Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/54/EC of the European Parliament and of the Council as regards the application of certain provisions in Estonia
Date: 2004-04-27
Institutions: European Commission
Subjects: Estonia, electrical energy, single market

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.4.2004 
COM(2004) 318 final 

2004/0110 (COD) 

Proposal for a  

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Directive 2003/54/EC of the European Parliament and of the Council as 
regards the application of certain provisions in Estonia 

(presented by the Commission) 

EN 

   EN 

 
 
 
  
  
EXPLANATORY MEMORANDUM 

During  the  accession  negotiations,  Estonia  invoked  the  specific  characteristics  of  its 
electricity sector to request a transitional period for the application of Directive 96/92/EC of 
the European Parliament and of the Council concerning common rules for the internal market 
in electricity. 

As referred to in Annex VI of the Act of Accession, Estonia was granted a transitional period 
until  31  December  2008  for  the  application  of  Article  19(2)  of  Directive  96/92/EC  of 
19 December 1996, an article relating to the gradual opening of the market. 

Moreover the Council agreed to give further consideration to this specific situation beyond the 
abovementioned  period  and  expressly  recognised  this  in  Declaration  No  8  annexed  to  the 
Treaty of Accession. 

In  this  declaration  “the  Union  recognises  in  this  respect  the  specific  situation  related  to  the 
restructuring of the oil shale sector which will require particular efforts until the end of 2012”. 

For  its  part,  Estonia  undertook  to  gradually  open  the  electricity  market  for  non-household 
customers by that date. 

Subsequent  to  the  signature  of  the  Treaty  of  Accession  on  16  April  2003,  there  has  been  a 
substantial change in the legal position. Directive 2003/54/EC of the European Parliament and 
of the Council, which was adopted on 26 June 2003 and comes into force on 1 July 2004, will, 
among other things, speed up the opening of the electricity market. 

Under Article 21(1)(b) of the new Directive, the opening of the market must be completed by 
1  July  2004  for  all  non-household  customers  in  order  to  achieve  the  complete  opening 
provided for in Article 21(1) (c) by 1 July 2007. 

In these new circumstances, Estonia transmitted by letter of 17 September 2003 a first formal 
request  for  adaptation  based  on  Article  57  of  the  Treaty  of  Accession  covering  both  the 
derogation granted which has to be adapted to cover the new Directive and a second request 
for a transitional period aimed at not applying Article 21(1) (b) on the opening of the market 
to  non-household  customers  of  Directive  2003/54/EC  between  1  January  2009  and 
31 December 2012. 

These two requests are based on a credible restructuring plan for the oil shale sector extending 
until 31 December 2012. 

At  the  request  of  the  European  Commission,  Estonia  indicated  in  a  further  letter  of 
5 December 2003 that it was planning to achieve the complete opening of the market provided 
for in Article 21(1) (c) by 31 December 2015. 

In the light of these two requests, the Commission carried out an additional evaluation of the 
criteria used in the accession strategy. 

Oil  shale  is  the  only  real  indigenous  energy  resource  in  Estonia  and  national  production 
represents almost 84% of world production. 90% of the electricity produced in Estonia is from 
this solid fuel. It is therefore of great strategic importance for security of supply in Estonia. 

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However the sector requires a major reform, which is already under way, in order to make it 
more efficient. 

Investments  totalling  €455  million  will  be  required  up  to  2015,  in  particular  to  bring 
production  installations  up  to  Community  environment  standards  and  modernise  the 
generation plants in Narva. 

The investments already made and those planned in the oil shale sector have to be guaranteed 
for  a  period  extending  beyond  2008,  which  is  possible  only  by  means  of  a  gradual 
introduction of competition. 

The  Commission  considers  that  deferring  the  granting  of  a  derogation  for  the  period  2008-
2012  would  seriously  affect  the  security  of  investments  in  generating  plants,  which  would 
weaken security of supply in Estonia and would not allow the serious environmental problems 
created  by  these  plants  to  be  resolved.  Moreover,  there  must  be  appropriate  accompanying 
measures to take account of social aspects in the Narva region. 

However,  it  is  essential  to  continue  to  monitor  developments  which  could  arise  in  the 
Estonian market. 

Since  1  July  1999,  10%  of  the  market  has  been  open.  The  market  in  Estonia  could  be  35% 
opened  by  31  December  2008  and  be  fully  open  by  31  December  2012,  which  would  be  a 
more rapid process than that planned by Estonia (77% by 31 December 2012). 

Among other things, the situation could change as regards ownership of the companies in that 
region.  At  present  they  are  small  and  they  could  attempt  to  consolidate  through  a  strategic 
partnership aimed at strengthening their market position. 

For  these  reasons,  the  Commission  does  not  consider  it  expedient  to  propose  granting  the 
derogation until 31 December 2015, but rather until the end of 2012 which will guarantee the 
abovementioned objectives while safeguarding the interests of the Union in seeing an internal 
market established in this region. 

The  European  Parliament  and  the  Council  are  requested  to  adopt  this  proposal  from  the 
Commission. 

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2004/0110 (COD) 

Proposal for a  

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Directive 2003/54/EC of the European Parliament and of the Council as 
regards the application of certain provisions in Estonia 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Articles 47(2), 55 and 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) 

During  the  accession  negotiations,  Estonia  invoked  the  specific  characteristics  of  its 
electricity  sector  to  request  a  transitional  period  for  the  application  of  Directive 
96/92/EC of the European Parliament and of the Council concerning common rules for 
the internal market in electricity4. 

In  Annex  VI  of  the  Act  of  Accession,  it  was  granted  a  transitional  period  until 
31 December 2008 for the application of Article 19(2) of Directive 96/92/EC, relating 
to the gradual opening of the market. 

Declaration  No  8  annexed  to  the  Treaty  of  Accession  recognised  moreover  that  the 
specific  situation  relating  to  the  restructuring  of  the  oil  shale  sector  in  Estonia  was 
going to require particular efforts until the end of 2012. 

Subsequent  to  the  signature  of  the  Treaty  of  Accession,  Directive  96/92/EC  was 
replaced by Directive 2003/54/EC of the  European Parliament and of the Council of 
26 June 2003  concerning  common  rules  for  the  internal  market  in  electricity5,  which 
has to be implemented by 1 July 2004 at the latest and which has the effect (Article 
21) of speeding up the opening of the electricity market. 

1 
2 
3 
4 
5 

OJ C 
OJ C 
OJ C 
OJ L 27, 30.1.1997, p. 20. 
OJ L 176, 15.7.2003, p. 37. 

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(5) 

(6) 

(7) 

(8) 

(9) 

By letter of 17 September 2003, Estonia transmitted a request aimed at not applying 
Article  21(1)(b)  of  Directive  2003/54/EC,  on  the  opening  of  the  market  to  non-
household customers, until 31 December 2012. In a further letter of 5 December 2003, 
Estonia indicated that it was planning to achieve the complete opening of the market 
provided for in Article 21(1)(c) by 31 December 2015. 

The request by Estonia is based on a credible restructuring plan for the oil shale sector 
extending until 31 December 2012. 

Oil  shale  is  the  only  real  indigenous  energy  resource  in  Estonia  and  national 
production  represents  almost  84%  of  world  production.  90%  of  the  electricity 
produced in Estonia is from this solid fuel. It is therefore of great strategic importance 
for security of supply in Estonia. 

The granting of a further derogation for the period 2009-2012 will guarantee security 
of  investments  in  generating  plants  and  security  of  supply  in  Estonia  while  allowing 
the serious environmental problems created by those plants to be resolved. 

The  request  made  by  Estonia  should  be  granted  and  Directive 2003/54/EC  amended 
accordingly, 

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 

The following paragraph 3 is hereby added to Article 26 of Directive 2003/54/EC: 

“3. Estonia shall be granted a temporary derogation from the application of Article 21(1)(b) 
and  (c)  until  31  December  2012.  Estonia  shall  take  the  measures  necessary  to  ensure  the 
opening of its electricity market. This shall be carried out gradually over the reference period 
with the aim of complete opening of the market by 1 January 2013. On 1 January 2009, the 
opening  of  the  market  must  represent  at  least  35%  of  consumption.  Estonia  shall 
communicate annually to the Commission the consumption thresholds extending eligibility to 
final customers”. 

Article 2 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative  provisions 
necessary  to  comply  with  this  Directive  not  later  than  1  July  2004.  They  shall  forthwith 
communicate to the Commission the text of those measures. 

When Member States adopt these measures, they shall contain a reference to this Directive or 
shall  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official  publication.  The 
methods of making such reference shall be laid down by Member States. 

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

Article 3 

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Article 4 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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