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1. Member States may provide for regulatory authorities or other competent authorities to classify a system which distributes natural gas within a geographically confined industrial, commercial or shared services site and does not, without prejudice to paragraph 4, supply household customers, as a closed distribution system provided that:

(a) for specific technical or safety reasons, the operations or the production process of the users of that system are integrated; or (b) that system distributes natural gas primarily to the owner or operator of the system or to their related undertakings.

2. Member States may provide for regulatory authorities to exempt the operator of a closed natural gas distribution system from the requirement laid down in Article 31(1) that tariffs, or the methodologies underlying their calculation, are approved prior to their entry into force in accordance with Article 78.

3. Where an exemption is granted pursuant to paragraph 2 of this Article, the applicable tariffs, or the methodologies underlying their calculation, shall be reviewed and approved in accordance with Article 78 upon request by a user of the closed natural gas distribution system.

4. Incidental use by a small number of household customers with employment or similar associations with the owner of the distribution system and located within the area served by a closed distribution system shall not preclude an exemption being granted pursuant to paragraph 2.

5. Closed distribution systems shall be considered as distribution systems for the purposes of this Directive.