EU Gas-Hydrogen Package: On the Party Status in the Procedure for the Decommissioning of Natural Gas Distribution Networks under the Internal Gas Market Directive

The approved NDP is a prerequisite for refusing connection to new network customers or terminating existing customers. The directive defines conditions for the disconnection of gas network connections, such as the consultation of consumer associations or the implementation of protective measures for customers affected by energy poverty and those in need of protection. The IGMD also requires member states to establish appropriate legal protection mechanisms at the national level for a party affected by a decision of the regulatory authority.

Who should have party status in the future NDP approval procedure depends on whether the decision on the NDP is issued as a notice or regulation, with it having characteristics of both a regulation and a notice. It will primarily concern the respective gas distribution network, but also (indirectly) the customers connected to the gas network, whose contracts may be terminated as a result of the approval, and potential new customers who will not receive network access or connection. Therefore, the approval of the NDP could be considered an infringement of the subjective rights of network customers. The fact that legal protection against a regulation is significantly weaker than against a notice argues for regulating the decision on the NDP as a notice procedure, as the Constitutional Court links the choice of legal form with questions of legal protection in its case law. EU law arguments also speak in favour of this: For example, in connection with the decision of the competent Hungarian regulatory authority on the amendment of provisions of a network code, the ECJ ruled that the principles contained in Art. 5 of Regulation (EU) No 1775/2005 should be interpreted in summary in such a way that they ‘would constitute protective measures in the interests of those users who wish to obtain access to the network and could therefore give rise to rights for them’.  According to this decision, the rights of potential users of network infrastructure facilities are already affected. The ECJ decision C 489/15, which stems from railway regulatory law, is similar, stating that decisions ‘of the regulatory body [...] have legal effects for all those affected by them in the railway sector, both transport companies and infrastructure managers’. The decision ensures ‘the effective protection of the rights of authorised parties’.  In ECJ C 55/06, the ECJ also addresses the ‘legal protection of third parties’ and emphasises that (also) a beneficiary who is not the addressee of a decision (here: the German Federal Network Agency) is to be regarded as an ‘interested party’ and is therefore also entitled to legal protection as a mere 'third party'.

Summary:

• The IGMD guarantees comprehensive end-customer rights and consumer protection. In particular, affected parties must have the right to effectively challenge the decision on an NDP.
   
• Although the IGMD does not directly regulate the termination of network customers, in light of the directive's purpose, which ultimately envisages the decommissioning of existing natural gas distribution networks, it can be considered an infringement of the subjective rights of network customers.
   
• From a constitutional perspective, it should be noted that the decision on an NDP will significantly interfere with fundamental rights, such as property rights, because this decision will impact existing contractual relationships.

A notice procedure with party status for network customers could remedy a potential violation of the rule of law principle by the approval decision in the form of a regulation. Constitutional and EU law considerations argue for the party status of end customers alongside the affected gas DSO.

authors: Marta Katarzyna Krzystek, Moritz Üblagger