on access to cross border infrastructure including allocation of capacity and congestion management,

  • (v) foster operational arrangements to enable an adequate level of interconnection capacity within the region and between regions to allow the development of effective competition and improvement of security of supply,

  • (vi) foster non-discriminatory operational arrangements in regard to supply undertakings, and

  • (vii) contribute to safeguarding secure electricity and gas supplies on the internal market by co-operating with, and keeping other national regulatory authorities informed of any co-operation measure which the Commission takes pursuant to this section. Such cooperation shall cover situations resulting or likely to result in the short-term in a severe disruption of supply and shall include—

    • (I) co-ordination of national emergency measures referred to in Article 8 of Directive 2004/67/EC of 26 April 2004 of the European Parliament and of the Council⁵ ,

    • (II) identification and, where necessary, development or upgrading of electricity and natural gas interconnections, and

    • (III) conditions and practical procedures for mutual assistance,

• (fc) to engage with transmission system operators in order to—

  • (i) promote and facilitate co-operation between transmission system operators at a regional level on cross-border issues,

  • (ii) foster the consistency of legal, regulatory and technical frameworks,

  • (iii) facilitate the integration of isolated systems forming electricity and gas islands in the European Union, and

  • (iv) create competitive internal electricity and gas markets,

• (fd) to ensure that electricity and gas transmission system operators have one or more integrated systems at regional level covering 2 or more Member States for capacity allocation and for checking the security of the network,”,

• (d) by substituting for subsection (1)(j) the following:

• “(j) to comply with and implement relevant legally binding decisions of the Agency and of the European Commission.”,

• (e) by substituting, in subsection (1)(k), “Part VIB,” for “Part VIB.”,

• (f) by inserting after subsection (1)(k) the following:

• “(l) ensure compliance by electricity and gas undertakings, including transmission system operators, distribution system operators and system owners, with their obligations under the Natural Gas Market Directive, the Electricity Market Directive including as regards cross-border issues in accordance with their statutory functions,

• (m) to carry out investigations into the functioning of the electricity and gas markets, and

• (n) to decide upon and impose effective and proportionate measures to promote effective competition.”,

• (g) by substituting for subsection (1A) the following:

• “(1A) For the purposes of this Act, the functions of the Commission under the Electricity Market Directive and under the Natural Gas Market Directive and any regulations made under either, shall be deemed to be functions of the Commission under this Act.”,

• (h) by substituting for subsection (1B) the following:

• “(1B) The Commission shall be responsible for ensuring non-discrimination, effective competition and the efficient functioning of the electricity and gas markets, by monitoring in particular—

  • (a) the rules on the management and allocation of interconnection capacity in conjunction with the regulatory authority or authorities of those Member States with which the interconnection exists,

  • (b) mechanisms to deal with management of congestion capacity within the electricity and gas systems,

  • (c) the time taken by transmission and distribution system operators to make connections and repairs,

  • (d) the publication of appropriate information by transmission and distribution system operators concerning interconnectors, grid usage and capacity allocation to interested parties, taking into account the need to treat non-aggregated information as commercially confidential,

  • (e) effective unbundling of accounts to ensure that there are no cross-subsidies between generation, transmission, distribution, storage, LNG and supply activities,

  • (f) conditions of access to storage facilities, linepack and to other ancillary services in relation to gas,

  • (g) the application by storage operators of the criteria relating to storage facilities that fall under Article 33 of the Natural Gas Market Directive,

  • (h) the extent to which transmission and distribution system owners and operators fulfil their functions in accordance with statutory requirements,

  • (i) the level of competition and transparency in respect of wholesale prices,

  • (j) ensuring compliance of transmission and distribution system owners and operators with transparency obligations,

  • (k) ensuring compliance by transmission system operators with recommendations of the Commission in regard to amendment or modification of investment plans of transmission system operators,

  • (l) compliance with, and review of, past performance of network security and reliability rules, and

  • (m) the terms, conditions and tariffs for connecting new producers of electricity to guarantee that these are objective, transparent and non-discriminatory, in particular taking full account of the costs and benefits of the various renewable energy sources technologies, distributed generation and combined heat and power.”,

• (i) subsection (1BA) is deleted,

• (j) by substituting for subsection (1C) the following:

• “(1C) The Commission shall in its annual report, under paragraph 25(c) of the Schedule include details on the carrying out and fulfilment of its duties under Article 37 of the Electricity Market Directive, and Article 41 of the Natural Gas Market Directive and subsection (3) of section 9BA.”,

• (k) by substituting for subsection (1D) the following:

“(1D)(a) Any dispute between a gas transmission, gas distribution, LNG or gas storage system operator and a person regarding—

(i)(I) the matters specified in section 9(1B), in relation to gas,

• (II) the terms and conditions for the provision of balancing services or the methodologies used to calculate such terms and conditions,

• (III) the terms and conditions, including tariffs or the methodologies used to calculate or establish such terms and conditions for connection and access to the national networks,

or

• (ii) any dispute between Bord Gáis Éireann and the ITO in respect of their obligations under the Natural Gas Market Directive,

shall, upon the application of such person, be determined by the Commission, and the Commission shall issue a direction regarding its determination and the system operator shall comply with and be bound by any such determination.

• (b) The Commission shall issue a binding determination referred to in paragraph (a) within 2 months from the date of receipt of the complaint. This 2 month period may be extended by a further 2 months (and such further extension as may be consented to by the applicant) where the Commission seeks additional information in the matter.

• (c) This subsection does not apply to a dispute between a final customer and a system operator where the dispute concerns a refusal to offer to enter into a third party access agreement within the meaning of section 10A or 10B of the Gas Act 1976 .”,

• (l) by substituting for subsection (1E) the following:

• “(1E) The Commission when carrying out its monitoring at paragraph (k) of subsection (1B) may make recommendations in its reporting obligations under section 9(1C) to amend or modify those investment plans to ensure consistency with the network development plan referred to in Article 8(3)(b) of the Electricity Market Regulation and Article 8(3)(b) of the Natural Gas Market Regulation.”,

• (m) by substituting for subsection (4) the following:

“(4)(a) In carrying out the duty imposed by subsection (3), statutory functions in Article 37 of the Electricity Market Directive and Article 41 of the Natural Gas Market Directive, the Minister and the Commission shall have regard to the need—

• (i) to promote competition in the generation and supply of electricity and in the supply of natural gas in accordance with this Act,

• (ii) to secure that all reasonable demands by final customers of electricity for electricity are satisfied,

• (iii) to secure that licence holders are capable of financing the undertaking of the activities which they are licensed to undertake,

• (iv) to promote safety and efficiency on the part of electricity and natural gas undertakings,

• (v) to promote the continuity, security and quality of supplies of electricity,

• (vi) to promote the use of renewable, sustainable or alternative forms of energy,

• (vii) to secure that there is sufficient capacity in the natural gas system to enable reasonable expectations of demand to be met, and

• (viii) to secure the continuity, security and quality of supplies of natural gas.

• (b) In carrying out its duties under paragraph (a) of this subsection, the Commission shall also have regard to the following objectives:

  • (i) to integrate large and small scale production of electricity and gas from renewable resources and distributed production in both transmission and distribution networks in the most cost effective way;

  • (ii) to develop competitive and properly efficient and reliable functioning regional electricity and gas markets;

  • (iii) to eliminate restrictions on trade in electricity and gas between Member States, including developing appropriate cross-border transmission capacities to meet demand and enhancing the integration of national markets which may facilitate electricity and gas flows across the European Union;

  • (iv) to promote system adequacy;

  • (v) to facilitate access to the network for electricity generation and for gas production, in particular removing barriers that could prevent access for new market entrants and of electricity and gas from renewable energy sources;

  • (vi) in fixing and approving tariffs or methodologies and the balancing services, to ensure that system operators and system users are granted appropriate incentives, in both the short and long term to—

    • (I) increase the efficiencies in system performance,

    • (II) to foster market integration,

    • (III) to foster security of supply, and

    • (IV) to support research activities.”,

and

• (n) by substituting for subsection (6)(b) the following:

• “(b) any decisions taken by it shall be fully reasoned and justified and shall be publically available while preserving the confidentiality of commercially sensitive information.”.

• (3) Section 9A (inserted by Regulation 12(2) of the European Communities (Internal Market in Natural Gas) (No. 2) Regulations 2004 ( S.I. No. 452 of 2004 )) of the Act of 1999 is amended by substituting the following:

“Approval of terms and conditions

9A.(1) The Commission shall be responsible for the following:

• (a) determining or approving prior to their entry into force, at least the methodologies used to calculate the terms and conditions for the provision of balancing services in relation to electricity and gas systems;

• (b) providing in the most economic manner balancing services, with the appropriate incentives for network users to balance the input and off-take of gas in the system;

• (c) providing balancing services in a fair and non-discriminatory manner and based on objective criteria.

• (2) The Commission shall publish the methodologies or the terms and conditions referred to in 9A(1) on a publically available website.”.

• (4) Section 10A (inserted by section 7 of the Energy (Miscellaneous Provisions) Act 2006 ) (No 40. of 2006)) of the Act of 1999 is amended by inserting after subsection (7) the following:

• “(8) Nothing in this section shall allow the Commission to seek or take instructions from any natural or legal person in relation to a decision on a matter which is set out in Article 37 of the Electricity Market Directive or in Article 41 of the Natural Gas Market Directive.”.

• (5) Section 14 of the Act of 1999 is amended by inserting after subsection (2F) the following:

• “(2G) A licence under paragraphs (b), (c) or (d) of subsection (1) may include conditions to ensure that where the holder of the licence is registered in another Member State, the holder of the licence shall comply with—

  • (a) the conditions of the licence, and

  • (b) the requirements of this Act.”.

• (6) Section 18(2) of the Act of 1999 is amended—

• (a) in paragraph (h), by deleting “and”,

• (b) in paragraph (i), by substituting “under section 39, and” for “under section 39.”, and

• (c) by inserting after paragraph (i) the following:

• “(j) the contribution of the generating capacity to assisting in ensuring that the renewable share in the year 2020 is at least the national overall target of 16 per cent as provided for in paragraph A of Annex 1 to Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009⁶ , and

• (k) the contribution of generating capacity to reducing emissions.”.

• (7) Section 34 of the Act of 1999 is amended by substituting for paragraph (b) the following:

• “(b) Any dispute between a transmission system operator or a distribution system operator in regard to duties under the Electricity Market Directive and a person as respects matters specified in section 9(1B) in relation to electricity shall, upon the application of such person, be determined by the Commission, and the Commission shall issue a direction regarding its determination and such direction shall be binding on all parties concerned.”.

• (8) Schedule 1 to the Act of 1999 is amended—

• (a) in paragraph 1 by substituting “not less than five” for “not less than three”,

• (b) by substituting for paragraph (3) the following:

“3.A member of the Commission whose term of office expires by effluxion of time shall be eligible for re-appointment to serve a second term.

3A.In appointing a member of the Commission under paragraph 1 or re-appointing a member of the Commission under paragraph 3, the Minister shall seek to ensure an appropriate rotation of Commission members so that terms of office do not all end within the same 12 month period.”.

Amendment of Gas (Interim) (Regulation) Act 2002

• (a) in section 2(1)—

• (i) by inserting after the definition of “functions” the following:

‘ “ITO”, has the same meaning as in the European Communities (Internal Market in Natural Gas and Electricity) Regulations 2011 ( S.I. No. 630 of 2011 );

• (ii) by inserting after the definition of “natural gas licence” the following:

‘ “Natural Gas Regulation” means Regulation 715/2009 of the European Parliament and of the Council of 13 July 2009⁴ ;’,

• (iii) by substituting for the definition of “Directive” the following:

‘ “Directive” means Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009¹ ;’,

• (iv) by substituting for the definition of “natural gas undertaking” the following:

‘ “natural gas undertaking” has the same meaning as in the Directive;’,

• (v) by substituting for the definition of “transmission” the following:

‘ “transmission” in relation to natural gas, means the transport of natural gas through a high pressure pipeline, other than an upstream pipeline with a view to delivering the gas to customers;’,

• (b) in section 16 by substituting for subsections (1), (1A), (1B) and (1C) the following:

• “(1) The Commission may grant or refuse to grant to a person a licence to undertake in the State all or any of the following activities:

  • (a) the supply of natural gas;

  • (b) the shipping of natural gas;

  • (c) the ownership of a transmission system;

  • (d) the operation of a transmission system;

  • (e) the ownership of a distribution system;

  • (f) the operation of a distribution system;

  • (g) the operation of a natural gas storage facility;

  • (h) the operation of a LNG facility.

• (1A) A licence granted under subsection (1) is subject to such conditions as are specified in the licence.

• (1B) Subject to security of supply requirements, it shall be a duty of the Commission to ensure that all customers are entitled to be supplied with gas by a supplier, subject to the supplier’s agreement, regardless of the Member State in which the supplier is registered, on condition that the supplier follows the applicable trading and balancing rules.

• (1C) For the purposes of the Directive—

  • (a) the holder of a licence for the ownership and operation of a transmission system is approved and designated as a transmission system operator,

  • (b) the holder of a licence for the operation of a natural gas storage facility is designated as a storage facility operator, and

  • (c) the holder of a licence for operation of a LNG facility is designated as a LNG facility operator.

• (1D) For the purposes of Article 24 of the Directive, the holder of a licence for the operation of a distribution system is designated as a distribution system operator.”,

• (c) in section 16(13)—

• (i) by substituting for paragraph (a) the following:

• “(a) in the case of a holder of a licence under paragraph (1)(c), (1)(e) or (1)(f), operate, maintain and develop under economic conditions a secure, reliable, economic and efficient transmission, storage or LNG facilities (as the case may be having regard to the activity for which it is licensed) to secure an open market, with due regard to the environment and public safety and ensure adequate means to meet service obligations,

• (aa) in the case of a holder of a licence under paragraph (1)(d), ensure the long-term ability of the system to meet reasonable demands for the distribution of natural gas, and for operating, maintaining and developing under economic conditions a secure, reliable and efficient system in its area, with due regard for the environment and energy efficiency;

• (ab) in the case of a holder of a licence under paragraph (1)(a), (1)(b) or (1)(d), operate, maintain and develop under economic conditions such facilities or systems as required for the purpose of carrying out the activity for which it is licensed with due regard to the environment and public safety,”,

• (ii) by substituting for paragraph (e) the following:

• “(e) in the case of the holder of a licence under paragraph (1)(c) or 1(d), take steps to prevent the disclosure in a discriminatory manner of commercially advantageous information about its own activities and not disclose any commercially sensitive information to the remaining parts of the undertaking of which it is part, unless this is necessary for carrying out a business transaction,

• (ea) in the case of the holder of a licence under paragraph (1)(c), without prejudice to its obligations to protect commercially sensitive information, make public all information necessary for effective competition and the efficient functioning of the market,”,

• (iii) by substituting for paragraph (f) the following:

• “(f) in the case of a holder of a licence under subsection (1)(c), (e) or (f), provide users of the system or facility with sufficient information to enable them to access the system or facility,

• (fa) in the case of a holder of a licence under subsection (1)(d), provide system users with the information they need for efficient access to, including use of, the system,”,

• (iv) in paragraph (h)(ii), by substituting “Article 41(6)” for “Article 25(2)”, and

• (v) by inserting after paragraph (j) the following:

• “(k) in the case of the holder of a licence under subsection (1)(c)—

  • (i) build sufficient cross-border capacity to integrate European transmission infrastructure accommodating all economically reasonable and technically feasible demands for capacity and taking into account security of natural gas supply, and

  • (ii) establish and publish transparent and efficient procedures and tariffs for non-discriminatory connection of storage facilities, LNG regasification facilities and industrial customers to the transmission system. Those procedures shall be subject to approval by the Commission,

  and

• (l) in the case of a licence granted to the ITO under subsection (1)(c), in performing its obligations pursuant to Articles 13 and 17(2) of the Directive, and in complying with Articles 13(1), 14(1)(a), 16(2), (3) and (5), 18(6) and 21(1) of the Natural Gas Market Regulation, refrain from discriminating against different persons or entities and shall not restrict, distort or prevent competition in production or supply;”.

Amendment of European Communities (Internal Market in Electricity) (Electricity Supply Board) Regulations 2008

“6A.(1) The Board shall ensure that any licensed supplier owned by it is separately identifiable from the distribution system operator.

• (2) The Board shall endeavour in its branding and communications to avoid confusion in respect of the separate identity of such licensed suppliers owned by it.

• (3) For the purposes of introducing a new brand to comply with its obligations under paragraphs (1) and (2), the Board may, subject to the agreement of the Commission, use both the ESB brand and the new brand for a transition period.

• (4) The duration of the transition period mentioned in paragraph (3) shall be determined by the Commission.

• (5) Brand for the purposes of this Regulation may be deemed to include slogan, symbol or sign.”.

Regulations 13(2) and 38(1)

SCHEDULE 1 Transfer of Assets, Contracts, Rights and Liabilities of BGÉ Corporate

Transfer of ownership of the Certain assets of BGÉ Corporate

• (2) All legal proceedings relating to those assets begun before the transfer date by or against BGÉ Corporate and pending immediately before that date are taken to be legal proceedings pending by or against the ITO.

• (3) Any act, matter or thing done or omitted to be done in relation to those assets before the transfer date by, to, or in respect of, BGÉ Corporate is (to the extent that that act, matter or thing has any effect) taken to have been done or omitted by, to, or in respect of, the ITO.

Transfer of the Certain rights and liabilities of BGÉ

• (2) All legal proceedings relating to those rights or liabilities begun before the transfer date by or against BGÉ Corporate and pending immediately before that date are taken to be legal proceedings pending by or against the ITO.

• (3) Any act, matter or thing done or omitted to be done in relation to those rights or liabilities before the transfer date by, to, or in respect of, BGÉ Corporate is (to the extent that that act, matter or thing has any effect) taken to have been done or omitted by, to, or in respect of, the ITO.

Change of ownership of asset not to be regarded as giving rise to remedy

No attornment required in respect of the certain leased land

Apportionment of assets, contracts, rights and liabilities

• (2) Where any estate or interest in land falls to be divided or apportioned by virtue of subparagraph (1)—

• (a) any rent payable under a lease in respect of that estate or interest, and

• (b) any rent charged on that estate or interest,

shall be correspondingly apportioned or divided so that each part is payable in respect of, or charged on, only the relevant part of the estate or interest so apportioned.

• (3) Any asset or liability to which subparagraph (1) relates, the nature of which does not permit its division or apportionment, may be transferred to the relevant member of the BGÉ Group according to—

• (a) in the case of an estate or interest in land, whether on the transfer date the relevant member of the BGÉ Group appears to be in greater need of the security afforded by that estate or interest or, where no such member appears to be in greater need of that security, whether on that date the relevant member of the BGÉ Group appears likely to make use of the land to the greater extent, and

• (b) in the case of any other asset or liability (including choses-in-action), whether on the transfer date the relevant member of the BGÉ Group appears likely to make use of, or as the case may be, to be affected by, the asset or liability, to the greater extent, subject (in either case) to such arrangements for the protection of the other relevant members of the BGÉ Group as may be agreed between them.

• (4) It shall be the duty of BGÉ and the ITO whether on or after the transfer date, so far as practicable, to arrive at such written agreements and to execute such other instruments as are necessary or expedient to identify or define the assets and liabilities transferred to the ITO as will—

• (a) afford to the ITO and BGÉ as against one another such rights and safeguards as they may require for the carrying on of their respective undertakings, and

• (b) make as from such date, not being earlier than the transfer date, as may be specified in the agreement or instrument, such clarification and modifications of the division of the BGÉ Corporate’s undertaking as will best serve the carrying on of the respective undertakings of the ITO and BGÉ.

• (5) Any agreement under subparagraph (4) shall, so far as it is expedient, provide for the granting of indemnities in connection with the severance of leases and other matters.

• (6) If the ITO or BGÉ represents to the Commission, or if it appears to the Commission without such a representation, that it is unlikely in the case of any matter on which agreement is required under subparagraph (4) between them that such agreement will be reached, the Commission may—

• (a) give a direction determining that matter, and

• (b) include in the direction any provision which might have been included in an agreement under subparagraph (4).

• (7) Any assets or liabilities required by a direction under subparagraph (6) to be transferred to the ITO shall be regarded as having been transferred by these Regulations to, and by virtue of the transfer, vested in the ITO accordingly.

• (8) A transaction of any description which, under paragraph (4) or a direction under paragraph (6), is effected between BGÉ and the ITO shall be binding on all persons notwithstanding that it would, apart from this paragraph, have required the consent or concurrence of any other person.

• (9) If any transaction is effected under paragraph (4) or a direction under paragraph (6), BGÉ or the ITO (as appropriate) shall notify any person who has rights or liabilities which thereby become enforceable as to part by or against one or more of BGÉ and the ITO.

• (10) If, within 28 days from being notified, such a person as is mentioned in paragraph (9) applies to, and satisfies the Commission that the transaction operated unfairly against him or her, the Commission may give such directions to BGÉ or the ITO (as appropriate) as appear to the Commission appropriate for varying the transaction.

• (11) If in consequence of 2 or more transfers effected under the transfer plan or anything done under the provisions of this paragraph—

• (a) the rights or liabilities of any person other than BGÉ or the ITO which were enforceable against or by BGÉ become enforceable against or by more than one of BGÉ and the ITO, and

• (b) the value of any property or interest of that person is thereby diminished,

such compensation as may be just shall be paid to that person by BGÉ or the ITO, as appropriate.

• (12) Any dispute as to whether and, if so, how much compensation is payable under subparagraph (11) or as to the person to, or by, whom it shall be paid shall be referred to the Commission. The Commission shall issue directions regarding its decision, as it sees fit, regarding the matter in dispute, and BGÉ or the ITO, as appropriate, shall comply with such directions.

Restrictions on dealing with the certain land

• (a) in consequence of those transfers, different estates in land, whether the same or different land, are held by BGÉ or the ITO, and

• (b) the circumstances are such that this paragraph should have effect to any transfer concerned,

then the Commission may direct that this paragraph shall apply to such of that land as may be specified in the direction. While the direction remains in force this paragraph shall have effect accordingly.

• (2) Neither BGÉ nor the ITO shall dispose of any estate to which they may respectively be entitled in any of the specified land except with the consent of the Commission.

• (3) If, in connection with any proposal to dispose of any estate of BGÉ or the ITO in any of the specified land, it appears to the Commission to be necessary or expedient for the protection of either of them, the Commission may—

• (a) direct BGÉ or the ITO (as appropriate) to dispose of any estate to which it may be entitled in any of the specified land to such person and in such manner as may be specified in the direction,

• (b) direct BGÉ or the ITO (as appropriate) to acquire from the other party any estate in any of the specified lands to which that other or others are entitled, or

• (c) consent to the proposed disposal subject to compliance with such conditions as the Commission may see fit to impose.

• (4) A person, other than BGÉ or the ITO, dealing with BGÉ or the ITO, shall be under no obligation to see or to enquire into—

• (a) whether or not this paragraph applies or has applied in relation to any land to which the dealing relates, or

• (b) whether or not the provisions of this paragraph have been complied with in connection with that or any other dealing with that land,

and no transaction between persons, other than between BGÉ and the ITO (as appropriate), shall be invalid by reason of any failure to comply with those provisions.

Regulations 7(4), 13(2) and 37(3)

SCHEDULE 2 Transfer of Certain BGÉ Employees

Certain BGÉ employees transferred to ITO or the relevant subsidiary on transfer date

This Schedule not to affect the Certain matters relating to staff members

• (2) Nothing in this Schedule has the effect of breaking a person’s contract of employment or continuity of employment for the purpose of applying to the person any other law relating to employment that would, apart from this Schedule, apply to the person. In particular, this Schedule does not affect a persons accrued rights that the person had immediately before the transfer date in respect of any kind of leave.

Special pension arrangements for officers and servants of BGÉ Corporate and ITO

Variation of terms and conditions of transferred employees and contractors

• (2) Nothing in this Schedule prevents the terms and conditions of a transferred employee’s employment after the transfer date from being varied—

• (a) in accordance with those terms and conditions, or

• (b) by or under an applicable law or agreement.

• (3) In this paragraph—

“terms and conditions” includes a term existing because of paragraph 1;

“vary”, in relation to terms and conditions, includes vary by—

• (a) omitting any of those terms and conditions,

• (b) adding to those terms and conditions, or

• (c) substituting new terms or conditions for any of the first-mentioned terms and conditions.

GIVEN under my Official Seal,

1 December 2011.

PAT RABBITTE,

Minister for Communications Energy and Natural Resources.

EXPLANATORY NOTE

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

These Regulations give legal effect to—

• (a) EU Directive 2009/73/EC concerning common rules for the internal market in natural gas, save for Articles 3, 41(1)(o) and (q) and Annex I to the Directive, and

• (b) Articles 3(4), 7(2)(j), 7(2)(k), 26(3), 35(5), 36 and 37 (save for Article 37(n) and (p)), and Article 38, of EU Directive 2009/72/EC concerning common rules for the internal market in electricity.

The Regulations provide for the establishment of an Independent Transmission System Operator (ITO) for gas, in line with the gas unbundling rules as set out in Directive 2009/73/EC. The operation and ownership of the gas transmission system will be carried our by a legally independent ITO, a subsidiary of Bord Gáis Éireann (BGÉ), subject to stringent requirements to ensure it is ring fenced from the supply business of BGE. Included in the ring fencing arrangements is a requirement for the ITO to have its own Board of Directors.

Other provisions provide for—

Commisison for Energy Regulation (CER) Functions and Powers

• • Enhancement of the CER’s market monitoring function in regard to the electricity and gas markets to align with the Directives,

• • Provision for the appointment of CER Commissioners for a period of between 5 and 7 years,

• • Prohibition on the CER taking instruction from the Minister in relation to functions set out in Article 37 of the Electricity Directive or Article 41 of the Gas Directive,

• • Assignment of powers to the CER to monitor the operations of electricity and gas transmission system operators and enforce compliance,

• • Assignment of powers to the CER to make applications to the High Court for Compliance Orders and to recommend to the court, in the case of non-compliance with unbundling provisions, fines up to a level of 10% of annual turnover of the TSO or the VIU as appropriate,

• • Assignment of a dispute resolution function to the CER in the event of disputes between TSOs and a third party (including disputes between BGÉ and the ITO) and disputes between DSOs, gas storage operators, LNG operators, gas undertakings and third parties,

• • Obligations on TSOs to draft 10 Year Network Investment Plans and to report annually to EU Commision on certain matters, and

• • Obligations on TSOs to report on certain matters to the CER.

Other Provisions

• • Consequential repeals and/or amendment of the Gas Act 1976 , the Electricity Regulation Act 1999 , the Gas (Interim) (Regulation) Act 2002 and other electricity and gas legislation to align with Third Package requirements in regard to electricity and gas TSOs,

• • Amendment of the Gas (Interim) (Regulation) Act 2002 in regard to the licensing of the gas TSO and distribution system operator (DSO) and gas suppliers,

• • Obligations on VIU/DSO to ensure that there is no confusion in regard to the identity of the DSO and a supplier owned by the VIU.

Footnotes