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Natural gas

Basic principles

The liberalisation of Europe's natural gas market is a revolutionary move, its aim being to promote free competition. Liberalisation has been a gradual process, instituted by the directive of 22 June 1998 and taken up a gear by the directive of 26 June 2003, which set the precise dates for liberalisation of the market for non-household (1 July 2004) and household (1 July 2007) customers. These directives form a legal framework which has to be transposed, with a certain margin for interpretation, by the different Member States in national laws guaranteeing consumers free and open access to the supplier of their choice. However, although natural gas supply has been opened up to competition, transmission and distribution remain legal monopolies so that consumers are offered non-discriminatory access to these services.

Why this reform?

The liberalisation of the gas market is part of an overall strategy to promote competition on the European power generation and sales markets, the aim being to enable the emergence of a more successful single European market. It requires the legal separation of gas generation, transmission, distribution and sales activities. On the liberalised market, customers are thus free to choose their energy supplier. This means that there must be several different suppliers using the same transmission and distribution networks.

In France...

Liberalisation of the energy market has taken place in stages.

10 August 2000:

  • in accordance with the European directive of 22 June 1998 (98/30/EC), the natural gas market was opened up to a level representing 20% of total annual consumption. A hundred or so large industrial sites (i.e. consuming over 265 GWh/year) were free to choose their supplier.

10 August 2003:

  • the law of 3 January 2003 transposed the first European directive and set out the conditions for liberalisation of the natural gas market in France. Liberalisation had to apply to at least 28% of the market.

1 July 2004:

  • in accordance with the second European directive of 26 June 2003 (D5242003/55/EC), all non-household consumers were free to choose their supplier. 70% of the market opened up to competition.

1 July 2007:

  • the liberalization of the natural gas market is complete. All consumers, including households, may now freely choose their supplier.

The market players

 Transmission and distribution system operators
  • These operate independently from suppliers and retain a monopoly on natural gas transmission and distribution. There are fixed tariffs for these activities, determined by the government based on proposals by the Energy Regulation Commission (CRE).
 Transmission system operator [High pressure]
  • The transmission system operator is responsible for designing, building, operating and maintaining the transmission system (methane terminals, compressor stations, pipelines) and the underground storage facilities.
  • It is also responsible for marketing third-party access services, in line with European directives and regulations.
Distribution system operator [Low pressure]
  • The distribution system operator is responsible for natural gas transmission on the distribution system, between the entry points and customer supply points. In this, it acts on behalf of suppliers. 
  • It connects customer facilities to the distribution system.
  • It is responsible for designing, building, operating and maintaining the distribution system.
  • It provides services related to the transmission of natural gas to customers. These include providing, operating and maintaining  the supply station. 
The market regulator: the Energy Regulation Commission (Commission de Régulation de l'Energie or CRE)
  • This independent, sectoral authority is a legally constituted body responsible for the smooth running of the energy market.
  • It monitors compliance with new market regulations, particularly those relating to conditions for accessing and using the transmission and distribution systems.
  • It oversees strict compliance with the laws transposing European directives on the energy market and with the principles of  non-discrimination, transparency and  confidentiality.
  • It approves the regulations and principles governing the accounting and legal separation of natural gas transmission, storage, and distribution activities and is involved with setting transmission tariffs