WRITTEN QUESTION P-1459/02

by Konstantinos Hatzidakis (PPE-DE) to the Commission

(21 May 2002)

Subject: Delays and lack of concrete planning for the liberalisation of the electricity market in Greece

Under Law 2773/99, which transposed Community Directive 96/92(1), the Greek electricity market has officially been liberalised since 19 February 2001 and the Ministry for Development has to date granted prospective investors seven operating licences for natural gas thermo-electric plants.

However, it is completely impossible for these licences to be used for the following reasons:

(a) Law 2773/99 establishes discriminatory treatment in favour of the Public Electricity Company (DEI) by giving it exclusive use of domestic fuel (lignite); in addition, the 65 % of DEI's electricity production which is based on the use of lignite is treated preferentially, since DEI only has to bear the cost of mining, without having to pay royalties to the Greek state.

(b) DEI submitted only a few days ago its plan for separate accounting treatment of its activities, as set out under Articles 13 and 14 of Community Directive 96/92, and this has not yet been checked, so that the cost of generation remains totally untransparent and it is impossible to define conditions for competition.

(c) In spite of the fact that natural gas has been prescribed as the exclusive fuel for the new thermo-electric power stations, the natural gas market remains totally closed and the implementation of Community Directive 98/30(2) is not anticipated before 2006.

(d) The Energy Regulatory Authority (RAE) does not have any decision-making powers, but only an initiating role, and therefore cannot fulfil its regulatory mission, which the political leadership of the Ministry for Development has retained.

Is the Commission satisfied with the liberalisation of the energy market in Greece?

Is it satisfied with the way in which the ERA is operating?

What are the reasons for the difficulties in liberalising the market, and what action does the Commission intend to take in order to liberalise the energy market in Greece?

(1) OJ L 27, 30.1.1997, p. 20.

(2) OJ L 204, 21.7.1998, p. 1.

Answer given by Mrs de Palacio on behalf of the Commission

(17 June 2002)

The Commission is satisfied, in principle, with the formal implementation that Greece has undertaken of the Directive regarding the Internal Market for Electricity (96/92/EC)(1), taking into account, in particular, the two-years derogation attributed to Greece to implement the Directive, due to the particular circumstances existing in that Member State. However, the Commission is fully aware that the Greek electricity market, as is the case in certain other Community markets, is as yet by no means characterised as a fully competitive market.

In this light, the Commission has already taken the following actions:

(a) proposed a Directive amending Directives 96/92 EC and 98/30/EC(2), which provide for:

- opening of the market to industrial consumers by 2004, and household customers by 2005;

- legal unbundling of the Transport System Operators (TSOs) and the Distribution System Operators (DSOs);

- common set of regulatory competences;

- access to the network on the basis of published tariffs;

- increased attention to public service levels, and

- increased attention for security of supply issues;

(b) proposed a Regulation of the Parliament and of the Council on conditions for access to the network for cross-border exchanges in electricity(3), which will provide a reliable framework for non-discriminatory and cost-reflective cross-border transmission tariffs and congestion management mechanisms;

(c) presented a Communication on European Energy Infrastructure, in which 12 priority projects of European interest were defined. One of these priority projects refers to the electricity interconnection of Greece to the Union for the Coordination of Transmission of Electricity (UCTE) system through the Balkan countries, and is therefore very important for Greece for its connection to the Union's internal electricity market;

(d) presented a proposal for the revision of the Trans European Networks (TEN)-Energy Guidelines, giving priority support to the 12 priority projects referred to above and proposing that support may reach 20 % of investment cost, instead of the previous 10 %;

(e) launched a renewed regional electricity market in South-East Europe, in which Greece will play a pivotal role. The operation of this regional market will certainly increase the trade of electricity between Greece and the neighbouring countries, contributing to security of supply and the operation of a more effective internal electricity market;

The Commission believes that these actions, which received strong support from the Parliament and at the European Council in Barcelona (March 2002), will go a long way to contribute to addressing the issues raised by the Honourable Member.

On the specific question of accounting unbundling, the Commission requested from the Greek government in April 2002 further details regarding the implementation of Article 14 paragraph 3 of Directive 96/92/EC which requires the full accounting unbundling of integrated electricity undertakings.

The Commission will not fail to take appropriate action in the event that the recent measures taken by the Greek government fail to fully comply with the Directive's requirements.

The Energy Regulatory Authority (RAE) has been relatively recently established, and the Commission considers that it has made good progress in implementing a system of effective regulation. The above-mentioned proposed common regulatory competences proposed by the Commission in its revision of the electricity and gas internal market Directives will reinforce the role and competences of the Regulatory Authority. Furthermore, the Commission is also following

with great interest the recent action by the Energy Regulatory Authority to propose a major reorganisation of the present electricity market structure, following a series of public consultation and discussions. Although it is quite early for the Commission to express its view on the new measures under discussion, the first impression is that the RAE's attempts to introduce more competition into the Greek electricity market are likely to improve the present situation.

Among the new proposals RAE is trying to mitigate the effect of the dominant position of the Public Power Corporation (DEI) in lignite generation, inter alia by foreseeing a certain percentage of this generation to be allocated to other suppliers.

Furthermore, with respect to the opening of the gas market through the transposition of the Directive 98/30/EC(4), the Commission has been informed of the intentions of the Greek government to speed up the opening of the gas market in 2004, earlier than originally envisaged and required by the Directive. Furthermore, a decision has recently been taken to lower transport fees for gas in 2004, a measure that can help in lowering the cost for new entrants.

(1) Directive 96/92/EC of the Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity, OJ L 27, 30.1.1997.

(2) Directive 98/30/EC of the Parliament and of the Council of 22 June 1998 concerning common rules for the internal market in natural gas, OJ L 204, 21.7.1998.

(3) OJ C 240 E, 28.8.2001.

(4) Directive 98/30/EC of the Parliament and of the Council of 22 June 1998 concerning common rules for the internal market in natural gas, OJ L 204, 21.7.1998.