European Traders Take France to Task on Storage Rules
France has joined Poland on the black-list of the European Federation of Energy Traders (Efet) owing to its allegedly discriminatory treatment of storage facilities. The European Union's third energy package is intended to bring competition to gas supply and that means access to flexibility such as storage. But some countries have public service obligations which can conflict with free market principles.
In a statement October 18 Efet said it regretted the government’s inability to adopt the draft ordinance to reform access to storage facilities in France, while thanking the energy ministry for its efforts on the design and working on it closely with traders.
As the ordinance “could not be published in the timeframe prescribed in the Energy Transition Law No 2015-992,” the projected reform has stalled, Efet said.
Efet said that public authorities should pursue the reform and promptly tell traders what the new timetable for reform is. Without reform, the current third party access mechanism, based on a “negotiated” access, grants priority access to storage capacities for shippers supplying end-users connected to distribution networks.
This leads to a distortion in the treatment of market participants who wish to access storage capacities. It also allows storage operators to set tariffs higher than the market value of storage in France, making it unattractive, Efet said. The reform project, introducing market-based access to gas storage capacities as foreseen by the European legislation on security of gas supply, would overcome these shortcomings.
The failure of the government to adopt the ordinance, combined with the absence of any communication by public authorities on the subject for many months, has created high uncertainty for market participants about the regulatory framework to be applicable to the 2017-2018 gas storage marketing season. The complete lack of visibility is prone to seriously disturb the functioning of the French gas market, whether it concerns the marketing of retail offers or the pricing of modulation between counterparties, Efet said.
Engie subsidiary Storengy operates facilities in France with some 10bn m³ capacity in total, of which one is on behalf of a third party.
Efet wrote to the Polish energy ministry July 4, urging it to drop plans to create a storage obligation for shippers when other forms of flexibility might be more efficient. It said in a statement July 26 that it was “highly concerned with proposed changes of the Polish natural gas market.” The government owns all of incumbent trader and importer PGNiG, while the French government owns about 33% of Engie.
William Powell