Draft for consultations

Other preventive measures

1. 
   Improved interconnection with neighbouring countries:
   

STORK gas pipeline and its reinforcement:
On 14 September 2011, the interconnection of the Czech and Polish gas systems was commissioned with a DN500, 6.3MPa pipeline Třanovice – Cieszyn – Skoczów (STORK) with an annual capacity of 0.5 billion m³. The project was implemented within the EEPR programme and for now, no reverse flow is used (gas supplies from the Czech Republic to Poland only). The north-south gas corridor takes into account an increase in the capacity to 2.5 – 3 billion m³/year and the capacity will be bi-directional.

This project is also associated with the proposed construction of the Morvia gas pipeline.

BTS Brandov and Gazela gas pipeline:
The Brandov border transfer station (commissioned on 1 October 2011) was constructed in the Czech Republic because of the construction of the Nord Stream gas pipeline from Vyborg (Russia) to Greifswald (Germany) linked to the OPAL pipeline in Germany, which significantly improved the security of natural gas supplies to the Czech Republic. The Gazela gas pipeline will be connected to this border transfer station.
The LBL gas pipeline:
Extending the Nabucco gas pipeline from Baumgarten (Austria) to Břeclav - the LBL gas pipeline - will contribute not only to improving the security and reliability of gas supplies to the Czech Republic but also to Poland, Slovakia, and Germany. This project is supported by the government of the Czech Republic.
The LBL gas pipeline should be about 52 km long (12 km in the Czech Republic and 40 km in Austria) with an annual capacity of 4 – 7 billion m³ and would represent a synergy of two international projects - the Nabucco project and the North-south gas corridor project.

2. 
   Diversification of resources and gas transmission routes:
   

In 2011, natural gas was imported from Russia – 5,863.1 million m³ (63.44%), Norway – 273.3 million m³ (2.95%) and the European Union + Germany – 3,010.5 million m³ (33.59%).

One way to diversify routes is a supply of Russian gas via Belarus and Poland (Yamal gas pipeline) to Germany and via BTS Hora Svaté Kateřiny to the Czech Republic using reverse flow for the Czech Republic. This route was used in January 2009 during a natural gas supply interruption flowing from the Ukraine.
The construction of the Nord Stream gas pipeline from Vyborg (Russia) to Greifswald (Germany) linked to the OPAL pipeline in Germany and the border transfer station Brandov in the Czech Republic significantly improved the security of natural gas supplies to the Czech Republic (more route diversification). BTS Brandov was commissioned on 1 October 2011.
The Gazela gas pipeline with an annual capacity of 30 billion m³, which will connect the Olberhnau transfer station and Waidhaus (Germany) via the Czech Republic, will contribute not only to the security of natural gas supplies from the Nord Stream gas pipeline to southern Germany but also to the security of the Czech Republic if supplies of natural gas from the Ukraine fail; the Gazela gas pipeline will be connected at four points to the Czech transmission system.
The interconnection of the Czech and Polish gas systems is already running with a DN500, 6.3MPa pipeline Třanovice – Cieszyn – Skoczów (STORK) with an annual capacity of 0.5 billion m³. The project was implemented within the EEPR programme and for now, no reverse flow is used (gas supplies from the Czech Republic to Poland only). The north-south gas corridor assumes an increase in the capacity to 2.5 – 3 billion m³/year and the capacity will be bi-directional. The importance of this interconnection was increased by the finishing of the construction of UGS Třanovice capacity expansion within the EEPR programme. This underground gas storage can be used for supplies to Poland.
Another option of diversifying resources and routes is the north-south gas corridor in Central and Eastern Europe. This gas pipeline will interconnect the LNG Swinoujscie terminal with the LNG terminal on Krk island (Croatia). The gas pipeline will cross Poland, the Czech Republic, Slovakia, Hungary, and Croatia.
Construction of the Nabucco gas pipeline and extending it from Baumgarten (Austria) to Břeclav - the LBL gas pipeline will contribute not only to improving the security and reliability of gas supplies to the Czech Republic but also to Poland, Slovakia, and Germany.

3. 
   Cross-border access to storage facilities:
   

RWE Transgas can supply natural gas from UGS Třanovice where the capacity has been increased from 240 million m³ to 530 million m³ by the EEPR programme to Poland if Poland is interested in the capacity.

The underground gas storage in Dolní Bojanovice, owned by SPP Storage, is connected only to the gas system of Slovakia and supplies gas to Slovakia only.

The Czech Republic does not have any direct cross-border access to underground gas storage abroad but gas traders can store gas in underground gas storages in neighbouring countries provided that gas transmission to the Czech Republic is contractually guaranteed.

5. 
   Public service obligations providing a gas supply
   

Section 12 of Act No. 458/2000 Coll. on the business conditions and public administration in the energy sectors and on amendments to other laws (the "Energy Act"), as amended states the obligations beyond the licence of the licence holder for distributing gas and electricity and for heat supply:

Obligations beyond the scope of the licence:
(1) The obligation to supply heat energy, distribute electricity and distribute gas beyond the scope of the licence will mean the obligation whereby another licence holder assumes the obligations of a licence holder that has ceased to carry out the licensed activities.
(2) In an urgent need and in the public interest a heat energy generator or heat energy distributer licence holder will supply energy beyond the scope of the licence on the Energy Regulatory Office’s decision.
(3) In an urgent need and in the public interest the electricity distribution or gas distribution licence holder will distribute electricity or gas beyond the scope of the licence through the Energy Regulatory Office’s decision.
(4) The Energy Regulatory Office’s decision according to Subsections 2 and 3 will be issued for a definite time which will not be more than 12 months. No legal remedy against such a decision shall have a suspensory effect.
(5) Any provable loss of the heat energy generation or heat energy distribution licence holder as a result of assuming the obligations of securing supplies beyond the scope of the licence will be covered by the resources of the Energy Regulatory Fund (hereinafter "Fund") in accordance with Section 14. Any provable loss of the electricity distribution or gas distribution licence holder or the last resort supplier is a reason for adjusting the regulated prices.
(6) If the licence holder also carries out activities other than fulfilling its obligation to secure supplies beyond the scope of the licence, the licence holder must keep separate accounts of supplies beyond the scope of the licence.
(7) The obligation of making energy facilities available in urgent situations and in the public interest for obligations beyond the scope of the licence also applies to an individual or legal entity who/which is not a licence holder and has ceased to carry out, or is about to cease carrying out, activities for supplying electricity, gas or heat energy. The provisions of Section 10 Subsection 7 and 8 apply.
Section 12A of the Energy Act stipulates the obligations of the last resort supplier (gas, electricity):
Last resort supplier:
(1) The last resort supplier in the delineated area of the electricity or gas distribution licence holder, whose equipment is connected to the transmission system or transport system, will be an electricity and gas sale licence holder who is or was part of the same vertically integrated undertaking or vertically integrated gas undertaking, such as an electricity and gas distribution licence holder at the supply point of the end customer.
(2) The last resort supplier supplies electricity or gas to a customer whose electricity or gas supplier is no longer authorized or can no longer supply electricity or gas or has stopped supplying eletricity or gas. This obligation commences on the day the market operator informs the last resort supplier about the registration point of the consumption point of the customer where no one is responsible for deviation, lasts not longer than 6 months and does not apply to a customer whose gas consumption was higher than 60 thousand m³ in the last 12 months.
(3) The last resort supplier will immediatelly inform the customer and the distribution system operator of Startig of the supply, the amount and other supply conditions.
(4) If electricity or gas is supplied by the last resort supplier, the distribution system operator will provide the last resort supplier with the identification data of the customer.
(5) The last resort supplier is not obliged to supply electricity or gas if the supplier detects unauthorized consumption at the consumption point.
(6) The last resort supplier supplies electricity or gas for at least 6 months to a household with a new consumption point to which neither electricity nor gas were ever supplied and if the ultimate supplier was asked to supply the household.
(7) When the last resort supplier starts to supply electricity or gas the supplies from the original supplier to the customer are terminated.

5. 
   Consideration of the ten-year EU grid development plan developed by ENTSOG
   

The Czech transmission system operator (TSO) NET4GAS, s.r.o. has produced a "Ten-year development plan for the Czech Republic 2012 - 2021" (the "Development plan"). The results of the plan were used to produce this Preventive Action Plan.

Before working on the development plan, TSO considered the production development, storage, consumption and supplies of natural gas as well as the investment plans and the plans of the distribution system operators, underground gas storage operators and the gas system development plan for the EU ("TYNDP").
The TSO development plan summarizes individual projects carried out in 2011 and new pipeline investment projects to increase the capacity of the Czech transmission system in the next ten years.
For this plan TSO used the worst possible scenario - i. e. the highest possible demand - when determining Czech Republic consumption. Based on this scenario PPS analyzed the adequacy of the entry and exit capacity of the system and found that all entry and exit capacities of the transmission system in all regions of Bohemia and Southern Moravia sufficiently cover the expected development of the maximum daily gas consumption. Only Northern Moravia is sensitive to an increased maximum daily consumption and therefore, TSO is preparing a project to increase the exit transmission capacity of this region by 2017. This project is also related to the scheduled V4+ north-south gas corridor.
TSO NET4GAS, s.r.o. was involved in preparing the TYNDP EU network development 2011 - 2020 as a member of ENTSOG. In addition, TSO led a regional group developing the Regional Investment plan for Central and Eastern Europe (CEE GRIP – http://www.net4gas.cz/en/1206).
The ten year development plan 2012 - 2021 of the Czech Republic is compatible with the needs of the region as well as those of the EU.

5. 
   Impacts of preventive measures:
   

1. 
   Economic impact, efficiency and expedience of the measures:
   

Considering the above facts, the preventive measures have almost no economic affect and are very good for maintaining the proper operation of the gas system in the Czech Republic.

2. 
   Impact on the operation of the internal gas market:
   

The preventive measures have no serious affect on the operation of the gas market in the Czech Republic.

3. 
   Impact on customers:
   

As mentioned in chapter 5.6 General obligations of a gas market participant, the preventive measures include declaring consumption levels 1 to 5 affecting customers:

Consumption level No. 1 affects customer group A

Consumption level No. 2 affects customer groups A, B1

Consumption level No. 3 affects customer groups A, B1, B2

Consumption level No. 4 affects customer groups A, B1, B2, C2

Consumption level No. 5 affects customer groups A, B1, B2, C2 and F
The measures will never apply to protected customers according to the SoS directive as customers with consumption points in customer groups C1, D and F in the Czech Republic.

4. 
   Environmental impact:
   

The environment may only be affected when switching to an alternative fuel other than natural gas. However, this solution is used in the Czech Republic only for the customer group A, i.e. customers with a predicted annual consumption of more than 630 MWh with the option of fully or partially switching to an alternative fuel.

5. 
   Negotiations with the relevant bodies in Germany, Slovakia and Poland:
   

According to the requirements of Article 4, clause 2 of SoS, the Competent Authorities of the Czech Republic, Germany, Slovakia and Poland exchanged the Plan draft on 3 June 2012 and a copy of the Plan draft was also submitted to the Commission.

Results of the Competent Authorities consultations:

1. 
   Federal Republic of Germany:
   

Prevetive Action Plan of the Czech Republic was discussed during meeting with representatives of the Federal Ministry of Economics and Technology on 12. October 2012 in Prague and no comments were raised. It was noted that Preventive Action Plan of the Czech Republic is comprehensive and well organized.

2. 
   Slovakia:
   

No comments received.

3. 
   Poland:
   

Comments of the polish Ministry of Economy concerning gas supplies to Poland in case of disruptions of deliveries through Ukraine and Slovakia were answered in writing. The capacity of interconnection between the Czech Republic and Poland can be fully used in present era even during disruption of gas delivery through Ukraine. In case of realization of Nort South corridor the capacity of this interconnector will be increased to 2.5 – 3 billions m³/year.

According to respektive interconnecting agreement between the czech and polish Transmission System Operator there is possible in case of necesity to tranport gas in certain quantity physicaly from Poland to the Czech Republic in border transfer point Ciezsyn in present time i.e. in reverse direction than the conventional direction of gas flow is in this point. Reverse flow is therefore made possible in BTS Cieszyn according to Article 6, patagraph 6 SoS Regulation.

5. 
   Conclusion:
   

The tasks and obligations of gas undertakings in a state of emergency are defined both in Act No. 458/2000 Coll. business conditions and public administration in the energy sectors and in amendments to other laws (the "Energy Act"), as amended as well as the decree on emergencies in the gas industry and providing the security standard.

The obligations of the Energy Act and the decree applicable to gas industry undertakings are continuously audited by the Ministry of Industry and Trade of the Czech Republic as well as the Energy Regulatory Office.
At the preventive measures level for the market are higher imports flexibility, increased extraction from underground gas storages and reverse flow in the transmission system on the offer side and using contracts with optional interruption on the demand side. With regard to preventive measures, no non-market measures are applied.
The Czech transmission system is sturdy, high quality and properly maintained and seamlessly complies with the N-1 standard; in fact, this standard is much higher in the Czech Republic than requested by Regulation No. 994/2010.
Gas storage, which is 30% of the annual natural gas consumption in the Czech Republic, significantly assists in providing gas supplies to end customers if gas supplies are interrupted or limitated. At present, gas storages is undergoing expansion projects and the total storage capacity will be 40% of the annual consumption after they are finished. The percent of gas storage capacity of the total annual natural gas consumption places the Czech Republic among the leading EU member states.
The Czech Republic uses diversified natural gas supplies from Russia, Norway and the European Union + Germany and the former dependence on a single gas source, i.e. Russia, has been removed.
The reversion flows in the Czech Republic transmission system were established for supplies not only to Czech but also Slovak customers if the Ukraine gas supply fails.
Diversification of routes is underway as well and commissioning the Nord Stream gas pipeline, the linked OPAL gas pipeline and the BTS Brandov pipeline can supply gas to the Czech Republic if needed.
These supplies could be extended after the construction of the Gazela gas pipeline in 2013, which will interconnect BTS Brandow across the Czech Republic to BTS Rozvadov - Waidhaus and connect the Czech transmission system at several points.
Electricity production is not in danger from a gas supply failure because electricity production in gas power plants accounts for only 5.62% of the total electricity production.
The risk analysis reveals that limited or suspended supplies from the Ukraine will not endanger gas supplies to customers in the Czech Republic. A cumulation of failures such as the natural gas supply from the Ukraine failing as well as the natural gas supply from BTS Hora Svaté Kateřiny failing is highly unlikely as well as several underground gas storage facilities failing at the same time.
The gas system of the Czech Republic fully complies with the requirements of the Regulation (EU) of the European Parliament and of the Council No. 994/2010 of 20 October 2010 on measures to safeguard the security of gas supplies and repealing Council Directive 2004/67/EC.

1^ On 1 July 2005, Act No. 251/2005 Coll. on labour inspection and Act No. 253/2005 Coll., amending act No. 174/1968 Coll. became effective. The act establishes the State Labour Inspectorate Office and regional labour inspectorates. The application of rights and obligations of ČÚBP passes to the State Labour Inspectorate Office (SÚIP).

2^{ )} Article 8 clause1 Regulation (EU) No. 994/2010 of the European Parliament and of the Council of 20 October 2010
on measures to safeguard the security of gas supply and repealing Council Directive 2004/67/EC.

3
^{ )} Article 10, subsection 3 of Regulation (EU) No. 994/2010 of the European Parliament and of the Council of 20 October 2010
on measures to safeguard the security of the gas supply and repealing Council Directive 2004/67/EC.