WRITTEN QUESTION E-0741/00

by Jannis Sakellariou (PSE) to the Commission

(13 March 2000)

Subject: Municipal enterprises and fair competition

Experience from America and Britain shows that free markets are possible only if there are powerful supervisory authorities.

1. What steps has the Commission taken to ensure that social conditions and environmental standards, consumer protection, transparency of annual reports and fair conditions of competition are guaranteed for all suppliers of local government services?

2. Does the Commission ensure that supervisory bodies are set up to monitor compliance with these social and environmental standards?

3. The electricity directive provides for preferential treatment for renewable energies and combined heat and power. What instruments are to be used to guarantee this?

Answer given by Mr Bolkestein on behalf of the Commission

(10 May 2000)

1. The Honourable Member's first question concerns the measures that have been taken at Community level to ensure that service providers participating in a public contract award procedure respect certain obligations or standards applying to them.

With regard to social conditions and environmental standards, the Community Directives on public contracts (particularly Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts(1)) currently contain provisions enabling the contracting authority in certain conditions to exclude from an award procedure any potential service provider who has not fulfilled obligations, particularly those of a social nature.

In general, the Directives on public contracts aim to guarantee the transparency of the award procedures and to ensure fair competition between service providers in order to prevent any kind of discrimination between potential providers.

2. As Community law stands, it is the responsibility of the authorities of the Member States to ensure that providers of local government services comply with the environmental provisions of Community law. The Commission itself is competent to check whether the national authorities have performed this control function correctly. However, as guardian of the Treaties, the Commission has no power to act when the environmental standards in question are not covered by Community directives.

3. Article 8(3) of Directive 96/92/EC of the Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity(2) provides one explicit mechanism for the favourable treatment of electricity from renewable energy sources and combined heat and power (CHP):

A Member State may require the system operator, when dispatching generating installations, to give priority to generating installations using renewable energy sources or waste or producing combined heat and power.

It should be noted, however, that the Directive limits itself to favourable dispatching. It does not cover schemes providing direct or indirect support for renewable energy sources.

In principle it is up to the Member State to decide on a particular support system for renewables or CHP, provided that it is compatible with the rules of the EC Treaty, in particular the rules on state aid as set out in Articles 87-88 (ex Articles 92-93).

A large number of different national support schemes exist, including guaranteed purchase obligation at a guaranteed price (often on an avoided cost basis, or on the basis of a regulatory-based calculation of the level of support required to generate the desired level of renewable electricity production); tax exemptions, in particular from energy and CO2 taxes, but equally from non-energy taxes; support scheme per kWh produced; and other support schemes including support for research and development or for capital investment.

(1) OJ L 209, 24.7.1992.

(2) OJ L 27, 30.1.1997.