Proposal for a Regulation of the European Parliament and the Council amending Regulation (EC) No 1228/2003 as regards the date of application of certain provisions to Slovenia
Date: 2004-04-26
Institutions: European Commission
Subjects: Slovenia, electrical energy, energy grid, transport network

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 26.4.2004 
COM(2004) 309 final 

2004/0109 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND THE COUNCIL  

amending Regulation (EC) No 1228/2003 as regards the date of application of certain 
provisions to Slovenia 

(presented by the Commission) 

EN 

   EN 

 
 
 
  
 
EXPLANATORY MEMORANDUM 

1. Relevant provisions of the act in question  

Regulation 1228/2003/EC of the European Parliament and of the Council on conditions for 
access to the network for cross-border exchanges in electricity (hereinafter referred to as the 
“Electricity Regulation”) aims at setting fair rules for cross-border exchanges in electricity, 
thus  enhancing  competition  within  the  internal  electricity  market,  taking  into  account  the 
specificities  of  national  and  regional  markets.    This  will  involve  the  setting  of  harmonised 
principles  on  the  allocation  of  available  capacities  of  interconnections  between  national 
transmission systems”. 

According  to  Article  6,  paragraph  1  of  the  Electricity  Regulation,  “network  congestion 
problems  shall  be  addressed  with  non-discriminatory  market  based  solutions  which  give 
efficient  economic  signals  to  the  market  participants  and  transmission  system  operators 
involved”. 

The Electricity Regulation contains in annex “Guidelines on the management and allocation 
of  available  transfer  capacity  of  interconnections  between  national  systems”.  The  rules 
contained under points 1.- 4. of the chapter “General” in these guidelines are directly linked 
to the general provision of Article 6, paragraph 1, and provide further detailed rules on its 
implementation. 

In accordance with its Article 15, the Electricity Regulation shall apply from 1 July 2004. 

2. Scope and justification of the amendment  

The Republic of Slovenia has submitted to the Commission a request for amendment of the 
Electricity Regulation, which would allow Slovenia to continue operating its current system 
of congestion management at the interconnections with Austria and Italy until 1 July 2007. 
At the moment, half of the total available capacity of the two interconnections in question is 
allocated  by  Slovenia  on  the  basis  of  this  system.  In  fact,  according  to  an  arrangement 
between the transmission system operators concerned, the other halves of the total capacity 
are allocated  by the Italian respectively the Austrian system operator.   

Under the current Slovenian system the available capacity, in case total demand for capacity 
exceeds the capacity available (congestion), is allocated to applicants for capacity on a pro-
rata basis (pro-rate curtailment of the requests for capacity). The capacity is allocated free of 
charge. Eligible for applications of capacity are Slovenian consumers (Austrian border) and 
respectively Slovenian electricity producers (Italian border). A minimum of 1 MW must be 
requested  by  applicants  (which  de  facto  excludes  on  the  consumer  side  small  consumers, 
notably households). 

Such a system cannot be considered a non-discriminatory, market based solution in the sense 
of the Electricity Regulation.  

Slovenia has provided the following justification of the request:  

– 

With regard to the interconnection with Austria the pro-rata allocation has resulted in 
allocation of capacity to large, energy intensive industrial consumers located in the 
north  of  the  country,  notably  aluminium  and  steel  producers.  If  the  capacity  is 
allocated on the basis of market mechanisms instead, for instance auctioned, it would 

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no longer be made available free of charge. The companies in question would thus 
see their cost of production increase, which would make them uncompetitive in the 
short term and endanger the currently implemented final phase of their restructuring-
process. 

– 

With  respect  to  the  interconnection  with  Italy  the  allocation  allows  electricity 
producers to sell part of their production on the Italian market and benefit from the 
higher  price  level  for  electricity  in  Italy,  compared  to  Slovenian  prices.  If  the 
capacity is no longer allocated free of charge but at a price resulting from a market 
mechanism the additional cost would be close to the current price difference between 
the  Italian  and  the  Slovenian  market.  Notably  one  producer  -  the  largest  electricity 
producer  in  Slovenia  –  has  to  bear  high  costs  arising  from  investment  in 
environmental protection, necessary to meet EC acquis. 

3. Proposal of the Commission  

The Commission finds it appropriate to amend the regulation as requested by Slovenia.  

Slovenia has invoked reasons which justify such a transitional period. Furthermore - and most 
importantly - its practical impact on the functioning of the internal electricity market would be 
very small. This is notably due to the very limited usable capacity which is available at the 
interconnections between Slovenia and Austria, and respectively Italy, of which only 50% are 
allocated by Slovenia. 

Concretely, around 300 MW (Italian border) and respectively 250 MW (Austrian border) of 
the total capacity are allocated by Slovenia. These capacities are very small, compared – for 
instance - to the total installed capacity for electricity production of the three Member States 
concerned: Italy around 77.000 MW, Austria around 18.000 MW and Slovenia around 13.000 
MW. 

This  situation  is  unlikely  to  change  before  1  July  2007.  Whilst  there  are  concrete  plans  to 
extend the capacity of the two interconnections concerned, the state of these projects is such 
that no significant extension of the current capacity can be expected before 1 July 2007. 

As regards the impact on the Slovenian market, it is true that smaller consumers are under the 
current  system  de  facto  excluded  from  access  to  notably  the  Austrian  interconnector. 
However,  it  should  be  noted  that  households  are  not  concerned  since  the  Slovenian 
government  does  not  intend  to  open  the  markets  for  households  before  1  July  2007,  the 
deadline foreseen in Directive 54/2003 for full market opening.  

In  conclusion,  the  Commission  suggests  amending  the  Electricity  Regulation  in  such  a  way 
that Article 6 (1) and the related provisions of the Guidelines apply in Slovenia only from 1 
July 2007, as far as the capacity of an interconnection is allocated by the Slovenian side.   

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2004/0109 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND THE COUNCIL  

amending Regulation (EC) No 1228/2003 as regards the date of application of certain 
provisions to Slovenia 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
95 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the Opinion of the European Economic and Social Committee2, 

Having consulted the Committee of the Regions,  

Acting in accordance with the procedure laid down in Article 251 of the Treaty3, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Regulation (EC) No 1228/2003 of the European Parliament and of the Council of 26 
June  2003  on  conditions  for  access  to  the  network  for  cross-border  exchanges  in 
electricity 4  aims at setting fair rules for cross-border exchanges in electricity.    

According  to  the  second  paragraph  of  Article  15  of  Regulation  (EC)  No  1228/2003, 
that Regulation shall apply from 1 July 2004. 

In accordance with Article 6(1) of Regulation (EC) No 1228/2003, network congestion 
problems are to be addressed by means of non-discriminatory market based solutions 
which  give  efficient  economic  signals  to  the  market  participants  and  transmission 
system operators involved. 

The  Guidelines  on  the  management  and  allocation  of  available  transfer  capacity  of 
interconnections  between  national  systems,  annexed 
to  Regulation  (EC)  No 
1228/2003, contain in their first chapter entitled “General”, in paragraphs 1 to 4, rules 
which  are  directly  linked  to  the  general  principle  contained  in  Article  6  (1)  of  that 
Regulation. 

(5) 

Slovenia has requested a transitional period for the application of Article 6 (1) and the 
related provisions in those guidelines until 1 July 2007. 

1 
2  
3  
4 

OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
OJ L 176, 15.7.2003, p. 1. 

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(6) 

(7) 

(8) 

Slovenia has demonstrated that without a transitional period certain Slovenian energy 
intensive  industries  would  be  adversely  affected  by  higher  prices  for  electricity 
imported from Austria and certain electricity producers by lower incomes from export 
sales  to  Italy.  That  situation  would  impede  the  ongoing  efforts  of  the  industries 
concerned  to  restructure  and  respectively  comply  with  Community  acquis  applicable 
to electricity production. 

The reasons provided by Slovenia justify a derogation. Furthermore, due to the small 
interconnection  capacity  of  the  two  interconnections  concerned  and  given  that  that 
situation is unlikely to change before 1 July 2007, the practical impact on the internal 
market of such a derogation will be very small. 

The derogation should be limited to what is strictly necessary in view of the Slovenian 
request.  It  should,  therefore,  only  cover  the  part  of  the  interconnections  allocated  by 
the  Slovenian  transmission  system  operator  and  apply  only  insofar  as  such  capacity 
does not exceed half of the total capacity available. 

(9) 

Regulation (EC) No 1228/2003 should therefore be amended accordingly. 

HAVE ADOPTED THIS REGULATION: 

Article 1 

In Article 15 of Regulation (EC) No 1228/2003, the following third paragraph is added:  

 “As  regards  interconnections  between  Slovenia  and  neighbouring  Member  States,  Article  6 
(1) as well as rules 1. to 4 contained in the chapter entitled “General” of the Annex shall apply 
from  1  July  2007.  This  paragraph  shall  apply  only  to  the  interconnection  capacity  which  is 
allocated  by  the  Slovenian  transmission  system  operator  and  only  insofar  as  such  capacity 
does not exceed half of the total available interconnection capacity.” 

Article 2 

This Regulation shall enter into force on the day of its publication in the Official Journal of 
the European Union. 

It shall apply from 1 July 2004. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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