Proposal for a COUNCIL DECISION laying down a series of measures aimed at creating a more favourable context for the development of trans-European networks in the energy sector
Date: 1993-01-19
Institutions: European Commission
Subjects: EU aid, electrical energy, energy grid, natural gas, technical cooperation, trans-European network

COMMISSSION  OF  THE  EUROPEAN  COMMUNITIES 

COM(93)685  final 
Brussels,  19.01.1994 

94/0009  (COD) 
94/0010  (SYN) 

COMMISSION  COMMUNICATION  TO THE 
EUROPEAN  PARLIAMENT  AND  THE  COUNCIL 

on  Community  guidelines  on  trans-European 
energy  networks 

Proposal  for a 
EUROPEAN  PARLIAMENT  AND  COUNCIL  DECISION 

94/0009  (COD) 

laying  down  a series  of  guidelines  on trans-European 
energy  networks 

Proposal  for a 
COUNCIL  DECISION 

94/0010  (SYN) 

laying  down  a series of  measures  aimed at creating  a more 
favourable  context  for  the  development  of  trans-European 
networks  in the  energy  sector 

(presented by the  Commission) 

COMMUNITY GUIDELINES ON TRANS-EUROPEAN  ENERGY NETWORKS 

CONTENTS 

Page 

3 

6 

9 
9 
10 

10 

14 

16 

17 

18 

COMMISSION  COMMUNICATION 

I. 

INTRODUCTION 

II.  SUBSIDIARITY 

III.  COMMUNITY  GUIDELINES  ON TRANS-EUROPEAN 

ENERGY NETWORKS 

* Community objectives 
* The priorities 
* Broad lines of  action 

Identification  of projects  of common  interest 

A. 
B.  Creation of a more favourable  technical,administrative, legal 
and financial  context for  the establishment  of trans-European 
energy networks 

* External  aspects 

IV.  IMPLEMENTATION  OF THE GUIDELINES ON 
TRANS-EUROPEAN ENERGY NETWORKS 

V.  CONCLUSIONS 

PROPOSAL FOR A EUROPEAN PARLIAMENT AND COUNCIL DECISION 
LAYING DOWN A SERIES OF GUIDELINES  ON TRANS-EUROPEAN 
ENERGY NETWORKS 

*  *  * 

PROPOSAL FOR A COUNCIL DECISION LAYING DOWN A SERIES OF 
MEASURES AIMED AT CREATING A MORE FAVOURABLE  CONTEXT 
FOR THE DEVELOPMENT OF TRANS-EUROPEAN  NETWORKS IN THE 
ENERGY SECTOR 

*  *  * 

ANNEX 

*  *  * 

Maps of the existing trans-European  electricity  and natural  gas networks and of 

the projects of common  interest 

COMMUNITY GUIDELINES ON TRANS-EUROPEAN  ENERGY NETWORKS 

2) 

COMMUNITY  GUIDELINES ON TRANS-EUROPEAN  ENERGY NETWORKS 

COMMISSION  COMMUNICATION 

I 

INTRODUCTION 

1.  Over  the  last  two years  the  Commission  has  continued  its discussion  on  energy  networks, 
based on two landmark  documents adopted at the start of that period which were the fruit  of 
earlier  work on the subject0*. These two documents were: 

The Treaty on European Union 

The agreement reached at Maastricht bears witness to the unanimous political will of the 
governments  of  the  Member  States  to  see  the  Community  involved  in  developing 
trans-European  networks, including energy networks, and in adapting them to the new 
conditions on the internal market. Details of these new activities by the Community are 
given in Article  129c of the new Treaty. They include: 

the establishment of common guidelines; 

any measures necessary to ensure interoperability  and harmonization of technical 
standards; 

the possibility of financial  support for projects of common interest, particularly in 
the form  of aid for feasibility  studies, loan guarantees or interest-rate subsidies. 

The provisions of the two proposals for Decisions on trans-European  energy  networks 
which  accompany  this  Communication  and  which  are  submitted  by  the  Commission 
comply with these requirements, as requested by the Council(2). 

The  Communication  submitted  to  the  Council  by  the  Commission  in  early  1992 on 
electricity  and natural gas transmission infrastructures in the Community(3). 

(,) 

(2) 

See the communication from the Commission entitled "Towards trans-European networks: for 
a Community  action programme" (COM(90) 585 final,  10 December  1990). 
See  the  conclusions  of  the  Council  meeting  on  the  internal  market  on  31 March  1992 
concerning trans-European  networks. 

(3)  Communication  from  the  Commission  to  the  Council  entitled  "Electricity  and  natural  gas 
transmission  infrastructures  in the Community" (SEC(92)  553 final,  27 March  1992). 

This document analysed the existing networks and the development projects in progress 
or planned and, taking account of likely  supply  and demand trends for these two  forms 
of  energy, highlighted the need for: 

consistent  development of  the major energy  networks  in the Community  and the 
rest of Europe; 

increased  energy  transmission  capacity,  including  transmission  to  the  peripheral 
regions of  the Community; 

promotion  of  technical  cooperation  between  the network operators. 

2. 

Today's electricity  and natural gas transmission networks reflect the significant  developments 
in most Member States in recent years. These national  developments have been  accompanied 
by  international  cooperation  which  has  led to  the  interconnection  of  the  national  electricity 
grids, for  example in the UCPTE network  which  extends to most Member States, and to the 
construction of  trans-frontier  gas pipelines, for example from the Netherlands and Russia. 

However,  network  development  is still  shaped by the national  dimension, with  the objective 
of  self-sufficiency  at national level,  which is no longer strictly compatible with the progress 
made  towards  integration  within  the  Community,  particularly  with  the  completion  of  the 
internal  market.  Moreover,  these  developments  have  not  been  the  same  throughout  the 
Community.  Some Member States and many frontier or peripheral regions and islands have 
little  or  no  access  to  the  major  European  energy  networks.  For  these  less  well  endowed 
Member  States  and  regions,  development  of  their  energy  transmission  infrastructure  and 
connection  to  the  trans-European  networks  are  one  of  the  preconditions  for  effective 
participation in the internal market and for strengthening economic and social cohesion within 
the Community. 

3.  Recent and foreseeable  developments  in energy  supply  and demand point to two trends: 

an  increase  in  transfers  of  electricity  between  Member  States  and  to  and  from 
non-Community  countries  to  harness  the  complementary  features  of  the  different 
electricity systems or to cover any shortfalls in production, whether temporary, seasonal 
or permanent; 

a rapid increase  in natural  gas imports from  outside the Community. 

These  extra  transfers  and  new  imports  will  not  be  possible  unless  energy  transmission 
networks  designed  and operated  increasingly  on  a Community-wide  or European  scale and 
offering  greater transmission  capacity  become  available. 

4. 

Completion  of  the  internal  market  combined  with  energy  supply  and demand  trends  in  the 
Community  therefore  pose  a series  of  challenges  to  electricity  and gas  undertakings  and to 
some extent to the public authorities, of which the most important, particularly  as regards the 
major energy  networks, are: 

bridging of the remaining discontinuities at the interfaces between the national networks; 

increase of the capacity of the interconnections between the electricity  grids and of the 
natural  gas supply  lines; 

connection  of  isolated or underequipped  countries and regions; 

the  interoperability  of  the  network  at  European  level  and  maintenance  of  quality  of 
service (continuity  of  supply, stability  of  voltage  and frequency,  etc.); 

utilization  of  the  networks,  as  they  become  increasingly  complex  with  the  growing 
number of  interconnections and the larger geographical  areas connected. 

5.  Given the magnitude of  these tasks, national operations  alone are not enough. 

It is therefore necessary for the Community to be able to take action by establishing guidelines 
on electricity and natural gas transmission networks with a view to encouraging  development 
and full  consideration of the Community  dimension of  these networks and of the  challenges 
posed by their growing interdependence.  In this context, the Commission  proposes two lines 
of action: 

identification  of  projects  of  common  interest  to  supplement  and  strengthen  these 
networks; 

technical, administrative, legal and financial  measures to contribute towards  creating  a 
favourable  context  for  completing projects for the networks. 

6. 

This action by the Community  on trans-European  energy  networks fits  into the context of a 
system which is moving towards open and competitive markets.  It is therefore necessary that 
undertakings  should  direct  their  investment  decisions  according  to  their  own  economic 
forecasts  and that they  should  themselves  bear the  economic  risk.  Consequently,  the  list  of 
projects of  common interest proposed will  have no binding force on the economic operators 
concerned. Instead, the objective is for the Community to establish, taking due account of the 
subsidiarity principle, a reference framework  enabling the economic circles concerned to take 
fuller account of the Community dimension in developing and operating energy  transmission 
networks. 

7.  Alongside this reference framework on trans-European energy networks, the Commission has 
already submitted a proposal  for a Council Regulation introducing a declaration of European 
interest  for  selected  projects  on  the  transmission  of  electricity  and  natural  gas 
(COM(92)  15 final),  followed  by  a  proposal  modifying  it  (COM(93)  115  final).  This 
declaration  is  intended  to help  to  mobilize  the necessary  funds  and to  promote  cooperation 
between the public authorities concerned so as to ensure that projects are completed as rapidly 
as possible.  It will  be granted to  clearly  defined  projects  endorsed by  feasibility  studies and 
will  complement  the  identification  of  projects  of  common  interest  provided  for  by  the 
guidelines. 

In preparing this Communication, the Commission also drew on the opinions given by experts 
from  the Member  States, by the trade organizations  which it  consulted,  representing  energy 
producers, transmitters and distributors^  and by consumers(5). The Commission  proposes to 
renew these consultations periodically, as regards the Member States' experts in the framework 
of the committee which it is proposed to set up, and as regards the trade associations and the 
economic operators on the occasion of drawing up the reports provided for in these proposals 
for Decisions. 

II. 

SUBSIDIARITY 

9.  As regards subsidiarity, the reasons for the annexed proposals to the Council and the European 
Parliament  for  decisions  defining  the nature  and  scope of  the action  bv  the  Community  to 
establish  guidelines on trans-European  energy networks are explained below. 

(a)  What are the objectives  of  me  proposed action by  the Community  in  relation  to  the 

obligations incumbent upon the Community? 

In undertaking this action, the Community is fulfilling  the obligations incumbent on it 
under Title XII of the Treaty  on European  Union. 

The  proposed  action  by  the  Community  on  trans-European  energy  networks  will 
contribute  towards  attaining  several  of  the  Community's  objectives.  These  include 
general objectives  such as economic growth, the internal market and integration  within 
the Community, the strengthening of economic and social cohesion and cooperation with 
the  non-Community  countries  in  Europe  and  in  the  Mediterranean  region.  More 
specifically,  in  the  energy  field,  the  action  proposed  will  help  to  consolidate  and 
strengthen  the  Community's  security  of  supply  and  to  set  up  energy  systems  more 
compatible with protection  of the environment. 

w  >  'UCPTE: 

Union  for  the  coordination  of  the  production  and  transport  of  electric 
power. 

EURELECTRIC:  Groupement  européen des entreprises d'électricité  -  GEIE. 
EUROGAS: 
E&P FORUM: 
CEDEC: 
GEODE: 

Union  européenne de l'industrie du gaz naturel. 
The oil industry international  exploration  and production  forum. 
Confédération européenne des distributeurs publics communaux d'énergie. 
Groupement  européen  des  entreprises  et  organismes  de  distribution 
d'énergie -GEIE. 

(5) 

ELECTRICITY  ASSOCIATION (UK). 
ENERGIENED:  Netherlands union of energy  distribution  undertakings. 
CEFIC: 
IFIEC: 
BEUC: 
UNICE: 

European  Council of chemical  manufacturers'  federations. 
International  federation  of industrial  energy consumers. 
European  bureau of consumers' unions. 
Union of industrial  and employer's confederations  of Europe. 

(b)  b the Community alone responsible for the action planned or does it share  responsibility 

with the Member States? 

The Community  and the Member States share responsibility  for  the action  proposed. 

(c)  What is the Community  dimension of the problem (for example, how  many Member 

States are concerned and which solution has been in force hitherto)? 

Development of these networks is of concern to every Member State: 

in  the  case  of  electricity,  because  of  the  expected  increase  in  interchanges  of 
electricity,  as  a  result  of  completion  of  the  internal  market,  of  the  growing 
interdependence of the Member States' electricity  systems and of the objective of 
making increasingly  economic use of these systems; 

in the case of natural  gas, because of the growing  share of  energy  consumption 
due to be covered by natural gas imported from non-Community countries and the 
sharp increase expected in the volume of gas transit across one or more Member 
States. 

The Community dimension is also extremely important for the Member States and 
regions with energy systems currently isolated from or inadequately connected to 
the Community's  main electricity  and natural gas transmission  networks.  These 
are usually in the least developed areas in the Community. 

(d)  Which is the most efficient solution, comparing the means available to the Community 

and to the Member States? 

The  proposed  action  by  the  Community  will  raise  to  Community  level  plans  and 
measures which already exist in the Member States but which can now be handled more 
efficiently  at Community  level, given the growing complexity  and interdependence of 
the electricity  and natural gas transmission networks in Europe. 

The Community action proposed supplements the similar measures which the Member 
States  are  taking  at  their  own  level,  particularly  the  master  plans,  guidelines  or 
development  plans  for  energy  transmission  infrastructure  already  adopted  or  in 
preparation. 

(e)  Which specific added value will the proposed action by the Community offer and what 

would be the cost of inaction? 

The  proposed  action  by  the  Community  offers  the  added  value  of  speeding  up  the 
process  of  study,  preparation  and  investment  regarding  electricity  and  natural  gas 
transmission networks by virtue of: 

the consensus  reached  by the Community  and nie Member  States on  the  future 
development of these networks and on the accompanying measures which  prove 
necessary; 

the targeting  of  the  interests of  undertakings  in  the  industries  concerned  and of 
investors; 

guidance  for  the  financial  support  from  the  Community,  whether  aid  from  the 
Structural  Funds, specific  measures to support trans-European  networks or loans 
from,  in  particular,  the  EIB  (see  the  new  lending  facility  set  up  as  part  of  the 
growth initiative). 

The cost of inaction  would be the sum total  of: 

development of  electricity  and natural  gas transmission  networks lagging  behind 
future  needs and less consistent on a Community-wide scale; 

the adverse impact on operation of the internal  market and cohesion. 

(f)  Which forms of action are open to the Community (recommendations, financial support, 

regulations,  mutual recognition, etc.)? 

Two forms  of  action  are proposed: 

the adoption of the proposals for decisions submitted by the Commission to settle 
the nature and scope of the action by the Community with regard to guidelines on 
trans-European  energy networks.  These decisions would  define: 

the broad guidelines for future  development of these networks; and 

accompanying  actions  to  create  a  favourable  context  for  preparation  and 
implementation  of projects of common  interest; 

within the framework  of the budget procedures, where appropriate, the granting of 
financial  aid from  the funds  specifically  for  trans-European  networks to  projects 
of common  interest fitting  into the series of guidelines. 

(g)  Are  uniform rales necessaiy  or would  a  directive  setting  the  general  objectives  but 

leaving implementation to the Member States  suffice? 

At this juncture, uniform  legislation, i.e. the Council Decision, is needed to define and 
delimit the action taken  by the Community on trans-European  energy networks. 

At a later stage, in the light of the accompanying  actions provided  for,  particularly  of 
the  analyses  of  the  authorization  procedures  for  projects  and  of  the  rules  on 
environmental  and  health  protection,  approximation  of  certain  rules  in  force  in  the 
Member  States could be useful  or necessary, given the transfrontier  nature of  most of 
the network development work proposed and the overriding need for undertakings to be 
able to complete projects within a manageable  timescale commensurate with trends in 
energy  supply  and in demand on the market. 

In these cases, the action by the Community  could take the form  of a recommendation 
or, if need be, a directive. 

ffl.  COMMUNITY  GUIDELINES  ON TRANS-EUROPEAN  ENERGY  NETWORKS 

10.  First, the Community  guidelines proposed clearly define  the Community  objectives  to which 
the trans-European  energy  networks  are expected  to  contribute.  Next  they  set the  priorities 
for development of the networks to ensure that they make an effective contribution to attaining 
these objectives.  Lastly, they clarify the broad lines of action envisaged for developing these 
networks, including  identifying  projects of  common  interest  and creating  a more  favourable 
context  for completing the projects for the networks. 

Community  objectives 

11.  The action taken by the Community to establish guidelines on trans-European energy networks 
by  promoting  the development,  interconnection  and interoperability  of  the networks  as  well 
as  access  to  such  networks  will  contribute  to  achieving  the  following  objectives  of  the 
Community: 

strengthening the Community's  security  of  energy  supply: 

in the short to medium term, by improving the efficiency  and reliability  of  all the 
Community's  electricity  and gas systems; 

in the long term, by diversifying  supply sources and routes and strengthening ties 
with the non-Community countries supplying  energy  or transited; 

allowing  effective  operation  of the internal  market in two ways: 

by  providing  infrastructure  which  allows  supply  to  respond  to  the  demand  for 
natural  gas  and  electricity  throughout  the  Community,  and  thereby  to  ensure 
balanced operation of  the internal  energy  market; 

by  allowing  the  citizens  of  the  Community,  economic  circles  and  regional  and 
local authorities to reap the full benefits derived from the establishment of an area 
without internal borders; 

promoting  economic  and social  cohesion  by  reducing  the  isolation  and facilitating  the 
development  of the less-favoured  and peripheral  regions and islands. 

The  priorities 

12.  To  attain  these  objectives,  the  Commission  proposes  the  following  priorities  for  the  action 

taken under the Community  guidelines on trans-European  energy networks: 

for  electricity  networks: 

connection  of  isolated networks, which  are usually  located  in the  less-developed 
regions of  the  Community; 

13) 

development (establishment or improvement) of interconnections between Member 
States and of internal connections in so far as this is indispensable to the operation 
of these  interconnections; 

(establishment  or  strengthening)  of 

development 
interconnections  with 
non-Community  countries  in  Europe  and  the  Mediterranean  region  which 
contribute to improving the reliability and security of the Community's electricity 
supply  networks or add to electricity  supplies to the Community; 

for natural  gas networks; 

introduction  of  natural  gas to new regions; 

connection  of  isolated  networks  to  the  trans-European  networks,  including  any 
improvements needed to the latter for that purpose and connection of the separate 
networks; 

increase  in  transmission  (gas  delivery  pipeline),  reception  (LNG)  and  storage 
capacities needed to satisfy  the demand and diversification  of  supply  sources and 
routes for natural gas. 

The  priorities  proposed  set  no  chronological  order  but  indicate  the  political  and  strategic 
importance of the measures. These priorities are to be set for the period between now and the 
year 2000  but by  no  means preclude projects planned to  start after  that date but to  which  a 
commitment is made by then. This date marks the maximum timescale for which  reasonably 
valid forecasts  can be made in  connection  with energy  transmission networks. 

Broad lines of  action 

13.  The broad lines of  action proposed  for the Community  guidelines on trans-European  energy 

networks are: 

identification  of  projects of common interest: 

creation of a more favourable context for completion of the projects for trans-European 
energy networks, with the aid of technical, administrative, legal and financial  measures. 

A. 

Identification  of  projects of  common interest 

14.  The Commission  proposes  a three-stage procedure for  identification  of  projects of  common 

interest: 

first,  technical  definition  of  the types of project which  can be taken  into  consideration 
in this approach to trans-European  energy networks; 

second,  establishment  of  the  criteria  which  must  be  met  by  all  projects  of  common 
interest; 

10 

third, identification  of the currently discernible needs for strengthening of the networks. 

These  proposals  take  account  of  the  information  received  during  the  Commission's 
consultations  with  experts from  the Member States and from  the industries  concerned. 

15.  Technical  definition 

From  the technical  point  of  view,  the  proposal  is  to take into  consideration,  basically,  very 
high  voltage  electricity  lines  (220  kV  or  more)  and  high-pressure  gas  pipelines.  The 
definition  will  also include the equipment essential  for operation of these lines and pipelines, 
including control  centres. 

16.  Criteria for establishing  common  interest 

The proposal  is that projects will  be considered of common interest if they satisfy  all three of 
the following  criteria: 

correspond to the technical  definition; 

fit  in with the objectives  and priorities set by these Community  guidelines; 

display  potential  economic  viability. 

The criterion of the economic viability of a project has regard in the first instance to financial 
profitability.  Moreover, it  also  includes  where appropriate other components  of  cost-benefit 
analyses which are not normally calculated by the markets, for example the benefits  (or costs) 
arising  from  the  environmental  aspects,  security  of  supply  and  the  contribution  to 
strengthening  economic  and social  cohesion. 

List of  projects of  common interest for trans-European energy  networks identified  in  1993 

17.  The proposed list of projects of  common interest for electricity  and gas networks  is  annexed 
to  the proposal  for  the  "guidelines" Decision.  It indicates the  projects  currently  regarded  as 
satisfying  the common  interest criteria defined  earlier. 

Each  project  on  the  list  corresponds  to  a  need  for  capacity  identified  in  the  network.  To 
simplify  the format, the projects have been classified  by type of need and, where appropriate, 
by link, region or country.  It is possible that one or more projects or parts of specific  projects 
could satisfy  the same need. The types of needs identified in the list are described in points  18 
and  19. 

According  to the  second  paragraph of  Article  129d of the Treaty, guidelines  and projects  of 
common  interest  relating  to  the  territory  of  a  Member  State  require  the  approval  of  that 
Member  State.  Member  States  have  been  consulted  and  have  given  their  agreement,  in 
principle, to the projects on the list which concern their territories. 

11 

The list includes a number of less advanced projects of common interest which are presumed 
to be economically viable, although this will have to be confirmed by technical and economic 
feasibility  studies. 

In addition to the projects on the list, any project to improve the technical management of the 
trans-European  electricity  and  natural  gas  networks  will  also  be  of  common  interest  (see 
point 20). 

18. 

In the case of electricity  networks, the following  types of need are identified  on the list: 

(a)  connection of isolated electricity networks 

The twin aims are to connect the national systems to the Community networks, as in the 
case of Greece and Ireland  where the electricity  networks are still  isolated but will be 
connected to the UCPTE network  via Italy  and the United Kingdom  respectively, and 
to  extend  the  national  networks  in  order  to  integrate  areas  not  yet  connected  or 
inadequately  connected,  for  example  the  eastern  Lander  or  territory  in  the  form  of 
islands. 

(b) 

improvement of the electrical interconnections between the Member States 

The aim is to reinforce  the international  interconnections in order to increase security 
of  supply  throughout  the  interconnected  system  in  Europe  and  to  allow  increased 
transfers of electricity on the more integrated internal market.  These improvements are 
necessary  given the virtual  saturation of most of the existing interconnections. 

(c) 

improvement  of  electricity  networks  witinn  the  Member States  associated  with 
improvement of the electrical interconnections between the Member States or with third 
countries 

In grid networks power  is transmitted  indiscriminately  from  all generators to  all users 
via the network.  Bottlenecks  can therefore  arise both  within the network  of  a single 
Member State and at the interfaces  between the Member States.  These weak spots can 
impair operation of the system and pose a risk of power cuts.  They must therefore be 
removed. 

(d)  establishment or improvement of electrical interconnections with third countries 

The objective  is to  establish  or  increase  the  capacity  of  interconnections  between  the 
Member States and their non-Community neighbours, i.e.: 

with  Switzerland  and  Austria,  both  of  which  are  on  the  UCPTE  network  and 
occupy  a central  position  in intra-Community  transfers; 

with  the  Scandinavian  countries to harness the complementary  features  between 
the  UCPTE/United  Kingdom 
system  (dominated  by  thermal  power  station 
capacity) and the Nordel network  (with its abundant hydroelectricity  resources); 

12 

with the countries of Central and Eastern Europe, which plan interconnection with 
the  UCPTE's  synchronous  system  in  the  medium  term.  This  will  offer  the 
Community  the  advantages  of  new opportunities  for  transfers  and,  in  the  long 
term, improvements to the electricity systems in its frontier  regions; 

with non-Community  Mediterranean  countries to contribute to the  Community's 
electricity supply (in the case of the Tunisia-Italy and Turkey-Greece links) or to 
promote integration of regional markets (in the case of the Morocco-Spain link). 

19. 

In the case of gas networks, the following types of need are identified on the list: 

(e) 

introduction of natural gas in new regions 

Parts of the Community still have no natural gas network.  Introduction of this fuel  can 
make  a  major  contribution  to  their  competitiveness  and  economic  development,  to 
diversification  of their energy  supplies and to solving their environmental problems. 

(f) 

connection of isolate or separate gas networks 

Some Member States or regions of the Community with gas networks are not yet linked 
to  the  interconnected  gas  transmission  pipeline  system.  Also,  some  neighbouring 
Member States which already have natural gas, or soon will, are not yet interconnected. 

(g) 

increasing reception and storage capacities for LNG and underground storage capacity 

Increased storage capacity is needed to cope with the growth in consumption and in the 
share  of  the  Community's  energy  supplies  accounted  for  by  natural  gas,  also  taking 
account of the growing dependence on natural gas supplies from outside the Community. 
It is therefore  both a question of security of supply and of increased needs for  storage 
capacity  connected with the increase in volume of the market 

In  addition  to  their  storage  capacity,  the  LNG  stations  forming  part  of  the  basic 
infrastructure  of  the natural  gas transmission  grids expand  the potential  supply,  even 
from  far-away  distant sources. 

(h)  new gas delivery pipelines (and improvement of the existing systems) 

To  cope  with  the  forecast  developments  on  the  market  and  in  natural  gas  supplies, 
measures  must  be  taken  to  develop  me gas  transmission  pipeline  capacity  from  the 
current suppliers (Algeria, Norway and Russia) and from potential suppliers (Libya and 
Iran). In addition, the completion of these projects will be in accordance with European 
Union policy towards the third countries concerned. 

For certain gas delivery  pipeline projects not yet finalized  LNG could be an attractive 
alternative. 

13 

B.  Creation  of  a  more favourable technical, administrative, legal  and financial context for the 

establishment of trans-european energy  networks 

Technical  measures 

20.  The operators of the trans-European  energy networks already cooperate closely  on technical 
matters.  However, with the steady increase in interconnections and the growing complexity 
of the systems, closer technical cooperation between the operators of trans-European networks 
is necessary to ensure maximum  interoperability of the networks on a Community scale. 

Closer technical  cooperation  could be achieved in particular by means of projects  aiming at: 

setting  up  and  making  wide  use  of  a  system  for  the  presentation  and  exchange  of 
information  between the system control centres of the trans-European  networks; 

conducting research and development work on more effective, compatible simulation and 
trans-European network management models between the various operators and control 
centres. 

As  indicated  in  point  17,  the  Commission  proposes  that  these  too  should  be  considered 
projects of common  interest. 

It  is understood  that this technical  cooperation  has to be carried out within  the  rules of the 
Treaty and in particular the rules relating to competition. 

Administrative  and legal  measures 

21.  Authorization criteria and procedures 

Development of these networks will require completion of a series of new projects. This raises 
two questions about the existing administrative and legal obligations. The first concerns access 
to  the  activity,  specifically  the right to  construct  an  electricity  line or  gas pipeline.  At the 
moment  in  most  Member States  mis  is  restricted  by  de jure  or  de facto  monopolies.  The 
second concerns the complexity and, in some cases, slowness of the administrative procedures 
for obtaining building permission. In extreme cases, undertakings have had to wait for as long 
as ten years before  being able to start work. 

The  proposals  for  Council  directives  concerning  common  rules  for  the  internal  market  in 
electricity  and  natural  gas  (COM(91)  548  final),  currently  being  discussed,  introduce  the 
principle of  granting licences for the construction of electricity and natural gas transmission 
networks, thereby making it possible to harmonize the conditions applicable to investors, on 
the basis of objective  and non-discriminatory criteria. 

In  addition, a detailed  inventory  of authorization  procedures is being  compiled, with a view 
to  pinpointing  ways  of  simplifying  and  speeding  up  these  procedures.  The  proposal  is to 
examine, on the basis of this inventory and in coordination with the Member States, possible 
ways of simplifying  and speeding up authorization procedures for projects on trans-European 
networks. 

14 

22.  Environmental  impact of energy  networks 

Environmental  considerations  are often  the central  concern in debates on the acceptability  of 
the siting and impact of  projects connected with energy  networks.  Clarification  of  the rules 
applied by undertakings in order to mitigate the environmental  impact of the projects and of 
the regulations and standards to be observed by the projects themselves should shorten these 
debates and thereby  simplify  the  authorization procedures. 

It will therefore be necessary to collect information on the existing rules and specifications  on 
the  environmental  impact  of  energy  networks  (primarily  the  very  high  voltage  electricity 
networks).  Analysis  of  these  data will  provide  a basis for coordinated  action  at Community 
level  to study and, where appropriate, define  a common basis for the technical  aspects linked 
to environmental  protection, applicable to energy networks, within the framework  of  existing 
Community  rules (in particular Directive  85/337). 

23. 

Investment  in  energy  transmission  infrastructure  has to be financed  with  due  regard  for the 
rules of the market.  Responsibility for the development and financing of energy networks lies 
with the economic  circles concerned. 

24.  However, in order to speed up completion of the networks, the Community  could support the 
efforts  made by  the Member  States to  finance  projects of  common  interest  identified  in the 
Community  guidelines on trans-European networks.  Such support could take three forms: 

aid for financing  feasibility  studies; 

loan guarantees; 

interest-rate  subsidies. 

25. 

In the energy sector, the Community's financial  support for specific  action on trans-European 
networks should provide  incentives  for  carrying out projects of  common  interest.  It should 
consist principally  of  promoting the feasibility  studies for these projects, where appropriate. 
In appropriate cases, more substantial  support in the form of a loan guarantee or interest-rate 
subsidy  could  be  considered.  This  financial  support  should  also  provide  a  stimulus  for 
technical  studies  and projects  covering  the development  and management  of  interconnected 
electricity  and natural gas transmission  systems (see point 20). 

26.  Where necessary,  the Community  will  continue to provide funding  for  energy projects  from 
its  aid  and  loan  mechanisms,  particularly  the  Structural  Funds  (primarily  the  ERDF),  the 
growth  initiative  (European  Investment  Fund  and  new  lending  facility),  the  European 
Investment Bank and the financial  instruments and programmes set up for the benefit of third 
countries.  These  funds,  instruments  and  programmes  will  likewise  take  account  of  the 
guidelines  laid  down  for  trans-European  energy  networks  in  their  criteria  for  selecting  the 
measures to receive  support, within the terms of their own  rules and finalities. 

15 

External  aspects 

27.  These  guidelines  have  been  established  primarily  from  the  Community's  point  of  view. 

However,  they  will  have  implications  beyond the Community, particularly: 

recognition of the interest of a project by the non-Community countries concerned too; 

the possibility  of  financial  support for networks outside the Community; 

extension  of  the  concept  of  guidelines  on  energy  networks  to  the  non-Community 
countries in Central  and Eastern Europe. 

28.  Accordingly,  completion of a project of common interest  - for example, construction of a gas 
delivery  pipeline from  a source outside the Community  - depends on agreement to the work 
by the energy-producing  country  and any non-Community  country  or countries crossed. 

Recognition that a project of common interest identified in the Community guidelines is in the 
mutual  interest of the  Community  and of  a non-Community  country  could be  settled  where 
appropriate  by  means  of  bilateral  cooperation,  association  or other  agreements  between  the 
Community  and  the  non-Community  country  concerned  and  by  the  procedures  for 
management of  such  agreements. 

29.  Another  question  is  the  possibility  of  allocation  of  die  budget  resources  specifically  for 
trans-European energy networks to parties to projects of common interest identified  under the 
Community  guidelines but sited outside the Community. 

Given  the  technical  conditions  for  electricity  and natural  gas  transmission  schemes,  which 
preclude full  use of a line or gas pipeline until completion of the whole link, the Commission 
considers that it should be possible to finance parts of projects of common interest outside the 
Community: 

in every case where the aid takes the form of a contribution towards feasibility  studies; 

only  if  the  project  is  concerned  predominantly  with  supplying  the  Community,  in the 
case of  loan  guarantees  and interest-rate  subsidies. 

In addition  to these possibilities, the Community  could participate in the direct  co-financing 
of  certain  investments  for  infrastructure  networks  in  the  countries  of  Central  and  Eastern 
Europe,  within  the  limit  of  15%  of  the  overall  budget  for  the  PHARE  programme  (see 
Conclusions of the Presidency  of  the Copenhagen European Council, 21-22  June  1993). 

30.  As the non-Community countries in Central and Eastern Europe have expressed the wish for 
more  effective  interconnection  with  the  Community  networks  and,  therefore,  need  to  be 
interconnected to one another more efficiently  too, there will be a growing need for guidelines 
on energy  networks  for this part of  Europe too.  The Commission  will  support this  action  in 
the framework  of  the Community  programmes  in favour of those countries. 

16 

Definition  of guidelines on trans-European energy networks for Central and Eastern Europe 
will  call  for  the  establishment  of  a  cooperation  procedure  between  the  non-Community 
countries concerned and of concertation arrangements with the Community.  The results of the 
studies conducted under the PHARE programme on electricity and gas interconnections in this 
part of Europe will be able to provide the basis for the establishment of reference  guidelines 
for the development of energy networks in Central and Eastern Europe. 

IV.  IMPLEMENTATION  OF  THE  GUIDELINES  ON  TRANS-EUROPEAN  ENERGY 

NETWORKS 

31.  The proposals  for  implementation  of  the  Community  guidelines on  trans-European  energy 

networks are as follows: 

the Commission's tasks will be: 

to  monitor  implementation  of  the  guidelines  and  submit  a  regular  report  on 
implementation  thereof to the Council and the European Parliament; 

to update the list of projects of common interest; 

to formulate proposals so that projects of common interest situated on the territory 
of third countries may also be considered as of mutual interest by those countries; 

to coordinate the  activities to  create a more favourable  technical,  administrative 
and legal  context; 

to adopt the measures granting financial  support from the Community to projects 
of  common  interest,  from  the  financial  resources  available  for  the  specific 
measures on trans-European  networks. 

the Member States will be called upon to give priority to projects of common interest 
and to take all the measures necessary  at national, regional  and local level to  facilitate 
completion thereof. 

32.  For the purpose of implementing the abovementioned tasks, the Commission is to be assisted 
by an advisory committee consisting of experts on trans-European energy networks from the 
Member States, while  the  task  of  updating  the  list  of  projects  of  common  interest  will  be 
entrusted to a management committee. 

This advisory committee will also be the appropriate forum for discussing any matters relating 
to  coordination  of  the  Member  States'  policies  with  an  impact  on  the  development  of 
trans-European  energy networks. 

(4) 

17 

V.  CONCLUSIONS 

33.  For the foregoing  reasons, the  Commission  hereby  submits to  the European  Parliament and 

the Council  the attached two  proposals for  Decisions: 

the first, on a series of  guidelines on trans-European networks in the energy  sector, and 

the  second, on  a series of  actions aimed  at creating  a more favourable  context  for the 
development  of  trans-European networks in the energy  sector. 

These proposals  from  the Commission  respond, for the energy  sector at least,  to the request 
by the European Council  in Copenhagen, which "invited the Commission and the Council  to 
complete  by  early  1994  the  network  plans  in  all  the  relevant  sectors  (transport, 
telecommunication  and energy)." 

34.  These proposals are made on the basis of  Articles  129b,  129c and  129d of the Treaty. 

Article  129d, in particular, provides for different  adoption procedures, as regards the role  of 
the European Parliament,  according to whether it is  a question of  guidelines  in the  sense  of 
the  Treaty  (co-decision  procedure  under  Article  189b)  or other  measures  (procedure  under 
Article 189c) concerning trans-European energy networks. It is for this reason mat the material 
covered by this Communication  is the subject of two different  proposals. 

It is also necessary  to recall  that Article  129d also stipulates that "guidelines  and projects of 
common interest which relate to the territory of a Member State shall require the approval  of 
the Member State concerned"; it mus introduces a supplementary  condition into the adoption 
procedure for the first proposal. 

*  *  * 

18 

Proposal  for a 
EUROPEAN PARLIAMENT  AND  COUNCIL DECISION 

laying  down  a series of  guidelines on  trans-European 
energy  networks 

THE EUROPEAN PARLIAMENT AND  THE COUNCIL OF THE EUROPEAN  UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular  the  first 
paragraph of  Article  129d thereof, 

Having regard to the proposal  from the Commission, 

Having  regard to the opinion of  the Economic  and Social  Committee(1>, 

Having  regard to the opinion of the Committee  of the Regions*2*, 

Whereas the establishment and development of trans-European networks contribute towards attaining 
major objectives of the Community, such as completion of the internal market and the strengthening 
of  economic  and social  cohesion; 

Whereas  the  establishment  and  development  of  trans-European  energy  networks  throughout  the 
territory of the Community also have the specific objectives of increasing the reliability and security 
of  the  Community's  energy  supplies  and  of  allowing  balanced  operation  of  the  internal  energy 
market within the framework  of  a system which is moving towards open and competitive markets; 

Whereas,  in  order  to  contribute  towards  attaining  the  said  objectives,  the  development  of 
interconnections  and of  electricity  and natural  gas transmission  networks in the Community  must 
be accelerated, particularly in the regions where improvements to the networks are necessary  or in 
regions  which  are  still  isolated,  and  with  the  non-Community  countries  in  Europe  and  in  the 
Mediterranean region; 

Whereas  action  by  the  Community  to  establish  guidelines  on  trans-European  energy  networks  is 
necessary  in accordance with the principle of  subsidiarity; 

Whereas in order to develop these networks on a Community-wide scale, it is necessary to  identify 
projects  of  common  interest  and to  create  a  more  favourable  technical,  administrative,  legal  and 
financial context for completion  and operation of  these networks; 

(i) 

(2) 

19 

Whereas the projects of common interest meet the said objectives and priorities; whereas only those 
projects should be considered which display potential economic viability;  whereas, in this context, 
the concept  of viability  includes not only the financial profitability  of  the projects  but  also other 
considerations such as the reliability and security of energy supplies, the strengthening of economic 
and social cohesion  and protection  of the environment  in the Community; 

Whereas, for the implementation  of this Decision, it is necessary to institute a Committee, 

HAVE ADOPTED THIS DECISION: 

Article 1 

This  Decision  defines  the  nature  and  scope  of  the  action  by  the  Community  on  guidelines  on 
trans-European  energy  networks.  It  establishes  a  series  of  guidelines  covering  the  objectives, 
priorities  and broad  lines  of  action  by  the  Community  on  the  subject  of  trans-European  energy 
networks. It identifies the projects of common interest on the trans-European electricity and natural 
gas networks. 

Article 2 

This Decision applies to: 

1. 

in electricity networks: 

all lines of 220 kV or more and submarine links, provided this infrastructure  is used for 
interregional  or international  transmission; 

the systems for operating the abovementioned  facilities, i.e. the protection,  monitoring 
and  control  systems,  as  well  as  any  equipment  or  installations  indispensable  for  the 
system in question to operate properly; 

2. 

in natural gas networks: 

high-pressure gas pipelines making it possible to supply regions of the Community from 
internal or external sources; 

underground  storage  facilities  connected  to  the  abovementioned  high-pressure  gas 
pipelines; 

the reception, storage and regasification  facilities  for  liquefied  natural  gas (LNG); 

the systems for  operating the abovementioned facilities,  i.e. the protection,  monitoring 
and  control  systems,  as  well  as  any  equipment  or  installations  indispensable  for  the 
system in question to operate properly. 

20 

Article 3 

The  Community  shall  promote  the 
trans-European  energy  networks  and access to such networks with the objective  of: 

interconnection, 

interoperability  and  development  of 

allowing effective operation of the internal market in general and of the internal energy market 
in particular; 

facilitating  the  development  and  reducing  the  isolation  of  the  less  favoured  regions  of  the 
Community,  thereby  contributing  to strengthening  economic  and social  cohesion; 

strengthening the security of the Community's energy supplies, including closer relations with 
non-Community  countries in the energy field. 

The  priorities  for  the  action  by  the  Community  on  trans-European  energy  networks  shall  be  as 
follows: 

Article  4 

1. 

for  electricity  networks: 

the connection  of  isolated  electricity  networks; 

the development of interconnections between Member States and of internal connections 
in  so  far as necessary  in order to harness these  interconnections; 

the development of interconnections with non-Community countries in Europe and the 
Mediterranean  region  which  contribute to improving  the reliability  and security  of the 
Community's  electricity  supply  networks  or  to  adding  to  electricity  supplies  to  the 
Community; 

2. 

for natural gas networks: 

the introduction  of  natural  gas to new regions; 

the connection  of  isolated natural  gas networks, including the improvements needed to 
the  existing  networks  for  this  purpose  and the  connection  of  the  separate  natural  gas 
networks; 

increasing  the  transmission  (gas  delivery  pipeline),  reception  (LNG)  and  storage 
capacities needed to satisfy  the demand and diversification  of supply sources and routes 
for natural gas. 

21 

Article S 

The broad lines of  action by  the Community  on trans-European  energy  networks shall be: 

the  identification  of projects  of  common  interest; 

the  creation  of  a  more  favourable  technical,  administrative,  legal  and financial context  for 
development  of the networks. 

Article  6 

1.  Any  energy  network  project  which  satisfies  all  the  following  criteria  may  be  of  common 

interest: 

it falls  within the scope of  Article 2; 

it corresponds to the objectives  and priorities  set out in Articles  3  and 4  respectively; 

it responds to  a need  and displays potential  economic viability  to be  confirmed. 

2. 

The projects of  common  interest  are those listed  in the Annex. 

3.  Any  application  by  a Member  State or the Commission  for  amending the list of  projects  of 
common interest set out in the Annex shall be decided in accordance with the procedure laid 
down in Article 7. The criteria set out in paragraph  1 shall apply in deciding the application. 
A  project  may  not  be  included  in  the list  unless  each  Member  State  to  whose  territory  the 
project relates has approved its inclusion. 

4.  Member States shall take all relevant measures at national, regional and local level to facilitate 
completion of projects of common interest. In particular the national authorisation procedures 
shall  be completed  as rapidly  as possible. 

5.  Where parts of projects of common interest are situated on the territory of third countries, the 
Commission  is to put forward  adequate proposals, where  appropriate, within  the framework 
of the management of the agreements between the Community  and those third countries, for 
the projects also to  be recognized  as of  common  interest  reciprocally  by  the third  countries 
concerned. 

6. 

The  evaluation  of  economic  viability  referred  to  in  the third indent of  paragraph  1 shall  be 
based upon an overall  cost-benefit  analysis, which  shall  take account of  all benefits  such  as 
environmental  aspects,  security  of  supply  and  the  contribution  to  economic  and  social 
cohesion. 

1.  A  committee  composed  of  the  representatives  of  the  Member States  and  chaired  by  the 

representative of the Commission  is hereby  instituted. 

Article  7 

22 

Any  application  for  amendment  of  the  list  of  projects  of  common  interest  made  by  the 
Commission  or a Member State shall  be submitted by the Commission  to this Committee in 
accordance  with the procedure  laid down  in paragraph 2. 

2. 

The representative  of the Commission  shall  submit to the committee  a draft of the measures 
to be taken. The committee shall deliver its opinion on the draft within a time limit which the 
chairman may lay down according to the urgency of the matter. The opinion shall be delivered 
by the majority  laid down in Article  148(2) of the Treaty  in the case of  decisions  which the 
Council  is  required  to  adopt  on  a  proposal  from  the  Commission.  The  votes  of  the 
representatives  of  the Member  States within the  committee  shall  be  weighted  in the manner 
set out in that Article.  The chairman shall not vote. 

The  Commission  shall  adopt  measures  which  shall  apply  immediately.  However,  if  these 
measures are not in accordance with the opinion of the committee, they shall be communicated 
by  the  Commission  to  the  Council  forthwith.  In  that  event,  the  Commission  may  defer 
application  of  the  measures  which  it has decided  for  a period of  not  more than one  month 
from the date of  such  communication. 

The Council, acting by a qualified majority, may take a different decision within the time limit 
referred to in the previous paragraph. 

Article 8 

Every  two years the  Commission  shall  submit  a report on the  implementation  of  this Decision  to 
the European Parliament,  the Council, the Economic  and Social  Committee and the Committee  of 
the Regions. 

This Decision shall enter into force on the third day following that of its publication in the  Official 
Journal of the European Communities. 

Article  9 

This Decision  is  addressed to the Member States. 

Article  10 

Done  at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

23 

ANNEX 

TOANS-EUROPEAN  ENERGY NETWORKS 

List of projects of common interest 

ELECTRICITY NETWORKS 

a.  Connection of isolated electricity networks: 

al 
a2 
a3 
a4 
a5 
a6 

Northern Ireland - Scotland 
Ireland - United Kingdom 
Germany: connections to the eastern Lander 
Greece - Italy 
Greece: connection  of Crete 
Spain: connection of the Balearic Islands 

b. 

Improvement of the electrical interconnections between the Member States: 

bl 
b2 
b3 
b4 
b5 
b6 
b7 
b8 
b9 
blO:  Spain 

Germany 
Germany 
Germany 
France  -
France  -
France  -
France  -
Belgium 
Belgium 
-

- Denmark 
- The Netherlands 
- Belgium 
Belgium 
Germany 
Italy 
Spain 
- The Netherlands 
- Luxembourg 
Portugal 

c. 

Improvement of electricity networks within the Member States associated with improvement 
of the interconnections between the Member States or with mini countries: 

cl:  United Kingdom: Wales 
c2:  Denmark: East-West link 
c3:  The Netherlands: North-East  zone 
c4:  France: North-East  zone 
c5: 
c6:  Spain:  North-South  route  and  along  the  coasts  of  the  Mediterranean  and  the  Bay  of 

Italy: North-South  and East-West  routes 

Biscay 

c7:  Portugal: improvements to the interconnection  with Spain 
c8:  Greece: East-West route 

24 

d.  Establishment or improvement of electrical interconnections with third countries: 

Italy 
Italy 
Italy 

dl:  Germany  - Sweden 
d2:  Germany  - Poland 
d3:  Germany  - Norway 
d4:  Germany  - Austria 
- Switzerland 
d5: 
- Austria 
d6: 
d7: 
- Tunisia 
d8:  Greece  - Balkan  countries 
d9:  Greece  - Turkey 
dlO:  U.K. 
-Norway 
dl 1:  The Netherlands - Norway 
dl2:  France  -  Switzerland 
dl3:  Spain 

- Morocco 

GAS NETWORKS 

e. 

Introduction of natural gas in new regions: 

el 
e2 
e3 
e4 
e5 
e6 

Northern Ireland 
Germany:  eastern Lander 
Corsica and  Sardinia 
new regions 
Spain: 
Portugal: whole country 
Greece:  whole country, including Crete 

f. 

Connection of isolated or separate gas networks: 

fl 
f2 
f3 

f4 
f5 
f6 

Ireland - Northern Ireland 
Great Britain - the Continent 
Germany  -  Luxembourg  -  Belgium:  connection  of  networks  to  the  system  of  gas 
pipelines from  Zeebrugge 
Germany: connections to the eastern Lander 
Spain - France 
Portugal  - Spain 

25 

g. 

Increasing reception and storage capacities for LNG underground storage capacity 

gl 
g2 
g3 
g4 
g5 
g6 
g7 
g« 
g9 

extension  and construction  of LNG stations 
extension of LNG stations 

Ireland:  construction  of an LNG station 
Germany:  construction  of  an LNG station 
France:  extension of LNG stations 
Italy: 
Spain: 
Germany:  creation of  underground  storage  facilities 
France:  creation of underground  storage  facilities 
Spain: 
creation of  underground storage  facilities 
Portugal: creation of underground  storage  facilities 

h.  New gas delivery pipelines 

hi 
h2 
h3 
h4 
h5 
h6 
h7 
h8 
h9 
hlO 
hll 

Norway - Belgium or Netherlands: new project  considered 
Norway - Germany  (Emden): EUROPIPE  project 
Norway - Denmark  - Sweden: SCANPIPE  project 
Algeria - Morocco - Spain - France (Toulouse/Fos) 
Algeria - Tunisia - Italy: increase in capacity 
Russia - Ukraine - EC: upgrading of the existing system of gas pipelines 
Russia - Belarus - Poland - EC 
Russia - Scandinavian  countries - EC 
Libya - Italy 
Iran - Turkey  - EC 
Bulgaria - Greece 

N.B.: 

For certain gas delivery  pipeline projects not yet finalized  LNG could be an attractive 
alternative. 

TECHNICAL COOPERATION 

i. 

Projects  to  improve  technical  cooperation  on  operation  of  the  trans-European  electricity 
networks  and  of  the  interconnected  natural  gas  networks  are  also  considered  projects  of 
common interest. 

*  *  # 

26 

Proposal  for a 
COUNCIL  DECISION 

laying  down  a series of  measures aimed at creating a more favourable  context 
for the development  of  trans-European  networks  in the energy  sector 

THE COUNCIL OF THE EUROPEAN  UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular  the  third 
paragraph of  Article  129d  thereof, 

Having  regard to the proposal from the Commission, 

In cooperation  with the European Parliament0*, 

Having  regard to the opinion  of the Economic  and Social Committee*2*, 

Having  regard to the opinion  of  the Committee of  the Regions(3), 

Whereas  the  creation  of  a  more  favourable  context  at  the  technical,  administrative,  legal  and 
financial  levels for the development of trans-European energy networks is part of the lines of action 
within the meaning of  Article  129c(l) of the Treaty  and provided for in European  Parliament and 
1994  [laying  down  a  series  of  guidelines  on  trans-European  energy 
Council  Decision  ...  of 
networks](4); 

Whereas the creation of  a more favourable  context at the technical, administrative  and legal  levels 
must be  aimed  mainly  at providing  a stimulus for technical  cooperation between  the operators  of 
the networks, at simplifying  and speeding  up the existing  authorization procedures for projects on 
the networks in the Member States in order to reduce delays and at seeking a common approach for 
technical  aspects applicable to these projects; 

Whereas, in order to speed up completion of projects of  common interest identified  by Decision  ... 
[guidelines on trans-European energy networks], it is necessary to provide the Community with the 
possibility  of  supporting,  from  the  financial  resources  allocated  specifically  to  trans-European 
networks, the financial  efforts  made by the Member States in favour of  such projects, particularly 
in  the  form  of  aid  for  feasibility  studies  and,  where  appropriate,  loan  guarantees  or  interest-rate 
subsidies; 

0) 

(2) 

(3) 

(4)  OJ No L 

27 

Whereas  the  other  financial  instruments  at the  disposal  of  the  Community,  such  as  the  structural 
Funds,  the  European  Investment  Fund  and  the  support  from  the  European  Investment  Bank  and 
programmes  in favour of third countries could make a contribution, in some  cases decisive,  to the 
realization  of projects of  common  interest identified  by Decision  ...  [guidelines on  trans-European 
energy networks], 

HAS  ADOPTED THIS DECISION: 

Article 1 

This Decision lays down the action to be taken with a view to creating a more favourable technical, 
administrative,  legal  and  financial  context  for  completion  of  the  projects  of  common  interest  in 
connection  with  trans-European  energy  networks  and  for  operation  of  such  networks  on  a 
Community-wide  scale. 

1. 

In order to contribute to creating a more favourable technical, administrative and legal context 
for the development  of  trans-European  networks, the Community  shall  promote: 

Article  2 

technical  cooperation  projects  between  die operators  responsible  for the  management, 
monitoring  and control  of  the trans-European networks; 

cooperation  between  Member  States  with  a  view  to  simplifying  and  speeding  up 
authorization  procedures  for  projects  on  trans-European  energy  networks  in  order  to 
reduce delays; 

the definition of a common approach for technical  aspects applicable to trans-European 
energy networks. 

2. 

The  Commission  shall,  in  close  collaboration  with  die  Member  States,  take  all  useful 
initiatives  for promoting the coordination  of  the activities  referred to in paragraph  1. 

In order  to  contribute  to  creating  a  more  favourable  financial  context  for  trans-European  energy 
networks, the  Community: 

Article 3 

28 

1.  may, within the framework  of its specific  action on trans-European energy networks, provide 

financial  support for  projects of  common  interest financed  by  Member States: 

for  feasibility  studies  on  projects  of  common  interest  identified  by  Decision  ... 
[guidelines  on  trans-European  energy  networks]  and  for  the  implementation  stage  of 
these projects, in the form  of  interest-rate  subsidies or loan guarantees; 

for  studies  and projects  aimed  at improving  technical  cooperation  on the  operation  of 
trans-European networks referred to in die first  indent of point  1 of  Article 2. 

The financial  support measures taken as part of the specific  action on trans-European  energy 
networks shall be adopted by the Commission in accordance with the procedure provided for 
by  Article  4(2)  and  in  accordance  with  the  provisions  of  the  Council  Regulation  [defining 
general  rules for the financing  of  trans-European networks](5>. 

2. 

shall take account of the projects of  common interest identified  in Decision  ...  [guidelines on 
trans-European  energy  networks]  in  interventions  by  its  Funds,  instruments  and  financial 
programmes  applicable to these networks, within the terms of their own  rules and finalities. 

Article  4 

1. 

In the implementation of the actions referred to in Article 2, the Commission shall be assisted 
by the committee established by Article 7(1) of Decision 94/.../E [guidelines on trans-European 
energy networks]. 

The representative  of the Commission  shall  submit to the committee a draft of  the measures 
to be taken. The committee shall deliver its opinion on the draft, within a time limit which the 
chairman may lay down according to the urgency of the matter, if necessary by taking a vote. 

The opinion  shall be recorded in the minutes; in addition, each Member State  shall have the 
right  to  ask to have its position  recorded in the minutes. 

The  Commission  shall  take  the  utmost  account  of  the  opinion  delivered  by  the  committee. 
It shall inform the committee of the manner in which its opinion has been taken into account. 

2. 

In the implementation of the actions referred to in point  1 of Article 3, the Commission shall 
be  assisted  by  the  committee  established  by  Article  7(1)  of  Decision  94/.../E  [guidelines  on 
trans-European energy networks] in accordance with the procedure laid down in Article  7(2) 
of  that Decision. 

(5)  OJ No L 

29 

Article 5 

The amounts to be granted pursuant to this Decision shall be entered annually in the general budget 
of  the  European  Communities.  They  shall  cover  the  financial  support  referred  to  in  point  1  of 
Article 3. 

Article  6 

Every  two  years  the  Commission  shall  submit  a report on  the implementation  of  this Decision  to 
the European Parliament, the Council, the Economic  and Social  Committee  and the Committee  of 
the Regions. 

This Decision  is  addressed to the Member States. 

Article  7 

Done  at Brussels, 

For the Council 
The President 

30 

TRANS-EUROPEAN  ELECTRICITY 
NETWORKS 

- PROJECTS OF COMMON  INTEREST -

As at 15-10-93 

31 

MAIN NETWORK FOR ELECTRICITY 
TRANSMISSION OF THE EUROPEAN 
COUNTRIES 

^ 

\> 

c=c 

TRANS-EUROPEAN  GAS 
NETWORKS 

- PROJECTS OF COMMON  INTEREST -

As at 15.10.93 

33 

MAIN  NETW3RK  FOR  THE  TRANSMISSION  OF  NATURAL 
GAS  OF  THE  EUROPEAN  COMMUNITY  AND  NEIGH 
BOURING  COUNTRIES  OF  EUROPE  AND 
THE  MEDITERRANEAN  B A S IN 

19 

9  3 

34 

FINANCIAL STATEMENT 

1.  TITLE OF OPERATION: Financial support for trans-European networks 

2.  BUDGET HEADING INVOLVED: B5-710 -  Energy networks 

3.  LEGAL BASK: 

Articles  129b, 129c and  129d of the Treaty establishing the European  Community. 

Proposal for a European Parliament and Council Decision, presented by the Commission 
on  ..., laying down a series of guidelines on trans-European  energy networks. 

Proposal  for  a Council  Decision,  presented  by  the  Commission  on  ..., laying  down  a 
series of measures aimed at creating a more favourable context for the development of 
trans-European networks in the energy sector. 

Council  Directive  No  90/547/EEC  of  29  October  1990  on  the  transit  of  electricity 
through transmission grids (OJ No L 313/30, 13.11.1990). 

Council Directive No 91/296VEEC of 31 May 1991 on the transit of natural gas through 
grids (OJ No L  147/37, 12.6.1991). 

Council  Resolution  of  22  January  1990  concerning  trans-European  networks 
(OJ No C 27/8, 6.2.1990). 

Proposal  for  a Council  Directive  concerning  common  rules for  the internal  market in 
electricity  and in natural gas (COM(91) 548 final,  21 February  1992 - OJ No C 65/4, 
14.3.1992). 

Proposal  for  a  Council  Regulation  introducing  a  declaration  of  European  interest 
(COM(92)  15, 24 February  1992, as amended by COM(93)  115,  19 .4.1993). 

35 

4.  DESCRIPTION OF OPERATION 

4.1  Objectives of operation 

To contribute to the establishment and development of trans-European energy networks 
by promoting the interconnection  and interoperability  of the national networks as well 
as access to such networks. 

The  aim  is  to  facilitate  the  emergence,  development  and  optimum  operation  of  the 
natural  gas  and  electricity  transmission  projects  of  common  interest  identified  in  the 
guidelines on trans-European  energy networks. 

The operation consists of promoting projects on electricity and gas interconnections not 
only  in the Community, particularly  in areas where improvements to the networks are 
needed or which are still isolated, but also with non-Community countries in Europe and 
the Mediterranean region in order to contribute to attaining the objectives of completing 
the  internal  market,  strengthening  economic  and  social  cohesion  and  improving  the 
security and reliability of the Community's energy supplies. 

The financial  support  from  the Community  will be granted primarily  for  defining  and 
starting projects of common interest, by promoting feasibility  studies on such projects, 
and, where appropriate, offering interest-rate subsidies during me implementation phase. 

Financial  support  could  also  be  granted  to  promote  studies  to  improve  technical 
cooperation on operation of the interconnected trans-European electricity and natural gas 
networks. 

4.2  Period covered by the operation and method provided for its renewal or continuation. 

Duration:  1994-1998. The  advisability  of  continuing the operation  beyond mis period 
will be considered on the basis of the results of the evaluation. 

5.  CLASSIFICATION OF EXPENDITURE OR REVENUE 

5.1 - Non-compulsory expenditure. 
52  - Differentiated appropriations. 
53  - Type of revenue provided - nil. 

6.  TYPE OF EXPENDITURE 

Financial  contribution  (grants) to feasibility  studies on projects of common  interest. 

36 

Financial  contribution  to  studies and projects on technical  cooperation, in the form  of 
grants covering up to 50% of the total cost. 

Interest-rate subsidies for projects of common interest which have demonstrated potential 
economic viability  and possibly  the granting of loan guarantees. 

7. 

FINANCIAL IMPACT 

7.1  Method of calculating total cost of operation (definition of unit costs) 

The total investment needed throughout the Community between  1994 and 1999 on the 
trans-European  electricity  and  natural  gas  transmission  network  projects  of  common 
interest identified  so far  will be in the order of ECU  13 billion.  Some 70 projects are 
concerned. 

One half of these projects  could qualify  for support for feasibility  studies in the period 
1994-1998.  These  normally  cost  between  ECU  2  and  4  million,  depending  on  the 
project. Assuming an average Community contribution of 50%, the total budget for part-
funding  these studies would be in the order of ECU 50 million. 

Approximately ECU  10 million would be allocated to promoting technical cooperation 
between the networks. 

In the order of ECU 30 million would be earmarked for  interest-rate subsidies, which 
will be granted only to projects with a favourable cost/benefit analysis and for which the 
subsidy  would be a decisive factor  in proceeding with the investment  considered.  By 
way of illustration, a  1% reduction  (for example, from  10% to 9%) in the interest rate 
on  a  loan  of  ECU  1 000  million  repayable  over  10 years  is  worth  in  the  order  of 
ECU 7 million  a year. The estimated budget of ECU 30 million  would  allow interest-
rate cuts of  1% on loans totalling ECU  1 000 million over 4 years. 

Consequently,  the  total  cost  of  the  operation  would  be  ECU 90 million,  which  is 
considered  the  minimum  for  credible,  effective  action  by  the  Community.  A  bigger 
budget could prove necessaiy  from  1999, which would be the subject  of evaluation by 
the  Commission  in  the  reports  provided  for  in  the  draft  decisions  accompanying  this 
communication. 

37 

In  1994,  the  first  year  of  the  operation,  the  entire  amount  requested  will  be  used 
exclusively  to  promote  feasibility  studies. In  1995 feasibility  studies  will  still  be  the 
priority, but a start will also be made on technical cooperation projects. In  1996 interest-
rate subsidies will be introduced, in addition to the support for feasibility  studies and for 
technical  cooperation. 

Based on the closest estimates available at the moment, around 40% of the  aid should 
go to the electricity  sector  and the other 60% to the gas industry.  However,  the cost-
benefit  analyses and the accelerator effect  of the contributions by the Community  will 
decide the final  breakdown of the aid between these two sectors. 

7.2 

Itemized breakdown of cost of opération 

BREAKDOWN 

1993 
BUDGET 

1994 
DRAFT 
BUDGET 

INDICATIVE PLAN 

1995 

1996 

1997 

1998 

Feasibility studies 

7 

12 

12 

12 

Promotion technical 

cooperation 

Interest rate 

subsidies 

3 

3 

5 

TOTAL 

50 

10 

30 

7 

2 

2 

10 

15 

TOTAL 

p.m. 

7 

15 

20 

24 

24 

90 

73 

Indicative schedule of appropriations 

1993 
Budget 

1994 
Draft 
budget 

INDICATIVE PLAN 

1995 

1996 

1997 

1998 

million ECU 

T 
0 
T 
A 
L 

p.m. 

7 

15 

20 

24 

24 

90 

38 

8.  FRAUD  PREVENTION  MEASURES  PLANNED 

(AND  RESULTS  OF  THEIR 

IMPLEMENTATION) 

Fraud prevention  measures (inspections,  reporting, etc.) are included in all  the agreements or 
contracts between the Commission  and the parties which  it pays. 

The  Commission  departments  concerned  verify  the  subsidies  or  receipt  of  the  services, 
feasibility  studies  or  assessments  ordered  before  payment,  taking  account  of  the  contractual 
obligations and the principles of  economy  and sound financial  or general  management. 

9.  ELEMENTS OF œST-EFTHECTIVENESS ANALYSIS 

9.1  Specific  and quantifiable  objectives, target population 

Closer integration of natural gas and electricity  transmission infrastructure  is one of the 
chief ways of implementing the internal energy market, by improving the flexibility  and 
security  of  the  Community's  energy  supplies  and,  in  the  long  term,  strengthening 
economic  and social  cohesion  in the Community. 

In particular, adjustment of  electricity  and natural gas transmission  infrastructure to the 
Community dimension is essential for effective  implementation of the Council  Directive 
of  29  October  1990  on  the transit of  electricity  (OJ No  L 313,  13.11.1990)  and of  the 
Council  Directive  of  31  May  1991  on  the  transit  of  natural  gas  (OJNoL  147, 
12.6.1991). 

The greater competition foreshadowed by the proposals for Council Directive concerning 
common  rules for  the  internal  market  in  electricity  and in  natural  gas  (COM(91)  548 
final, 21 February  1992) will in turn demand an extra effort in the energy  infrastructure 
field  to allow these markets to operate properly. 

Further  Community-wide  integration  of  electricity  and  natural  gas  transmission 
infrastructure  is  also  needed  to  support the  growth  in  transfers  of  energy  to  and  from 
non-Community  countries.  This,  in  turn, is  one  of  the  mainstays  of  the  Community's 
security  of  supply.  It is hard to quantify  these factors  in a cost-effectiveness  analysis. 

Nevertheless,  simply  taking  account  of  the  Community  dimension  when  managing  the 
electricity  system,  based  on  interconnected  networks,  should  allow  further  savings  in 
addition  to  those  already  made  principally  as  a result  of  the  transfers  provided  for by 
bilateral  supply  contracts.  Based  on  the  current  configuration  of  the  electricity 
transmission  networks,  including  the  ongoing  projects,  experts  from  the  electricity 
industry estimate that these further savings could be worm in the order of ECU  1 billion 
per year, or approximately 3% of electricity generating costs, attributable primarily to the 
reduction  in the  cost  of  the  primary  energy  sources  burned  in power  stations.  Similar 
savings could be  expected  for natural gas. 

The target population for the operation is the whole of the Community and neighbouring 
countries involved  in interconnection  projects. 

39 

9.2  Grounds for the  operation 

To provide  energy  networks  tailored to the internal  energy  market  and to  the needs  of 
European  industry,  encouragement  is  needed  at  Community  level,  together  with 
coordination of the measures taken by the Member States and the private sector.  These 
objectives  could not be  attained at any  alternative  level. 

The  Community  dimension  of  the  issue  makes  action  by  the  Community  essential  to 
promote  implementation  of  projects  offering  benefits  extending  beyond  the  State  or 
Member  States in which they  are carried out. 

The  main  spin-offs,  beyond  completion  of  the  internal  energy  market,  concern  the 
security  of  the  Community's  supplies  in  this  strategic  field  and  the  strengthening  of 
economic  and social  cohesion, plus the benefits  for the Community's  external  relations 
policy,  particularly  vis-à-vis  the  countries  of  Eastern Europe  and in the  Mediterranean 
region. 

The  multiplier effects,  particularly  the  ability to mobilize other  sources of  funding,  are 
being assessed.  However, it is already clear that projects of this type mobilize substantial 
public  and  private  capital,  as  proved  by  the  financial  mechanisms  for  the  Structural 
Funds,  where  energy  projects  have  attracted  four  to  five  times  the  Community 
contribution. 

93  Monitoring  and evaluation of  the operation 

The  proposal  for  a  Council  Decision  on  a  series  of  actions  aimed  at  creating  a 
more favourable  context for die development of trans-European  energy  networks 
provides for  the  establishment  of  a committee  of  representatives  of  the  Member 
States to assist the Commission  with monitoring  and assessing  those actions. 

The proposal  also provides for the preparation of  a report which the  Commission 
is  to  submit  to  the  European  Parliament,  the  Council,  the  Economic  and  Social 
Committee and the Committee  for the Regions every two years. 

9.4  Coherence with financial programming 

This operation is incorporated in the DCs financial programming for the relevant years. 

The objective of the proposed operation fits in with the broader objective of establishing 
trans-European  energy  networks. 

* 

* 

* 

40 

ISSN 0254-1475 

COM(93) 685 final 

DOCUMENTS 

EN 

12 

Catalogue number : CB-CO-93-751-EN-C 

'  t 

ISBN 92-77-63150-3 

Office for Official Publications of the European Communities 
Lr2985 Luxembourg