Changes from report parliamentary committee draft to plenary report

AddedSHORT JUSTIFICATION

AddedOn 15 December 2021, the European Commission proposed a directive on common rules for the internal markets in renewable and natural gases and in hydrogen. The purpose of this directive is to create a solid policy framework ensuring an appropriate transition from fossil gas towards low-carbon and renewable gases in order to create a European-wide market for renewable and low-carbon gases and to meet the ambitious Union climate targets. The rapporteur welcomes the Commission’s proposal to remove the existing regulatory barriers on the markets and to create the appropriate conditions for renewable and decarbonised gas, ensuring at the same time energy security and market liquidity. Especially the alignment of consumer protection rights with the already existing protection in electricity markets is very timely in the context of rising energy costs. One third of the energy used by European households is natural gas. Costs for consumers need to be kept low.

AddedHydrogen will remain an expensive energy carrier and therefore not a suitable option for consumers’ residential heating needs. Despite not promoting hydrogen usage for consumers, they should benefit from the same level of protection on the entire gases market, independently of the gas mix available to them.

AddedGas consumers find it difficult to understand what they are paying for, how to distinguish between different offers and how sustainable their gas supply is. It is therefore crucial to set clear rules in order for consumers to have access to comparison tools covering the entire gases market, so as to enable consumers to choose the most suitable offer for them. Suppliers should provide information about all available offers in order to feed the comparison tool. This comparison tool should be easily understandable and empower consumers to understand what they are paying for, how to differentiate between different offers and how sustainable their gas supply is.

AddedThe rapporteur believes that Member States should apply the necessary measures to protect vulnerable consumers prone to suffer from energy poverty. The current energy price crisis illustrates the need for a sound protection of energy poor and vulnerable consumers. This is why the rapporteur suggests mirroring the identification criteria from the Electricity Directive, providing for an accurate identification of vulnerable consumers who are suffering from energy poverty. As well, social and economic support should be provided to these consumers, in order to avoid their stigmatisation and to ensure that no one is left behind. Consumers should especially be protected from disconnections during winter times, where their life and health is at stake.

AddedMoreover, consumers should have the right to switch easily gas suppliers. Providers of bundled services shall give final customers the possibility to cancel or switch individual parts of the bundled contract through direct negotiation between the contracting parties.

AddedAs regards e smart metering systems, it is important that a cost-benefit assessment be carried out in order to estimate the benefits emerging from the use of smart meters for consumers so as not to create additional investments and burdens for consumers in a time where fossil gases need to be phased out.

AddedFurthermore, a new provision on third party intermediaries is needed when they are completing tasks exercised by the energy supplier, as third parties intermediaries are unregulated and consumers should be able to rely on their rights provided by this directive.

AddedThe final customers who are able to store and self-generate renewable gas should have the right to participate in all gas markets and value chains, providing necessary services to the energy system.

AddedAll in all, the proposed directive aims to safeguard the functioning of the internal market for gases and to ensure a high level of consumer protection, independently of the energy mix.

AddedAMENDMENTS

AddedThe Committee on the Internal Market and Consumer Protection calls on the Committee on Industry, Research and Energy, as the committee responsible, to take into account the following amendments:

AddedRecital 4: (4) As part of the Package “Clean Energy for all Europeans” proposed by the Commission on 30 November 2016, Regulation (EU) 2019/9436 and Directive (EU) 2019/9447 brought about a further step in the development of the internal market for electricity with citizens at its core and contributing to the Union’s objectives of transition to a clean energy system and reducing greenhouse gas emissions. The internal market in natural gas and renewable gases should be built on those same principles and ensure an equal level of consumer protection so that no one is left behind and in particular to protect consumers against higher tariffs that may be used to subsidise investments that they will not benefit from in the future.

AddedRecital 6: (6) This Directive aims to facilitate the penetration of renewable and low-carbon gases into the energy system enabling a shift from fossil gas and to allow these new gases to play an important role towards achieving the EU’s 2030 climate objectives and climate neutrality in 2050. The Directive aims also to set up a regulatory framework which enables and incentivises all market participants to take the transitional role of fossil gas into account while planning their activities to avoid lock-in effects and ensure gradual and timely phase-out of fossil gas notably in all relevant industrial sectors and for individual heating purposes while mitigating deepening energy poverty.

AddedRecital 8: (8) In line with the EU Hydrogen Strategy, renewable hydrogen is expected to be deployed on a large-scale from 2030 onwards for the purpose of decarbonising certain sectors, ranging from aviation and shipping to hard-to-decarbonise industrial sectors. All final customers connected to hydrogen systems will benefit from consumer protection rules and basic consumer rights applicable to final customers connected to the natural gas system such as the right to switch supplier and accurate billing information. In those instances where customers are connected to the hydrogen network, e.g. industrial customers, they will benefit from the same consumer protection rights applicable to natural gas customers. However, consumer provisions designed to encourage household participation on the market such as price comparison tools, active customers and citizen energy communities do not apply to the hydrogen system.

AddedRecital 9: (9) In line with the EU Hydrogen Strategy, the priority for the EU is to develop renewable hydrogen produced using mainly wind and solar energy. Renewable hydrogen is the most compatible option with the EU’s climate neutrality and zero pollution goal in the long term and the most coherent with an integrated energy system. However, low-carbon fuels (LCFs) such as low-carbon hydrogen (LCH) will play a role in the energy transition, particularly in the short and medium term to rapidly reduce emissions of existing fuels, and support the uptake of renewable fuels such as renewable hydrogen and the decarbonisation of Europe’s energy-intensive industries and transport. In order to support the transition, it is necessary to establish a realistic threshold for greenhouse gas emission reductions for low-carbon hydrogen and synthetic gaseous fuels. Such threshold should become more stringent for hydrogen produced in installations starting operations from 1 January 2031 to take into account technological developments and better stimulate the dynamic progress towards the reduction of greenhouse gas emissions from hydrogen production. The EU Energy System Integration strategy highlighted the need to deploy an EU–wide certification system to also cover low-carbon fuels with the aim to enable Member States to compare them with other decarbonisation options and consider them in their energy mix as a viable solution. In order to ensure that LCF have the same decarbonisation impact as compared …

AddedRecital 10: (10) The freedoms which the Treaty guarantees the citizens of the Union — inter alia, the free movement of goods, the freedom of establishment and the freedom to provide services — are achievable only in a fully open market, which enables all consumers freely to choose their suppliers and all suppliers freely to deliver to their customers. A fully integrated EU energy market should prioritise better connection of energy infrastructure between Member States alongside fair and open competition.

AddedRecital 11: (11) Consumer interests should be at the heart of this Directive and quality of service should be a central responsibility of natural gas undertakings. Existing rights of consumers and rights for access to essential services, including energy, as well as the right to a secure an affordable energy supply, and safeguarding against energy poverty, as stated in the European Pillar of Social Rights communication and the REPowerEU Plan need to be strengthened and guaranteed, and should include greater transparency. Consumer protection should ensure that all consumers in the wider remit of the Union benefit from a competitive gas and hydrogen market. Consumer rights should be enforced by Member States or, where a Member State has so provided, the regulatory authorities.

AddedRecital 12 a (new): (12a) The REPower EU Plan underlines that during the EU’s clean energy transition, the decoupling from Russian energy imports can lead to higher and more volatile energy prices and therefore emphasises the need, at Member State level, for targeted measures to minimise volatility, keep prices in check and protect the individuals in or at risk of energy poverty in order to ensure a fair transition for all.

AddedRecital 14: (14) Member States should have a wide discretion to impose public service obligations on gas undertakings in pursuing objectives of general economic interest. However, public service obligations in the form of price setting for the supply of natural gas constitute a fundamentally distortive measure that often leads to the accumulation of tariff deficits, the limitation of consumer choice, poorer incentives for energy saving and energy efficiency investments, lower standards of service, lower levels of consumer engagement and satisfaction, and the restriction of competition, as well as to there being fewer innovative products and services on the market. Consequently, Member States should apply other policy tools, in particular targeted social policy measures, to safeguard the affordability of natural gas supply to their citizens and to ensure a fair transition for all and that no one is left behind. Public interventions in price setting for the supply of natural gas should be carried out only as public service obligations and should be subject to specific conditions. A fully liberalised, well-functioning retail natural gas market would stimulate price and non-price competition among existing suppliers and provide incentives to new market entrants, thereby improving consumer choice and satisfaction.

AddedRecital 16 a (new): (16a) When implementing fuel switch policies, Member States may conduct distributional impact assessments in order to determine whether public intervention is necessary to address disproportional effects on certain customer groups.

AddedRecital 17: (17) Clear and comprehensible information should be made available to consumers concerning their rights in relation to the energy sector. The Commission has established , after consulting relevant stakeholders including Member States, regulatory authorities, consumer organisations and natural gas undertakings, an accessible, user-friendly energy consumer checklist providing consumers with practical information about their rights. That energy consumer checklist should be regularly maintained, updated and should reflect current market developments, where possible. It should be provided to all consumers and should be made publicly available.

AddedRecital 20: (20) Natural gas still plays a key role in energy supply, as household energy consumption from natural gas is still higher than from electricity. Although electrification is a key element of the green transition, in the future there will still be household natural gas consumption including increasing volumes of low-carbon and renewable gas.

AddedRecital 23: (23) As in the electricity sector, market flexibilities and an adequate Union consumer rights’ legal framework in the natural gas sector are essential to ensure that all citizens can participate in the energy transition and benefit from affordable prices, good standards of service, and effective choice of offers mirroring sustainable technological developments.

AddedRecital 24: (24) The switch from fossil gas to renewable alternatives, including biomethane, will concretise if energy from renewable sources becomes an available, attractive, non-discriminatory choice for all consumers based on truly transparent information where the transition costs are fairly distributed among different groups of consumers and market players.

AddedRecital 27: (27) To be coherent and effective, this mirroring approach should encompass all consumer protection provisions. This should go from basic contractual rights and comprehensive pre-contractual information to rules for billing information, switching energy provider, having at disposal reliable comparison tools, especially protecting vulnerable and energy poor consumers, ensuring adequate data protection for smart meters and data management, and efficient alternative dispute resolution rules.

AddedRecital 29: (29) The modernisation of the gas sector is expected to lead to substantial economic benefits through improved retail competition while also delivering incentives and supports for new market entrants, and its social and distributional benefits and customer empowerment, including strengthened contractual rights and better available information on consumption and energy sources leading to greener and more price-competitive choices, such as uptaking energy efficiency measures and long-term, switching from gas to other more sustainable and efficient energy sources, such as renewable. Energy communities-of-interest should contribute to the uptake of renewable gas.

AddedRecital 30: (30) Switching is an important indicator of consumer engagement as well as an important tool to boost competition on the natural gas market and should therefore be guaranteed as a basic right to consumers. However, switching rates remain inconsistent among Member States and consumers are discouraged from switching both energy source and supplier by exit and termination fees. Although removing such fees might limit consumer choice by eliminating products based on rewarding consumer loyalty, restricting their use further should improve consumer welfare, consumer engagement and competition in the market, including promoting the use of biomethane and other low-carbon and renewable gases.

AddedRecital 30 a (new): (30a) In case of bundled investment in equipment, the economic loss resulting from the customer’s termination of the contract before its maturity should be determined based on the remaining part of the service fee until the end of the contract. In line with the contractual freedom, if provided for in contractual clauses, providers of bundled services should give final customers the possibility to cancel or switch individual parts of the bundled contract through direct negotiation.

AddedRecital 32: (32) Several factors impede consumers from accessing, understanding and acting upon the various sources of market information available to them. It follows that the comparability of offers should be improved, through adequate consumer information, including on the environmental impact of the energy offers, and comparison tools for all customers, and unjustified barriers to switching should be removed without unduly limiting consumer choice.

AddedRecital 33: (33) Independent comparison tools, including websites, are an effective means for smaller customers to assess the merits of the different energy offers that are available on the market. They should aim to include the broadest possible range of available offers, and to cover the market as completely as is feasible so as to give the customer a representative overview in a clear and easy to understand manner. Where the environmental impact is promoted as an essential feature of the offer, comparison tools should also include a description of that environmental impact. It is crucial that smaller customers have access to at least one comparison tool and that the information given on such tools be trustworthy, impartial, transparent and easy to understand. To that end, Member States could provide for a comparison tool that is operated by a national authority or a private company. It is also vital to provide customers with a clear and understandable pre-contractual information, so that they are fully aware about the details and consequences of the contract.

AddedRecital 34: (34) In some instances, final customers, particularly those in the agricultural sector, are able to consume, to store and to sell self-generated renewable gas. To the extent that they are able to undertake these activities, these customers should be able to participate in all natural gas markets including local supply, providing ancillary services to the system, and energy storage, while maintaining their rights as final customers. Member States should be able to provide different provisions in their national law with respect to taxes and levies for individual and jointly-acting active customers.

AddedRecital 35 a (new): (35a) Renewable energy communities, pursuant to Directive (EU) 2018/2001, and citizen energy communities, pursuant to Directive (EU) 2019/944, can contribute to the production, storage and supply of renewable gas, helping to decarbonize the energy system. In particular, renewable energy communities can help contribute to the development of a local circular economy, specifically in rural regions. Where strict environmental standards, for instance to prevent methane leakage, are respected, citizen energy communities can also help consumers further away from biogas production, with the uptake of renewable gas offers. There is a need to provide a level playing field so that renewable gases, such as biomethane, can be integrated into the natural gas system. At the same time it should be ensured that the obligations under Directive (EU) 2018/2001 are respected and that this Regulation does not create any incentive to create energy-crops, which would not only lead to mono-cultures and related problems, but enhance the scarcity of food-crops.

AddedRecital 36: (36) The provisions on citizen energy communities do not preclude the existence of other citizen initiatives such as Renewable Energy Communities in Directive (EU) 2018/2001 or those stemming from private law agreements. Membership of citizen energy communities should be open to all categories of entities. However, the decision-making powers within a citizen energy community should be limited to those members or shareholders that are not engaged in large-scale commercial activity and for which the energy sector does not constitute a primary area of economic activity. This means that citizen energy communities and individual members or shareholders need to be financially and economically independent from entities engaged in such activities, notwithstanding the possibility for citizen energy communities to delegate the management of the installations required for their activities, including installation, operation, data handling and maintenance. To avoid abuse and to ensure broad participation, renewable energy communities and citizen energy communities with activities in renewable gas should be able to remain independent from individual members and other traditional market actors that participate in the community as members or shareholders, or who cooperate through other means such as investments.

AddedRecital 37: (37) Bills and billing information are an important means to inform and empower final customers. Energy bills remain the most common consumer concern and source of consumer complaints, a factor that contributes to the persistently low levels of consumer satisfaction and engagement in the gas sector. Provisions for billing information in the gas sector also lag behind rights granted to consumers in the electricity sector, therefore holding back the full potential of consumer engagement in the gas sector, particularly when it comes to renewable and low-carbon gases. It is therefore necessary to align them and to set minimum requirements for bills and billing information in the gas sector, so that all consumers have access to transparent, complete, easy to understand information. Bills should convey information to the final consumers on their consumption and costs, type of energy, its share and quantity, thus facilitating comparison between offers and switching supplier, as well as information on their consumer rights (such as on alternative dispute resolution) and source of purchased energy. In addition, bills should be a tool to actively engage consumers in the market, so that consumers can manage their consumption patterns and make greener choices. Consumers should be able to access accurate billing information in both online and offline formats.

AddedRecital 39: (39) A key aspect in supplying customers is access to objective and transparent consumption data. Thus, consumers should have access to their consumption data and associated prices and services costs so that they can invite competitors to make an offer based on that information . Consumers should also have the right to be properly informed about their energy consumption and should be able to readily access that information. Prepayments should not place a disproportionate disadvantage on their users, while different payment systems should be non-discriminatory. Information on energy costs provided to consumers frequently enough should create incentives for energy savings because it will give customers direct feedback on the effects of investment in energy efficiency and change of behaviour.

AddedRecital 42 a (new): (42a) Benefits to network operations, namely savings for the operator, for instance due to better network management, or more precise planning and identification of network losses, should, where feasible, be assessed and deducted when calculating the final customers’ contribution to the associated costs of the deployment of smart metering systems.

AddedRecital 43: (43) Currently, different models for the management of data have been developed or are under development in Member States following deployment of smart metering systems. Independently of the data management model it is important that Member States put in place transparent rules that data can be accessed under non-discriminatory conditions by all consumers and ensure the highest level of cybersecurity and data protection as well as the impartiality of the entities which process data.

AddedRecital 44: (44) Greater consumer protection is guaranteed by the availability of effective means of dispute settlement for all consumers. Member States should provide for speedy and effective complaint handling procedures. Guidance about where and how to complain should be provided in consumer contracts and billing information.

AddedRecital 46: (46) Pursuant to Regulation (EU) 2018/1999 and Directive (EU) 2019/944 of the European Parliament and of the Council10 , the Commission provided indicative guidance11 on appropriate indicators for measuring energy poverty and defining a ‘significant number of households in energy poverty’. The Commission, together with Eurostat and Member States, should improve the comparability of datasets so that these become comparable, where possible, across Member States within two years after the entry into force of this Directive.

AddedRecital 100 a (new): (100a) Third-party intermediaries, such as automated switching tools and bill splitters, are increasingly used by consumers to, inter alia, split their bills or switch suppliers. Where third party intermediaries are completing tasks usually performed by energy suppliers, they should be bound by the same legislative framework.

AddedArticle 1 – paragraph 1: 1. This Directive establishes common rules for the transmission, distribution, supply and storage of gases within the meaning of Article 2, point (2) using the natural gas system defined in point (3) of that Article together with consumer protection provisions. It lays down the rules relating to the organisation and functioning of that sector, access to a truly integrated, competitive, consumer-centred, flexible, fair, transparent and non-discriminatory market, the criteria and procedures applicable to the granting of authorisations for transmission, distribution, supply and storage of gases using the natural gas system and the operation of systems.

AddedArticle 1 – paragraph 4 a (new): 4a. Articles 10, 11, 15 and 23 and Annex I shall also apply to third-party intermediaries when they are completing tasks usually performed by the energy supplier.

AddedArticle 2 – paragraph 1 – point 41 a (new): (41a) ‘protected customer’ means protected customer as defined in point (5) of Article 2 of Regulation (EU) 2017/1938 of the European Parliament and of the Council;

AddedArticle 2 – paragraph 1 – point 71 a (new): (71a) 'third-party intermediary' means a natural or legal person who is not acting as a natural gas undertaking, and who, in the course of his or her trade, business or profession: / (a) presents or offers gas supply contracts or related services to consumers; / (b) assists consumers by undertaking energy management services or contract-related services other than those referred to in point (a); / (c) concludes gas supply contracts with the natural gas undertaking on behalf of the consumer; / (d) concludes gas supply contracts with consumers on behalf of the natural gas undertaking;

AddedArticle 4 – paragraph 2 a (new): 2a. Member States shall take appropriate measures to require network operators to maintain separate regulated asset bases for gas, electricity and hydrogen assets in accordance with [Proposal for a Regulation of the European Parliament and of the Council on the internal markets for renewable and natural gases and for hydrogen (recast) COM/2021/804 ]. Member States shall also ensure that network operators do not include additional costs in their gas network tariffs for consumers, which are related to a possible transformation of the existing gas network into a hydrogen network.

AddedArticle 4 – paragraph 3: 3. By way of derogation from paragraphs 1 and 2, Member States may apply public interventions in the price setting for the supply of gases to energy poor or vulnerable household customers as well as to other protected customers in the exceptional event of an unprecedented price increase. Such public interventions shall be subject to the conditions set out in paragraphs 4 and 5.

AddedArticle 4 – paragraph 4 – introductory part: 4. Public interventions in the price setting for the supply of gases shall:

AddedArticle 4 – paragraph 4 – point b: (b) be clearly defined, transparent, non-discriminatory, verifiable and fair for all suppliers;

AddedArticle 4 – paragraph 4 – point c: (c) guarantee equal access for Union gases undertakings to customers;

AddedArticle 4 – paragraph 5: 5. Any Member State applying public interventions in the price setting for the supply of gases in accordance with paragraph 3 of this Article shall also comply with of Article 3(3), point (d) and with Article 24 of Regulation (EU) 2018/1999, regardless of whether the Member State concerned has a significant number of households in energy poverty.

AddedArticle 4 – paragraph 6: 6. For the purpose of a transition period to establish effective competition for supply contracts for gases between suppliers, and to achieve fully effective market-based retail pricing of gas in accordance with paragraph 1, Member States may apply public interventions in the price setting for the supply of natural gas to household customers and to microenterprises that do not benefit from public interventions pursuant to paragraph 3.

AddedArticle 8 – paragraph 4: 4. The obligations laid down in paragraph 2 shall apply regardless of whether low carbon fuels are produced within the Union or are imported. Information about the geographic origin and feedstock type of low carbon fuels or low carbon hydrogen per fuel supplier shall be made available to consumers on their energy bills and websites of operators, suppliers or the relevant competent authorities and shall be updated on an annual basis.

AddedArticle 10 – paragraph 3 – subparagraph 1 – point a: (a) the identity and address of the supplier and its contact details (phone number, email address and contact details of customer service);

AddedArticle 10 – paragraph 3 – subparagraph 1 – point f a (new): (fa) product name and main features, including, where the environmental impact is promoted as an essential feature of the offer, a description of this environmental impact, at least in respect of CO2 emissions resulting from the gases supplied by the supplier over the preceding year;

AddedArticle 10 – paragraph 3 – subparagraph 1 – point h: (h) information relating to consumer rights, including clear and understandable information on complaint handling, including how and where a complaint should be submitted and all the information referred to in this paragraph, clearly communicated on the bill or the hydrogen or natural gas undertaking's web site.

AddedArticle 10 – paragraph 3 – subparagraph 1 – point h a (new): (ha) information on the provider and the price of additional services, where relevant, such as insurance and energy efficiency services.

AddedArticle 10 – paragraph 3 – subparagraph 2: Conditions shall be fair and well known in advance. In any case, the information shall be provided in consumer friendly, clear and unambiguous language, prior to the conclusion or confirmation of the contract. Where contracts are concluded through intermediaries, the information referred to points (a) to (f) shall also be provided prior to the conclusion of the contract.

AddedArticle 10 – paragraph 3 – subparagraph 3: Final customers shall be provided with a summary of the key contractual conditions in a prominent manner in one document and in concise and simple language.

AddedArticle 10 – paragraph 3 – subparagraph 3 a (new): Member States shall ensure, through their National Regulatory Authorities, the use of common terminology agreed at national level.