The gas markets in Europe are fragmented, with several balancing zones across the European Union (EU) and different balancing arrangements applying in neighbouring markets. This entrenches the market power of incumbents and increases the barriers to new entry into the EU gas markets. In many Member States, network users do not yet have regular information during the balancing period on whether their portfolio is in balance or have access to liquid wholesale markets to trade flexible gas. This impedes new entrants’ ability to balance their portfolios and increases their exposure to imbalance charges. It also means that Transmission System Operators (TSOs) undertake most of the network balancing and, in order to fulfil this task, hold options to significant amounts of flexible gas, via long-term contracts, which could otherwise be traded in the wholesale market. In many balancing regimes, imbalance charges do not reflect the cost of the TSO balancing the gas network. This can result in incentives for inefficient behaviour and cross-subsidies between network users which could be considered discriminatory.

The 3rd Package defines a new European regulatory framework with Framework Guidelines and related codes to address certain topic areas for the integration of EU electricity and gas markets, enabling cross-border trade and competition to develop across EU energy markets. In this context, the Agency, in accordance with Article 6(2) of Regulation (EC) No. 715/2009, has to submit to the Commission Framework Guidelines on Gas Balancing in Transmission Systems by 12 September 2011.

These Framework Guidelines aim at setting out clear and objective principles for the development of a network code on gas balancing.  This network code shall define a European gas balancing regime which is market based and enables network users to trade gas efficiently, including across borders.

In particular, the network code on gas balancing shall promote the harmonisation of balancing regimes in order to encourage and facilitate gas trading across systems and to support the development of competition within the EU, both between Member States and within each Member State, and thereby move towards greater market integration.