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A First Commission Decision on Natural Gas Storage

 |  April 15, 2022

By: Phedon Nicolaides (State Aid Uncovered)

On 23 March 2022, the European Commission announced plans to mitigate the spike in energy prices caused by the war in Ukraine. Chief among those plans were proposals for joint gas purchases and gas storage. Increase in storage capacity has been a strategy followed by several Member States to safeguard their energy security.

Consequently, the Commission, in decision 2022/444, assessed positively the compatibility with the internal market of a French State aid measure to support natural gas storage.[1] The gas in this case is stored in underground facilities. Although the measure in question was adopted before the war in Ukraine broke out, presciently its purpose was to stabilise demand and supply of gas in the event of a significant supply disruption.

What makes this measure particularly interesting is that it is the first time that the Commission had to assess the compatibility of aid to support natural gas storage.

The aid measure supports operators of storage infrastructure through a so-called “regulatory mechanism” that makes up the difference between the revenue that the energy regulator determines as adequate for these operators and the actual revenue that they generate from market sales. The funds for the regulatory mechanism are raised through tariffs that are levied on users of the gas network.

Before the Commission reached its decision it opened the formal investigation procedure because it had doubts as to the proportionality of the regulatory mechanism and the extent of its impact on competition…