A case initiated with respect to norms that regulate the connection of the natural gas users to the natural gas transmission system
On 22 November 2019, the 4th Panel of the Constitutional Court initiated the case “On Compliance of Decision No. 1/7 of 18 April 2019 by the Board of the Public Utilities Commission “Regulation on the Connection to the Natural Gas Transmission System for Biomethane Producers, Liquefied Natural Gas System Operators and Natural Gas Users” with Article 1, Article 64, Article 89 and the First Sentence of Article 105 of the Satversme of the Republic of Latvia as well as Section 45 (7) and Section 841 (1) of the Energy Law and the Compliance of Section 841(1) of the Energy Law with Article 64 of the Satversme of the Republic of Latvia”.
The Contested Norms
Decision No. 1/7 of 18 April 2019 by the Board of the Public Utilities Commission (hereafter – the Regulator) “Regulation on the Connection to the Natural Gas Transmission System for Biomethane Producers, Liquefied Natural Gas System Operators and Natural Gas Users” (hereafter – the contested regulation).
Section 841 (1) of the Energy Law (hereafter – the contested norm of the law):
“The Regulator shall approve natural gas system connection regulations developed by a natural gas transmission system operator for biomethane producers, liquefied natural gas system operators and natural gas users, and natural gas distribution system connection regulations developed by a natural gas distribution system operator for natural gas users. The referred to regulations must be objectively substantiated, economically justified, fair, equal and transparent. The Regulator may initiate re-examination of the natural gas system connection regulations and request that the relevant natural gas system operator submits, within a specified time period, draft regulations of the natural gas system connection.”
Norms of Higher Legal Force
Article 1 of the Satversme of the Republic of Latvia (hereafter – the Satversme): “Latvia is an independent democratic republic”
Article 64 of the Satversme: “The Saeima, and also the people, have the right to legislate, in accordance with the procedures, and to the extent, provided for by this Constitution.”
Article 89 of the Satversme: “The State shall recognise and protect fundamental human rights in accordance with this Constitution, laws and international agreements binding upon Latvia.”
The first sentence of Article 105 of the Satversme: “Everyone has the right to own property.”
Section 45 (7) of the Energy Law: “The overlapping of the licence operation areas of distributing system operators is not allowed.”
Section 84.1 (1) of the Energy Law: (quoted above)
The Facts
The case was initiated with respect to an application by the joint stock company “Latvijas Gāze”. It is noted in the application that the applicant is the sole shareholder of the joint stock company “Gaso”. Pursuant to the licence that has been issued, this company is the only operator of the natural gas distribution system in Latvia ensuring the delivery of natural gas from the transmission system to end users. The segment of distribution of natural gas is said to be one of the most essential segments of the applicant’s business. The contested regulation allows any user to connect to the natural gas transmissions system without the mediation of the operator of the distribution system. Hence, the applicant’s right to property, included in Article 105 of the Satversme, allegedly has been violated.
The applicant holds that the restriction on fundamental rights included in the contested regulation has not been established by a law adopted in due procedure, that it lacks a legitimate aim and, also, that the principle proportionality has not bee complied with. Likewise, it is maintained that, in the adoption of the contested regulation, the principles of good legislation, good governance, legitimate expectations and legal certainty have been violated. Therefore the contested regulation is incompatible also with Article 1, Article 64, Article 89 and the first sentence of Article 105 of the Satversme. Moreover, the regulation is also contrary to Section 45 (7) and Section 841 (1) of the Energy Law.
In view of the fact that the contested regulation had been issued in accordance with Section 841 (1) of the Energy Law, also the contested norm of the law, which is said to be incompatible with Section 64 of the Satversme, causes an infringement on the applicant’s right to property. Allegedly, this norm allows a legal person of private law, which has not been democratically legitimised to do so, to issue an external normative act. The applicant underscores that the matter of whether and on what terms connection of natural gas users to the natural gas transmission system is an important one and that should be decided on by the legislator.
The Legal Proceedings
The Constitutional Court has requested the institution, which issued the contested act, the Saeima, to submit a written reply on the facts of the case and the legal reasoning by 22 January 2020.
The term for preparing the case is 22 April 2020. The Court will decide on the type of procedure and the date for hearing the case after it has been prepared.
Linked case: 2019-28-0103