Measures plan for emergencies to mitigate and avoid impacts of natural gas supply distruption in the Czech Republic

§ 4 state of emergency

1. 
   In a state of emergency, the agreed transmission or gas distribution and the agreed natural gas supply to all customers can only be limited or suspended by declaring the relevant consumption level.
   
2. 
   The consumption levels are declared so higher consumption level can be declared without prior declaration of a lower consumption level.
   
3. 
   Activities in a state of emergency are carried out in the following order:
   
   1. 
      the consumption levels for limiting the natural gas supply are declared,
      
   2. 
      the consumption levels for suspending the natural gas supply are declared,
      
   3. 
      the emergency consumption level is declared, which suspends the natural gas supply to all customers.
      
4. 
   When removing the consequences of a state of emergency, the emergency plan of the gas system of the Czech Republic is followed as well as the emergency plans of gas producers, transmission system operator, distribution systems operator and underground gas storage operators.
   

§ 11 The way of safeguarding the security standard

1. 
   The extent of the security standard for protected customers for cases according to the directly applicable legislation⁴⁾ will be laid down according to appendix No. 3 of the Decree.
   
2. 
   As of 1 May of a year the market operator will update and publish input information for calculating the security standard in a way allowing remote access. A sample of the input data for calculating the security standard published by the market operator is specified in Appendix No. 4 of the Decree.
   
3. 
   From 30 September to 1 April, the security standard is at least 20% of the stored gas in the underground gas storages of the European Union.
   
4. 
   Gas traders and gas producers, who deliver gas to protected customers, must inform the market operator and Energy Regulatory Office about the extent of the security standard specified according to clause 1 and the provision thereof by the 15th day of the following month; the provision of the security standard will be demonstrated as follows:
   

1. 
   for gas stored in underground gas storages in the Czech Republic, confirmation of the stored gas volume from the underground gas storage operator and a document that demonstrates the arrangement of fixed transmission capacity at the entry point of virtual gas storage,
   
2. 
   for gas stored in underground gas storages outside the Czech Republic, a copy of a gas storage contract or confirmation of the stored gas volume from the underground gas storage operator and a document that demonstrates the arrangement of fixed transmission capacity to the Czech Republic,
   
3. 
   for diversified gas resources, a copy of a contract for the specified gas volume or confirmation from a foreign supplier for this gas supply as well as a document that proves the provision of fixed transmission capacity from the supply point to the Czech Republic,
   
4. 
   for an increased volume of gas production, a copy of a contract or confirmation from the relevant gas producer,
   
5. 
   confirmation of the involved protected customer on possibility of using alternative fuels and a copy of the gas supply contract based on which the gas supply can be interrupted,
   
6. 
   confirmation of the provision of the security standard by another gas market participant.
   

5. 
   A gas market participant who undertakes the provision of the security standard according to section 4, point f), must include in its gas supply security standard the extent of the security standard of the gas trader or gas producer for whom the confirmation of the provision of the security standard has been issued.
   
6. 
   The security standard specified in Appendix No. 3, subsection 1 point c) must be provided otherwise than through the gas industry structure used by the gas trader for the largest portion of his supplies in the month for which the extent of the security standard is determined. If a virtual sale point is used by the gas trader for the greatest proportion of his supplies, the security standard must be demonstrated according to clause 4.
   

12. 
    Supply disruption scenarios
    

12.1. Exceptionally high gas demand scenarios

1. 
   Gas consumption in the Czech Republic
   

We have selected the scenario for the last two years because only after the liberalization of the market in 2007, were new licences for gas trade issued and new gas traders started their gas supplies in 2009.

• 
  Natural gas consumption in the Czech Republic:
  
  • 
    in 2010 – 8.979 billion m³, 95,138 GWh
    
  • 
    in 2011 – 8 billion m³, 85 645 GWh
    

• 
  Average daily winter consumption 1 November 2011 - 31 March 2012:
  
  • 
    34,988 mil.m³, 370 GWh
    

• 
  Maximum historical daily consumption on 23 January 2006 at -16.9°C:
  
  • 
    67.6 million m³, 713 GWh
    

• 
  Maximum historical daily consumption on 6 February 2012 at -14.1°C:
  
  • 
    61,6 mil.m³, 651 GWh
    

2. 
   Household category customers consumption
   

We have selected the scenario for the last two years because only after the liberalization of the market in 2007, were new licences for gas trade issued and new gas traders started their gas supplies in 2009.

• 
  Natural gas consumption in the Czech Republic for the households customer category:
  
  • 
    in 2010 – 2.905 billion m³, 30,785 GWh
    
  • 
    in 2011 – 2.443 billion m³, 25,889 GWh
    

• 
  Maximum daily consumption of households customer category over the last two years:
  
  • 
    20.3 million m³, 214 GWh
    

• 
  Maximum daily consumption of households customer category - historical:
  
  • 
    23.7 million m³, 250 GWh
    

12.2. Failure of the main transmission infrastructure

In relation to the value of the N-1 coefficient for the Czech Republic of 288%, a failure of any individual transmission infrastructure would not substantially affect the supply of natural gas to end customers as verified during the January 2009 crisis followed by simulation drill in November 2009, see chapter 6.4. The following mechanisms for securing the natural gas supply would be used if a failure occurs:

• 
  Increased gas extraction from underground gas storages
  
• 
  Use of the reverse flow of the northern branch of the transmission system
  
• 
  Natural gas supply from the short-term market
  

If these steps are not sufficient, the transmission system operator would limit gas supplies to a group of customers according to the decree on a state of emergency in the gas industry.

1. 
   Frequency and term of suspended supplies
   

Historically, the Czech Republic has recorded two cases of a serious breach in the supply of natural gas. The first was in January - March 2006 where the deviation between the nominal value and the actual gas supply from Russia ranged from 10% to 30%, which meant that of 23.25 million m³/day up to 7 million m³/day was not delivered and from 9 January - 17 January and then 30 January - 1 February and 20 February – 22 February no supplies were recorded.
The second was in January 2009 when no gas from Russia via Ukraine was supplied from 7 January to 19 January. The operator of the transmission system reversed the flow of natural gas from West to East and 18 million m³ was supplied to the Czech Republic via HPS Sayda and extraction from the underground gas storages was increased up to 34 million m³/day to cover the demand of the Czech Republic which was slightly over 50 million m³/day at that time. The worst situation was reported on 12 January 2009 when consumption increased to 57.3 million m³ and extraction from underground gas storages was increased to the maximum. The Czech Republic also transmitted 33 million m³ of gas daily from Olbernhau to Waidhaus for Bayerngas. None of these supply disruptions was passed on to customers in the Czech Republic because increased gas extraction from underground gas storages and the reverse flow of natural gas from Germany via the border transfer station Hora Sv. Kateřiny was successfully arranged to supply all customers and no one had to be limited in any way.

2. 
   Potential future suspension of supplies from third countries
   

Considering the high N-1 coefficient, continued expansion of the capacity of underground gas storages and the prepared construction of new underground gas storages as well as the construction of the Gazela gas pipeline to supply natural gas from NordStream and OPAL gas pipelines, the affect of a serious supply disruption will be further minimized. Several points will be used on the Gazela gas pipeline for interconnection with the transmission system of the Czech Republic so if there is insufficient gas, customers will also be supplied from this gas pipeline. Also, the reverse flow of the northern branch of the gas transmission system must be mentioned, it can be used in emergencies for supplies to Slovakia with a daily capacity of up to 25 million m³. Last but not least, is the project to construct a north-south gas pipeline corridor connecting LNG terminals in Swinoujscie (Poland) and Krk (Croatia) and finally the assumed interconnection of the Břeclav compression station with the Baumgarten virtual trade point in Austria where the Nabucco and/or SouthStream gas pipeline should end.
12.3. Description of probable consequences by individual scenarios

The main transmission infrastructures in the Czech Republic are HPS Lanžhot, HPS Hora Svaté Kateřiny, HPS Brandov, HPS Waidhaus, HPS Český Těšín. Each exceptionally high gas demand scenario considered an interruption of the natural gas supply via one of the border transfer stations above.

To analyse the consequences of not being able to use one or more underground gas storages during an exceptionally high natural gas demand, scenarios for the failure of an individual underground gas storage connected to the transmission system of the Czech Republic as well as a single scenario of the combined failure of multiple underground gas storages affecting gas supplies in the Czech Republic (PZP Lobodice, PZP Štramberk and PZP Třanovice) were considered.
The failure of an individual border point has no affect on the natural gas supply in the Czech Republic but affects supplies to Germany or Poland. The only possible risk for the natural gas supply in the Czech Republic would be the concurrent failure of supplies via HPS Lanžhot and HPS Hora Svaté Kateřiny. However, this scenario is highly unlikely.

For these reasons we think that the termination of supplies from the main transmission infrastructures or underground gas storage as defined in Regulation (EU) No. 994/2010 on measures to safeguard the security of the gas supply would not cause serious problems in supplies to customers.

Table No. 2 – Interruptions of the infrastructure and consequences

Interruption of infrastructure	Consequence
HPS Lanžhot	No danger to the natural gas supply in the Czech Republic even in winter
HPS Hora Svaté Kateřiny	No effect on the natural gas supply in the Czech Republic
HPS Brandov	No effect on the natural gas supply in the Czech Republic, affects natural gas transit to Germany only
HPS Waidhaus	No effect on the natural gas supply in the Czech Republic, affects natural gas transit to Germany only
HPS Český Těšín	No effect on the natural gas supply in the Czech Republic, affects natural gas transit to Poland only
PZP Uhřice	No effect on the natural gas supply in the Czech Republic
Virtual PZP RWE GS	No effect on the natural gas supply in the Czech Republic

According to this table, the failure of a single main infrastructure or one underground gas storage will have not affect the natural gas supply in the Czech Republic both in summer and winter. Problems could only arise if concurrent failures of PZP Lobodice, Štramberk and Třanovice occur. In this combined failure, natural gas supplies to Northern Moravia would be impaired (during the highest winter consumption, up to 38% of the daily consumption could be missing in this region). However, this situation is most unlikely.

12.4. Natural gas supply disruption simulation drill

In relation to the interruption of natural gas supplies in January 2009 and for the preparedness of the gas industry in the Czech Republic for a repeat of the natural gas supply termination via Ukraine to Western Europe, a review of the preparedness of new declaration mechanisms and the activities of the Competent Authorities in emergencies in the gas industry according to decree No. 334/2009 Coll. on a state of emergency in the gas industry was requested.

A simulation drill for a state of emergency took place on 12 November 2009.

Declaring the first consumption level resulted in natural gas supply savings in the Czech Republic (1.2% of the natural gas consumption), because some customers need a few days to switch to an alternative fuel (about 3).

The fourth consumption level resulted in total natural gas savings at distribution companies and direct customers of about 12% in the transmission system of the actual natural gas consumption under the current conditions (climatic, production, heating etc.).

The simulated drill only included customers with an annual natural gas consumption over 5 million m³.

Consumption was limited to A, B1, B2 end customers according to decree No. 334/2009 Coll. of 12 November 2009 during the drill for the gas industry emergency because the average temperature was 7.1°C. Heating customers (type C) could not decrease natural gas consumption because the vast majority of facilities were not operating. In lower temperatures, we assume actual natural gas consumption savings at the fourth alert level of about 25 %.

The next simulation drill of a state of emergency is scheduled when the new decree on a state of emergency in the gas industry and the provision of the security standard will be published.

12.5. Draft of preventive measures for mitigating identified risks

The identified risks, if occurring separately only, will neither endanger nor limit natural gas supplies to the Czech Republic. For the risks to affect supplies to customers, at least two of them would have to occur at the same time, which is highly unlikely, particularly a failure of HPS Lanžhot and HPS Hora Svaté Kateřiny. The risk analysis shows that at least three adverse circumstances would have to occur at the same time, i.e. failure of the highest infrastructure, substantial reduction of extraction from underground gas storages and long lasting bad weather conditions. The potential but still very low likelihood can be further decreased in several ways.

For a concurrent failure of HPS Lanžhot and HPS Hora Svaté Kateřiny, there are the following measures:

• 
  increase operational volume and extraction capacities of the underground gas storages in the Czech Republic;
  
• 
  direct connection of the Czech transmission system to Nabucco / South Stream gas pipeline;
  
• 
  construction of a north-south gas corridor
  

The potential risk of the concurrent failure of PZP Lobodice, Štramberk and Tranovice would be reduced by the construction of the "Moravia" gas pipeline to northern Moravia (see "Ten-year development plan in the Czech Republic 2012 - 2021" published on the website of the transmission system operator, http://www.net4gas.cz).

13. 
    Consultation with Competent Authorities of neighbouring countries
    

In compliance with provision of Art. 4, para. (2) Regulation (EU) No. 994/2010 the Competent Authorities shall, by 3 June 2012, exchange their draft Preventive Action Plans and Emergency Plans and consult each other at the appropriate regional level, and the Commission, with a view to ensuring that their draft Plans and measures are not inconsistent with the Preventive Action Plan and the Emergency Plan of another Member State and that they comply with this Regulation and with other provisions of Union law. Such consultation shall be carried out in particular between neighbouring Member States.

In compliance with this provision the Ministry of Industry and Trade of the Czech Republic after translation into English language and necessary proof reading sent the draft of the Emergency Plan to the Competent Authorities of neighbouring countries, the Ministry of Economics of Poland, the Ministry of Economics of Slovakia and Federal Ministry of Economics and Technology of the Federal Republic of Germany.

1. 
   Federal Republic of Germany
   

Emergency Plan of the Czech Republic was consulted at the common meeting with representatives of the Federal Ministry of Economics and Technology of the Federal Republic of Germany on October 12^th, 2012 in Prague. There were no substantial comments from the German delegation, it was just noted, that the Emergency Plan of the Czech Republic is comprehensive and well elaborated. The cooperation between ministries in a state of emergency was agreed as well as further meetings.

2. 
   Poland
   

Comments of Polish Ministry of Economics concerning supplying polish territory with natural gas from the Czech Republic in a case of a serious disruption or interruption of gas supply through Ukraine and Slovakia were answered in writing. The capacity of interconnector STORK between Poland and the Czech Republic can be fully used also in a case of a serious disruption or interruption of gas supply through Ukraine.

Provided that the North – South gas interconnector in East Europe will be constructed, the capacity of Czech – Polish interconnector will be increased up to 2,5 Bcm annually. According to the provision of the Regulation (EU) No. 994/2010 this interconnector will have to have the ability of reverse flow, which will require substantial changes of polish transportation system, optionally installation of a compressor.

3. 
   Slovakia
   

No comments were received.

14. 
    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 on amendments to other laws (the "Energy Act"), as amended as well as the decree on a state of emergency in the gas industry and the provision of the security standard. In addition, the individual activities of gas industry undertakings in preventing a state of emergency and a state of emergency are set out in detail in the emergency plans of individual gas facility operators and covered in the "Emergency plan of the gas system of the Czech Republic".

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.

The emergency committees of individual gas industry undertakings are established for emergencies and a state of emergency and work based on the processes and rules by which responsibilities and authorizations are assigned, and the Decentralized emergency committee of the transmission system operator and the Central emergency committee.

At the warnings level within the market higher import flexibility, increased extraction from underground gas storages and reverse flow in the transmission system can be used on the supply side and contracts with optional interruption on the demand side.

Non-market measures usually used only after a state of emergency include mandatory extraction from underground gas storages on the supply side and mandatory switching to an alternate fuel as well as successive gas consumption reduction according to the classification of customers into individual groups pursuant to the decree on a state of emergency in the gas industry and the provision of the security standard on the demand side.

Transmission system operators will cooperate in a state of emergency, it would be good to extend this to other countries of the region with mutual interconnection as well as to establish cooperation at the state bodies level.

The reporting obligations of individual operators are defined by the Energy Act and set out in detail in the decree on a state of emergency in the gas industry and the provision of the security standard.

Preferentially natural gas in a state of emergency should be supplied to protected customers, which are households and small enterprises with an annual natural gas consumption of up to 630 MWh, and customer group C1 that includes the consumption points of customers mainly for heating with predicted annual gas consumption over 4,200 MWh and not meeting the criteria of customer groups A or D; these consumption points are part of this group if the sum value of consumption for the last quarter of the previous year and the first quarter of this year is 70% and more of the total consumption of the period from 1 April of the previous year to 31 March of this year and if the customers classified in this group provide more than 20% of the produced thermal energy of its total production to households, health care facilities and social service facilities; if the actual consumption is not available, this value will be replaced by the scheduled annual consumption listed in the distribution contract and customer group D, which includes consumption points of customers with predicted annual consumption of over 630 MWh, producing foods for daily consumption by inhabitants, including but not limited to perishable food processing, animal production operations with animal death threat, fuel production, communal waste incinerator plants, power for public transport vehicles, health care facilities, social service facilities²⁾, basic elements of the Integrated Emergency Response system, reconstruction facilities, crematoriums as well as the Czech National Bank; specific customers are classified by the transmission system operator for the consumption points of customers connected directly to the transmission system or the distribution system operator for the consumption points of customers connected directly to the distribution system (hereinafter "competent operator") for informing the local and competent regional authority or Prague Municipality Office.

The Czech transmission system is sturdy, high quality and properly maintained and fully 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 accounts for 30% of the annual natural gas consumption in the Czech Republic, significantly assists in providing gas supplies to end customers if gas supplies from Ukraine are interrupted or limited. At present, gas storages are being expanded and the total storage capacity will correspond to 40% of the annual consumption after they are finished.
The Czech Republic uses diversified natural gas supplies from Russia 64.1%, Norway 12.4% and the European Union 23.5% and the former dependence on a single gas source, i.e. Russia, has been removed.
Reverse flows were established in the transmission system of the Czech Republic for supplies of not only Czech but also Slovak customers if supplies of Ukraine gas fail.
The diversification of routes has begun as well and commissioning the NordStream gas pipeline, linked OPAL gas pipeline and HPS Brandov pipeline will supply gas to the Czech Republic.
These supplies could be extended after the construction of the Gazela gas pipeline at the end of 2012, which will interconnect HPS Brandow across the Czech Republic to HPS Rozvadov - Waidhaus and connect to Czech transmission system at several points.
Electricity production is not in danger from a gas supply failure because gas power plants only produce 5.62% of the total electricity.
The risk analysis revealed that limiting or suspending supplies from Ukraine will not endanger gas supplies to customers in the Czech Republic. An accumulation of failures such as the failure of natural gas supplies from Ukraine as well as the failure natural gas supplies from HPS Hora Svaté Kateřiny is highly unlikely as well as the failure of several underground gas storage facilities at the same time.
The gas industry of the Czech Republic fully complies with the requirements of the Regulation (EU) of the European Parliament and of the Council No. 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.

1^{ )} 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.

2
^{ )} 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.

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.

4

^{ )} Article 8 clause 1 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.