WRITTEN QUESTION E-0633/01 by Ioannis Souladakis (PSE) to the Commission. Deregulation of electricity.
Date: 2001-03-06
Institutions: European Parliament, Provisional data
Subjects: electrical energy, energy policy, energy supply, liberalisation of the market, price of energy, security of supply

C 340 E/54

Official Journal of the European Communities

EN

4.12.2001

Will the Council approve the revision of these rules? What is the intended timetable for the Council(cid:146)s
decision? What practical obstacles are there to a Council decision on the matter?

Reply

(13 July 2001)

In the framework of the draft Statute for Members of the European Parliament, the Council is currently
giving careful consideration to the rules on Members(cid:146) expenses and allowances proposed by the European
Parliament. As the Honourable Member is undoubtedly aware, the draft Statute is the subject of regular
contacts between representatives of the Parliament and of the Council. These contacts are progressing
favourably, but it is too early to predict when a conclusion will be reached.

(2001/C 340 E/062)

WRITTEN QUESTION E-0633/01

by Ioannis Souladakis (PSE) to the Commission

(6 March 2001)

Subject: Deregulation of electricity

The recent electricity crisis in the State of California has highlighted the problems caused by the
deregulation of electricity in this State. There are many reasons for this crisis, such as overcharging for
wholesale prices, the disastrous financial situation of the distribution companies and the failure of the State
authorities to intervene in time. This crisis has also had a variety of consequences which are equally
serious: the risk of a sudden increase in electricity prices, inflationary pressure, a fall in the shares of
companies involved in electricity, the risk of a reduction in the growth rate of the State, etc.

Given that the EU has been moving towards a similar deregulation of electricity for years, will the
Commission say:

1. What studies has it carried out with a view to ensuring a sufficient quantity of electricity without

running the risk of excessive increases in electricity prices?

2. Has it examined safeguards to ensure that the electricity market does not operate solely through the

spot market, but also through long-term contracts?

3. Has it established rules governing the intervention of Member States in the event of electricity
the production

intervention takes place at prices which cover the costs of

shortages, so that
companies without passing costs on to consumers?

4. Has it provided for specific phases of the deregulation of the market in electricity and periods of time
for reviewing deregulation so as to correct any distortions which might result in disruptions of energy
supplies and, consequently, cost increases?

Answer given by Mrs de Palacio on behalf of the Commission

(10 May 2001)

Security of supply is a key objective of European energy policy, as highlighted in the Commission(cid:146)s

1.
recent Green Paper (cid:145)Towards a European strategy for the security of energy supply(cid:146) (1).

On the basis of an analysis of the events in California, the Commission has reached the conclusion (cid:129)
shared by nearly all analysts (cid:129) that the problems in California result from the specific structure of the
market and the regulatory framework in California. This structure is mainly characterized by insufficient
generation capacity, barriers to new entrants and fluctuating, high prices, facilitated by the existence of an
obligatory pool and the exclusion of the possibility of long-term contracts.

4.12.2001

EN

Official Journal of the European Communities

C 340 E/55

These elements do not exist in the Community. In particular, in the Community sufficient reserve capacity
is available, which can be estimated to amount to around 30 % of peak electricity demand (including
reserve capacity necessary to maintain the security of the system and over-capacity).

Unlike in California, in the Community medium- and long-term supply contracts between suppliers
2.
and consumers are not prohibited but form the basic commercial arrangement in the electricity market.
Used in parallel to short-term transactions in the spot market, these contracts provide the necessary
stability in terms of price developments.

3.
The growing integration of the European electricity market will increase security of supply through
the opening up of markets and the extension of interconnection capacities, allowing more cross-border
trade, in particular in the event of electricity shortages in a Member State.

In addition, 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) contains provisions, which allow Member States to
take specific measures to react to acute shortages and prevent future problems regarding primary energy
sources for generation. In the event of a sudden crisis in the energy market, Article 23 of this Directive
provides the possibility for Member States to take (cid:129) temporarily (cid:129) safeguard measures. Such measures
may include intervention in the market in order to ensure reasonable prices for end-consumers and cost-
recovery by producers, provided such measures are proportionate with the objectives pursued and non-
discriminatory in effect. Furthermore, if a Member State determines that installed capacity on the basis of
a given primary source is excessively high, or is increasing so rapidly as to constitute a threat to overall
security of electricity supply, it may, pursuant to Article 5 (1) (f), (cid:145)specify the nature of the primary sources
of energy(cid:146) for all new capacity.

In its proposal for a revision of the electricity directive (3), the Commission proposes a gradual
4.
approach towards full market opening. By 2003 all non-domestic customers shall be free to choose their
supplier and by 2005 all consumers shall have this right.

In order to ensure appropriate vigilance with regard to security of supply while market opening is
progressing, new measures aimed to ensure the availability of sufficient generation capacity are suggested.
Under these new measures Member States would be obliged to continuously monitor the balance between
demand and supply and to publish annually a report outlining their findings, indicating any measures
envisaged to ensure supply security. The Commission, on the basis of the national reports and its own
monitoring work, would publish a report covering the Community as a whole. When necessary, Member
States would launch tenders for the construction of new electricity generating capacity.

As regards security of supply in terms of primary energy sources for generation, the safeguard provisions
of the electricity directive described above in the reply to question 3 remain applicable.

(1) COM(2000) 769 final.
(2) OJ L 27, 30.1.1997.
(3) COM(2001) 125.

(2001/C 340 E/063)

WRITTEN QUESTION E-0635/01

by Ioannis Souladakis (PSE) to the Council

(8 March 2001)

Subject: Aid for Armenia

According to figures concerning American aid for Armenia published in the Washington Post, per
capita aid to Armenia over the last year amounted to USD 42, which is one of the highest levels of
American aid to third countries. This aid takes a wide variety of
forms, notably housing repairs,
a contribution towards antiseismic protection for buildings, the renovation of schools, the construction of
water supply networks, etc.