The Third European Energy Liberalization Package: Does Functional and Legal Unbundling in the Gas Storage Sector Go Too Far?

The third European gas liberalization package (the 3rd Package) is intended to facilitate access to gas storage through the introduction of functional and legal unbundling in the storage sector. This article will challenge this new regulatory regime from two perspectives. First, this new regime may change the originally coherent regulatory patterns in the 1st and 2nd Gas Directives without taking into account the economic rationales. Second, this new regime will lead to three serious concerns upon implementation, i.e., the cost-effectiveness, clear implementation of the unbundling, and the doctrine of ‘rigid unbundling as a last resort. For the purpose of finding a solution, this article provides three legislative suggestions to the 3rd Package. In spite of these efforts, the issue of the unclear scope of storage subject to the open access regime and to the functional and legal unbundling remains unresolved in the 2nd Gas Directive and 3rd Package. Thus, to facilitate access to storage, it is suggested that the Commission may have to clarify the scope issue first and consider adopting a more direct approach; i.e., it should consider the regulated third party access regime for the storage sector in the 3rd Package instead of the indirect approach of further unbundling.