The Energy Community Treaty
Date: 2005-10-25
Institutions: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, European Community, Montenegro, North Macedonia, Romania, Serbia
Subjects: Central and Eastern Europe, Energy Community, agreement (EU), electrical energy, energy cooperation, energy policy, multilateral agreement, natural gas

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THE ENERGY COMMUNITY TREATY

The Parties, being:

The EUROPEAN COMMUNITY on the one hand,

And

The following CONTRACTING PARTIES on the other hand

— The Republic of Albania, the Republic of Bulgaria, Bosnia and Herzegovina, the Republic of Croatia, the former
Yugoslav Republic of Macedonia, the Republic of Montenegro, Romania, the Republic of Serbia (hereafter referred to
as the Adhering Parties),

and

— The United Nations Interim Administration Mission in Kosovo pursuant to the United Nations Security Council

Resolution 1244,

CONSOLIDATING on the Athens Process and the 2002 and 2003 Athens Memoranda of Understanding,

NOTING that the Republic of Bulgaria, Romania and the Republic of Croatia are Candidate Countries for accession to the
European Union, and that the former Yugoslav Republic of Macedonia has also applied for membership,

NOTING that the European Council
in Copenhagen in December 2002 confirmed the European perspective of the
Republic of Albania, Bosnia and Herzegovina, and Serbia and Montenegro, as potential candidates for accession of the
European Union, and underlined the determination to support their efforts to move closer to the European Union,

RECALLING that the European Council in Thessaloniki in June 2003 endorsed ‘The Thessaloniki Agenda for the Western
Balkans: moving towards European integration’, which aims to further strengthen the privileged relations between the
European Union and the Western Balkans and in which the European Union encouraged the countries of the region to
adopt a legally binding South-East Europe energy market agreement,

RECALLING the Euro-Mediterranean Partnership Process and the European Neighbourhood Policy,

RECALLING the contribution of the Stability Pact for South-East Europe that has as its core the need to strengthen
cooperation amongst the states and nations of South-East Europe and to foster the conditions for peace, stability and
economic growth,

RESOLVED to establish among the Parties an integrated market in natural gas and electricity, based on common interest
and solidarity,

CONSIDERING that this integrated market may involve at a later stage other energy products and carriers, such as
liquefied natural gas, petrol, hydrogen, or other essential network infrastructures.

DETERMINED to create a stable regulatory and market framework capable of attracting investment in gas networks,
power generation and transmission networks, so that all Parties have access to the stable and continuous gas and
electricity supply that is essential for economic development and social stability,

DETERMINED to create a single regulatory space for trade in gas and electricity that is necessary to match the geographic
extent of the concerned product markets,

RECOGNISING that the territories of the Republic of Austria, of the Hellenic Republic, of the Republic of Hungary, of the
Italian Republic, and of the Republic of Slovenia are naturally integrated or directly affected by the functioning of the gas
and electricity markets of the Contracting Parties,

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DETERMINED to promote High-Levels of gas and electricity provision to all citizens based on public service obligations,
and to achieve economic and social progress and a High-Level of employment as well as a balanced and sustainable
development through the creation of an area without internal frontiers for gas and electricity,

DESIRING to enhance the security of supply of the single regulatory space by providing the stable regulatory framework
necessary for the region in which connections to Caspian, North African and Middle East gas reserves can be developed
and indigenous reserves of natural gas, coal and hydropower can be exploited,

COMMITTED to improving the environmental situation in relation to gas and electricity, related energy efficiency and
renewable energy sources,

DETERMINED to develop gas and electricity market competition on a broader scale and exploit economies of scale,

CONSIDERING that, to achieve these aims, a broad ranging and integrated market regulatory structure needs to be put in
place supported by strong institutions and effective supervision, and with the adequate involvement of the private sector,

CONSIDERING that in order to reduce stress on the state-level gas and electricity systems and contribute to resolving
local gas and electricity shortages, specific rules should be put in place to facilitate gas and electricity trade; and that such
rules are needed to create a single regulatory space for the geographic extent of the concerned product markets,

HAVE DECIDED TO CREATE AN ENERGY COMMUNITY.

TITLE I

PRINCIPLES

Article 1

(b) create a single regulatory space for trade in Network Energy
that is necessary to match the geographic extent of the
concerned product markets,

By this Treaty, the Parties establish among themselves an

1.
Energy Community.

2. Member States of the European Community may become
Participants in the Energy Community pursuant to Article 95 of
this Treaty.

Article 2

1.
The task of the Energy Community shall be to organise
the relations between the Parties and create a legal and
economic
framework in relation to Network Energy, as
defined in paragraph 2, in order to:

(a) create a stable regulatory and market framework capable of
attracting investment in gas networks, power generation,
and transmission and distribution networks, so that all
Parties have access to the stable and continuous energy
supply that
for economic development and
social stability,

is essential

stable

(c) enhance the security of supply of the single regulatory space
by providing a
in which
connections to Caspian, North African and Middle East
gas reserves can be developed, and indigenous sources of
energy such as natural gas, coal and hydropower can be
exploited,

investment

climate

(d) improve the environmental situation in relation to Network
Energy and related energy efficiency,
the use of
renewable energy, and set out the conditions for energy
trade in the single regulatory space,

foster

(e) develop Network Energy market competition on a broader

geographic scale and exploit economies of scale.

‘Network Energy’ shall

include the electricity and gas
2.
sectors falling within the scope of the European Community
Directives 2003/54/EC and 2003/55/EC (1).

(1) Directive 2003/54/EC of

the European Parliament and of
for

the
Council of 26 June 2003 concerning common rules
the
internal market in electricity, Official Journal of the European Union
L 176, 15 July 2003, p. 37-56; and Directive 2003/55/EC of the
European Parliament and of
the Council of 26 June 2003
concerning common rules for the internal market in natural gas,
Official Journal of the European Union L 176, 15 July 2003, p. 57-78.

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Article 3

Article 8

For the purposes of Article 2,
Community shall include:

the activities of

the Energy

Nothing in this Treaty shall affect the rights of a Party to
determine the conditions for exploiting its energy resources,
its choice between different energy sources and the general
structure of its energy supply.

(a)

the implementation by the Contracting Parties of the acquis
communautaire on energy, environment, competition and
renewables, as described in Title II below, adapted to both
the institutional framework of the Energy Community and
the Contracting Parties
the specific situation of each of
referred to as ‘the extension of
(hereinafter
the acquis
communautaire’), as further described in Title II;

(b) the setting up of a specific regulatory framework permitting
the efficient operation of Network Energy markets across
the territories of the Contracting Parties and part of the
territory of the European Community, and including the
creation of a single mechanism for the cross-border trans-
mission and/or transportation of Network Energy, and the
supervision of unilateral safeguard measures (hereinafter
referred to as ‘the mechanism for operation of Network
Energy markets’), as further described in Title III;

(c)

internal

frontiers,

the creation for the Parties of a market in Network Energy
including the coordination of
without
mutual assistance in case of serious disturbance to the
energy networks or external disruptions, and which may
include the achievement of a common external energy
trade policy (hereinafter referred to as ‘the creation of a
single energy market’), as further described in Title IV.

Article 4

The Commission of
the European Communities (hereinafter
referred to as ‘the European Commission’) shall act as coor-
dinator of the three activities described in Article 3.

Article 5

The Energy Community shall follow the acquis communautaire
described in Title II, adapted to both the institutional framework
of
the
this Treaty and the specific situation of each of
Contracting Parties, with a view to ensuring High-Levels of
investment security and optimal investments.

Article 6

The Parties shall take all appropriate measures, whether general
or particular, to ensure fulfilment of the obligations arising out
of this Treaty. The Parties shall facilitate the achievement of the
Energy Community's tasks. The Parties shall abstain from any
measure which could jeopardise the attainment of the objectives
of this Treaty.

TITLE II

THE EXTENSION OF THE ACQUIS COMMUNAUTAIRE

CHAPTER I

Geographic Scope

Article 9

The provisions of and the measures taken under this Title shall
apply to the territories of the Adhering Parties, and to the
territory under the jurisdiction of the United Nations Interim
Administration Mission in Kosovo.

CHAPTER II

The Acquis on Energy

Article 10

Each Contracting Party shall
the acquis commu-
nautaire on energy in compliance with the timetable for the
implementation of those measures set out in Annex I.

implement

Article 11

The ‘acquis communautaire on energy’, for the purpose of this
Treaty, shall mean (i) the Directive 2003/54/EC of the European
Parliament and of the Council of 26 June 2003 concerning
common rules for the internal market in electricity,
(ii) the
Directive 2003/55/EC of the European Parliament and of the
Council of 26 June 2003 concerning common rules for the
internal market
the Regulation
1228/2003/EC 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 (1).

in natural gas,

and (iii)

CHAPTER III

The Acquis on Environment

Article 12

Each Contracting Party shall
the acquis commu-
nautaire on Environment in compliance with the timetable for
the implementation of those measures set out in Annex II.

implement

Article 13

Article 7

The Parties recognise the importance of the Kyoto Protocol.
Each Contracting Party shall endeavour to accede to it.

Any discrimination within the scope of this Treaty shall be
prohibited.

(1) Official Journal of the European Union L 176, 15 July 2003, p. 1-10.

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Article 14

Article 19

The Parties recognise the importance of the rules set out in
Council Directive 96/61/EC of 24 September 1996 concerning
integrated pollution prevention and control. Each Contracting
Party shall endeavour to implement that Directive.

Article 15

After the entry into force of this Treaty, the construction and
operation of new generating plants shall comply with the acquis
communautaire on environment.

Article 16

The ‘acquis communautaire on environment’, for the purpose of
this Treaty, shall mean (i) Council Directive 85/337/EEC of 27
June 1985 on the assessment of the effects of certain public and
private projects on the environment, as amended by Council
Directive 97/11/EC of 3 March 1997 and Directive 2003/35/EC
of the European Parliament and of the Council of 26 May
2003,
(ii) Council Directive 1999/32/EC of 26 April 1999
relating to a reduction in the sulphur content of certain liquid
fuels
(iii) Directive
2001/80/EC of the European Parliament and of the Council
of 23 October 2001 on the limitation of emissions of certain
pollutants into the air from large combustion plants, and (iv)
Article 4(2) of Directive 79/409/EEC of the Council of 2 April
1979 on the conservation of wild birds.

and amending Directive 93/12/EEC,

With regard to public undertakings and undertakings to which
special or exclusive rights have been granted, each Contracting
Party shall ensure that as from six months following the date of
entry into force of this Treaty, the principles of the Treaty
establishing the European Community, in particular Article 86
(1) and (2) thereof (attached in Annex III), are upheld.

CHAPTER V

The Acquis for Renewables

Article 20

Party

shall provide

Each Contracting
to the European
Commission within one year of the date of entry into force
of this Treaty a plan to implement Directive 2001/77/EC of
the European Parliament and of the Council of 27 September
2001 on the promotion of electricity produced from renewable
energy sources in the internal electricity market and Directive
2003/30/EC of the European Parliament and of the Council of
8 May 2003 on the promotion of the use of biofuels or other
renewable fuels for transport. The European Commission shall
present the plan of each Contracting Party to the Ministerial
Council for adoption.

Article 17

Compliance with Generally Applicable Standards of

the

The provisions of and the measures taken under this Chapter
shall only apply to Network Energy.

European Community

Article 21

CHAPTER VI

CHAPTER IV

The Acquis on Competition

Article 18

The following shall be incompatible with the proper func-
trade of

1.
tioning of
Network Energy between the Contracting Parties:

insofar as they may affect

the Treaty,

(a) all agreements between undertakings, decisions by asso-
ciations of undertakings and concerted practices which
have as their object or effect the prevention, restriction or
distortion of competition,

(b) abuse by one or more undertakings of a dominant position
in the market between the Contracting Parties as a whole or
in a substantial part thereof,

(c) any public aid which distorts or threatens to distort compe-
tition by favouring certain undertakings or certain energy
resources.

2.
Any practices contrary to this Article shall be assessed on
the basis of criteria arising from the application of the rules of
Articles 81, 82 and 87 of the Treaty establishing the European
Community (attached in Annex III).

Within one year of the date of entry into force of this Treaty,
the Secretariat shall draw up a list of the Generally Applicable
Standards of the European Community, to be submitted to the
Ministerial Council for adoption.

Article 22

The Contracting Parties shall, within one year of the adoption of
the list, adopt development plans to bring their Network Energy
sectors into line with these Generally Applicable Standards of
the European Community.

Article 23

and is necessary

safely and efficiently,

‘Generally Applicable Standards of the European Community’
is applied
shall refer to any technical system standard that
within the European Community,
for
including
operating network systems
aspects of transmission, cross-border connections, modulation
and general technical system security standards issued where
applicable via the European Committee for Standardization
(CEN), the European Committee for Electrotechnical Standardi-
zation (Cenelec) and similar normation bodies or as issued by
the Union for the Coordination of Transmission of Electricity
(UCTE) and the European Association for the Streamlining of
Energy Exchanges (Easeegas)
for common rule setting and
business practices.

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CHAPTER VII

The Adaptation and Evolution of the Acquis

Article 24

For the implementation of this Title, the Energy Community
shall adopt Measures adapting the acquis communautaire
described in this Title, taking into account both the institutional
framework of this Treaty and the specific situation of each of
the Contracting Parties.

CHAPTER III

Security of Supply

Article 29

The Parties shall, within one year of the date of entry into force
of this Treaty, adopt security of supply statements describing in
particular diversity of
and
geographic origin of imported fuels. The statements shall be
communicated to the Secretariat, and shall be available to any
Party to this Treaty. They shall be updated every two years. The
Secretariat shall give guidance and assistance with respect to
such statements.

technological

security,

supply,

Article 25

The Energy Community may take measures to implement
amendments to the acquis communautaire described in this
Title, in line with the evolution of European Community law.

Article 30

Article 29 does not imply a necessity to change energy policies
or purchasing practices.

TITLE III

MECHANISM FOR OPERATION OF NETWORK ENERGY
MARKETS

CHAPTER I

Geographic Scope

Article 26

The provisions of and the measures taken under this Title shall
apply to the territories of the Adhering Parties, to the territory
under the jurisdiction of the United Nations Interim Adminis-
tration Mission in Kosovo, and to the territories of the European
Community referred to in Article 27.

Article 27

As regards the European Community, the provisions of and the
measures taken under this Title shall apply to the territories of
the
the Republic of Austria, of
Republic of Hungary, of
the
Republic of Slovenia. Upon accession to the European Union
of an Adhering Party, the provisions of and the measures taken
under this Title shall, without any further formalities, also apply
to the territory of that new Member State.

the Hellenic Republic, of
the Italian Republic, and of

CHAPTER IV

Provision of Energy to Citizens

Article 31

The Energy Community shall promote High-Levels of provision
of Network Energy to all its citizens within the limits of the
public service obligations contained in the relevant acquis
communautaire on energy.

Article 32

For this purpose, the Energy Community may take Measures to:

(a) allow for the universal provision of electricity;

(b) foster effective demand management policies;

(c) ensure fair competition.

Article 33

The Energy Community may also make recommendations to
support effective reform of the Network Energy sectors of the
Parties, including inter alia to increase the level of payment for
energy by all customers, and to foster the affordability of
Network Energy prices to consumers.

CHAPTER II

Mechanism for Long-Distance Transportation of Network
Energy

Article 28

The Energy Community shall take additional measures estab-
lishing a single mechanism for the cross-border transmission
and/or transportation of Network Energy.

CHAPTER V

Harmonisation

Article 34

The Energy Community may take measures concerning compat-
ibility of market designs for the operation of Network Energy
markets, as well as mutual recognition of licenses and measures
fostering free establishment of Network Energy companies.

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CHAPTER VI

Renewable Energy Sources and Energy Efficiency

Article 35

The Energy Community may adopt Measures to foster devel-
opment in the areas of renewable energy sources and energy
efficiency, taking account of their advantages for security of
supply, environment protection, social cohesion and regional
development.

CHAPTER VII

Safeguard Measures

Article 36

In the event of a sudden crisis on the Network Energy market in
the territory of an Adhering Party, the territory under the juris-
diction of the United Nations Interim Administration Mission in
Kosovo, or a territory of the European Community referred to
in Article 27, where the physical safety or security of persons,
or Network Energy apparatus or installations or system integrity
is
the concerned Party may
temporarily take necessary safeguard measures.

threatened in this

territory,

Article 37

cause

Such safeguard measures
least possible
shall
disturbance in the functioning of the Network Energy market
the Parties, and not be wider in scope than is strictly
of
necessary to remedy the sudden difficulties which have arisen.
They shall not distort competition or adversely affect trade in a
manner which is at variance with the common interest.

the

Article 38

The Party concerned shall without delay notify these safeguard
measures to the Secretariat, which shall immediately inform the
other Parties.

Article 39

The Energy Community may decide that the safeguard measures
taken by the Party concerned do not comply with the
provisions of this Chapter, and request that Party to put an
end to, or modify, those safeguard measures.

the territory under
Interim Mission in Kosovo.

the jurisdiction of

the United Nations

CHAPTER II

Internal Energy Market

Article 41

Customs duties and quantitative restrictions on the import
1.
and export of Network Energy and all measures having
equivalent effect, shall be prohibited between the Parties. This
prohibition shall also apply to customs duties of a fiscal nature.

2.
Paragraph 1 shall not preclude quantitative restrictions or
measures having equivalent effect, justified on grounds of public
policy or public security; the protection of health and life of
humans, animals or plants, or the protection of industrial and
commercial property. Such restrictions or measures shall not,
however, constitute a means of arbitrary discrimination or a
disguised restriction on trade between the Parties.

Article 42

The Energy Community may take Measures with the aim
for

1.
of creating a single market without
Network Energy.

frontiers

internal

2.
Paragraph 1 shall not apply to fiscal measures, to those
relating to the free movement of persons nor to those relating
to the rights and interests of employed persons.

CHAPTER III

External Energy Trade Policy

Article 43

The Energy Community may take Measures necessary for the
regulation of imports and exports of Network Energy to and
from third countries with a view to ensuring equivalent access
to and from third country markets in respect of basic environ-
mental standards or to ensure the safe operation of the internal
energy market.

CHAPTER IV

Mutual Assistance in the Event of Disruption

TITLE IV

Article 44

THE CREATION OF A SINGLE ENERGY MARKET

CHAPTER I

Geographic Scope

Article 40

In the event of disruption of Network Energy supply affecting a
Party and involving another Party or a third country, the Parties
shall seek an expeditious resolution in accordance with the
provisions of this Chapter.

The provisions of and the measures taken under this Title shall
apply to the territories to which the Treaty establishing the
European Community applies under the conditions laid down
in that Treaty, to the territories of the Adhering Parties and to

Article 45

Upon request of the Party directly affected by the disruption, the
Ministerial Council shall meet. The Ministerial Council may take
the necessary measures in response to the disruption.

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Article 46

Within one year of the date of entry into force of this Treaty,
the Ministerial Council shall adopt a Procedural Act for the
operation of
this
Chapter, which may include the conferral of powers to take
interim Measures to the Permanent High-Level Group.

the mutual assistance obligation under

TITLE V

INSTITUTIONS OF THE ENERGY COMMUNITY

CHAPTER I

The Ministerial Council

Article 47

Presidents. The Presidency
prepare the draft Agenda.

and the Vice-Presidents

shall

Article 52

The Ministerial Council shall submit an annual report on the
activities of the Energy Community to the European Parliament
and to the Parliaments of
the
Participants.

the Adhering Parties and of

CHAPTER II

The Permanent High-Level Group

Article 53

The Ministerial Council shall ensure that the objectives set out
in this Treaty are attained. It shall:

The Permanent High-Level Group shall:

(a) prepare the work of the Ministerial Council;

(a) provide general policy guidelines;

(b) take Measures;

(b) give assent to technical assistance requests made by inter-
insti-

international financial

national donor organisations,
tutions and bilateral donors;

(c) adopt Procedural Acts, which may include the conferral,
under precise conditions, of specific tasks, powers and obli-
gations to carry out the policy of the Energy Community on
the Permanent High-Level Group, the Regulatory Board or
the Secretariat.

(c) report to the Ministerial Council on progress made toward

achievement of the objectives of this Treaty;

(d) take Measures, if so empowered by the Ministerial Council;

Article 48

The Ministerial Council shall consist of one representative of
each Contracting Party
the
European Community. One non-voting representative of each
Participant may participate in its meetings.

and two representatives of

(e) adopt Procedural Acts, not involving the conferral of tasks,
powers or obligations on other institutions of the Energy
Community;

(f) discuss

the development of

described in Title II on the basis of a report
that
European Commission shall submit on a regular basis.

the acquis communautaire
the

Article 49

The Ministerial Council
procedure by Procedural Act.

shall adopt

its

internal

rules of

Article 54

Article 50

The Presidency shall be held in turn by each Contracting Party
for a term of six months in the order decided by a Procedural
Act of the Ministerial Council. The Presidency shall convene the
Ministerial Council in a place decided upon by the Presidency.
The Ministerial Council shall meet at
least once every six
months. The meetings shall be prepared by the Secretariat.

The Permanent High-Level Group shall consist of one represen-
tative of each Contracting Party and two representatives of the
European Community. One non-voting representative of each
Participant may participate in its meetings.

Article 55

The Permanent High-Level Group shall adopt its internal rules
of procedure as a Procedural Act.

Article 51

Article 56

the Ministerial Council and be
The Presidency shall chair
assisted by one representative of
the European Community
and one representative of the incoming Presidency as Vice-

The Presidency shall convene the Permanent High-Level Group
at a place to be determined by the Presidency. The meetings
shall be prepared by the Secretariat.

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Article 57

The Presidency shall chair the Permanent High-Level Group and
be assisted by one representative of the European Community
and one representative of the incoming Presidency as Vice-
shall
Presidents. The Presidency
prepare the draft Agenda.

and the Vice-Presidents

CHAPTER III

The Regulatory Board

Article 58

The Regulatory Board shall:

CHAPTER IV

The Fora

Article 63

Two Fora, composed of representatives of all interested stake-
holders,
industry representative
groups and consumers, shall advise the Energy Community.

including industry, regulators,

Article 64

The Fora shall be chaired by a representative of the European
Community.

Article 65

(a) advise the Ministerial Council or the Permanent High-Level
Group on the details of statutory, technical and regulatory
rules;

The conclusions of the Fora shall be adopted by consensus.
They shall be forwarded to the Permanent High-Level Group.

(b) issue Recommendations on cross-border disputes involving
two or more Regulators, upon request of any of them;

(c)

take Measures, if so empowered by the Ministerial Council;

(d) adopt Procedural Acts.

Article 66

The Electricity Forum shall meet in Athens. The Gas Forum
shall meet at a place to be determined by a Procedural Act of
the Ministerial Council.

CHAPTER V

The Secretariat

Article 67

Article 59

The Secretariat shall:

The Regulatory Board shall be composed of one representative
of the energy regulator of each Contracting Party, pursuant to
the relevant parts of the acquis communautaire on energy. The
European Community shall be represented by the European
Commission, assisted by one regulator of each Participant,
and one representative of the European Regulators Group for
Electricity and Gas (ERGEG). If a Contracting Party or a Parti-
cipant has one regulator for gas and one regulator for elec-
tricity, the Contracting Party or the Participant shall determine
which regulator shall attend a meeting of the Regulatory Board,
taking account of its agenda.

Article 60

The Regulatory Board shall adopt its internal rules of procedure
by Procedural Act.

Article 61

for a term
The Regulatory Board shall elect a President
determined
European
Commission shall act as Vice-President. The President and the
Vice-President shall prepare the draft Agenda.

Regulatory

Board.

The

the

by

(a) provide administrative support to the Ministerial Council,
the Regulatory Board

the Permanent High-Level Group,
and the Fora;

(b) review the proper implementation by the Parties of their
obligations under this Treaty, and submit yearly progress
reports to the Ministerial Council;

in the coordination by the European
(c) review and assist
Commission of
the donors' activity in the territories of
the Adhering Parties and the territory under the jurisdiction
of the United Nations Interim Administration Mission in
Kosovo, and provide administrative support to the donors;

(d) carry out other tasks conferred on it under this Treaty or by
a Procedural Act of the Ministerial Council, excluding the
power to take Measures; and

(e) adopt Procedural Acts.

Article 62

The Regulatory Board shall meet in Athens.

Article 68

The Secretariat shall comprise a Director and such staff as the
Energy Community may require.

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Article 69

the Secretariat

shall be appointed by a
The Director of
the Ministerial Council. The Ministerial
Procedural Act of
Council shall
the
lay down, by Procedural Act,
recruitment, working conditions and geographic equilibrium
of the Secretariat's staff. The Director shall select and appoint
the staff.

rules for

Article 70

In the performance of their duties the Director and the staff
shall not seek or receive instructions from any Party to this
Treaty. They shall act impartially and promote the interests of
the Energy Community.

TITLE VI

DECISION MAKING PROCESS

CHAPTER I

General Provisions

Article 76

Measures may take the form of a Decision or a Recommen-
dation.

A Decision is legally binding in its entirety upon those to whom
it is addressed.

A Recommendation has no binding force. Parties shall use their
best endeavours to carry out Recommendations.

Article 71

The Director of the Secretariat or a nominated alternate shall
assist at
the Permanent High-Level
the Ministerial Council,
Group, the Regulatory Board and the Fora.

Article 77

Save as provided in Article 80, each Party shall have one vote.

Article 72

The seat of the Secretariat shall be in Vienna.

CHAPTER VI

Budget

Article 73

Each Party shall contribute to the budget of
the Energy
Community as set out in Annex IV. The level of contributions
may be reviewed every five years, on request of any Party, by a
Procedural Act of the Ministerial Council.

Article 74

the

cover

operational

The Ministerial Council shall adopt the budget of the Energy
Community by Procedural Act every two years. The budget
shall
Energy
Community necessary for the functioning of its institutions.
The expenditure of each institution shall be set out
in a
the budget. The Ministerial Council shall
different part of
adopt a Procedural Act specifying the procedure for the imple-
mentation of
the budget, and for presenting and auditing
accounts and inspection.

expenses

the

of

Article 78

The Ministerial Council, the Permanent High-Level Group or the
Regulatory Board may act only if two third of the Parties are
represented. Abstentions in a vote from Parties present shall not
count as votes cast.

CHAPTER II

Measures under Title II

Article 79

The Ministerial Council, the Permanent High-Level Group or the
Regulatory Board shall
take Measures under Title II on a
from the European Commission. The European
proposal
Commission may alter or withdraw its proposal at any time
during the procedure leading to adoption of the Measures.

Article 80

Each Contracting Party shall have one vote.

Article 81

The Ministerial Council, the Permanent High-Level Group or the
Regulatory Board shall act by a majority of the votes cast.

Article 75

The Director of the Secretariat shall implement the budget in
accordance with the Procedural Act adopted pursuant to Article
74, and shall report annually to the Ministerial Council on the
execution of the budget. The Ministerial Council may decide by
Procedural Act, if appropriate, to entrust independent auditors
with verifying the proper execution of the budget.

CHAPTER III

Measures under Title III

Article 82

The Ministerial Council, the Permanent High-Level Group or the
Regulatory Board shall
take Measures under Title III on a
proposal from a Party or the Secretariat.

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Article 83

Article 90

The Ministerial Council, the Permanent High-Level Group or the
Regulatory Board shall act by a two third majority of the votes
cast, including a positive vote of the European Community.

CHAPTER IV

Measures under Title IV

Article 84

The Ministerial Council, the Permanent High-Level Group or the
Regulatory Board shall
take Measures under Title IV on a
proposal from a Party.

1.
Failure by a Party to comply with a Treaty obligation or to
implement a Decision addressed to it within the required period
may be brought to the attention of the Ministerial Council by a
reasoned request of any Party, the Secretariat or the Regulatory
Board. Private bodies may approach the Secretariat with
complaints.

The Party concerned may make observations in response

2.
to the request or complaint.

Article 85

The Ministerial Council, the Permanent High-Level Group or the
Regulatory Board shall take Measures by unanimity.

1.
The Ministerial Council may determine the existence of a
breach by a Party of its obligations. The Ministerial Council shall
decide:

Article 91

CHAPTER V

Procedural Acts

Article 86

A Procedural Act shall regulate organizational, budgetary and
including the
transparency issues of the Energy Community,
delegation of power
to the
Permanent High-Level Group,
the Regulatory Board or the
Secretariat, and shall have binding force on the institutions of
the Energy Community, and, if the Procedural Act so provides,
on the Parties.

from the Ministerial Council

Article 87

Save as provided in Article 88, Procedural Acts shall be adopted
in compliance with the Decision Making Process set out in
Chapter III of this Title.

Article 88

The Procedural Act appointing the Director of the Secretariat
provided for in Article 69 shall be adopted by simple majority
on a proposal from the European Commission. The Procedural
Acts on budgetary matters provided for in Articles 73 and 74
shall be adopted by unanimity on a proposal
from the
European Commission. The Procedural Acts conferring powers
on the Regulatory Board provided for in Article 47(c) shall be
taken by unanimity on a proposal from a Party or the Secre-
tariat.

TITLE VII

IMPLEMENTATION OF DECISIONS AND DISPUTE
SETTLEMENT

(a) by a simple majority, if the breach relates to Title II;

(b) by a two-thirds majority, if the breach relates to Title III;

(c) by unanimity, if the breach relates to Title IV.

2.
The Ministerial Council may subsequently decide by
simple majority to revoke any decisions adopted under this
Article.

Article 92

At the request of a Party, the Secretariat or the Regulatory
1.
Board,
the Ministerial Council, acting by unanimity, may
determine the existence of a serious and persistent breach by
a Party of its obligations under this Treaty and may suspend
certain of the rights deriving from application of this Treaty to
the Party concerned, including the suspension of voting rights
and exclusion from meetings or mechanisms provided for in
this Treaty.

The Ministerial Council may subsequently decide by
this

2.
simple majority to revoke any decisions taken under
Article.

Article 89

Article 93

The Parties shall
implement Decisions addressed to them in
their domestic legal system within the period specified in the
Decision.

When adopting the decisions referred to in Articles 91 and 92,
the Ministerial Council shall act without taking into account the
vote of the representative of the Party concerned.

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TITLE VIII

INTERPRETATION

Article 94

Article 99

Upon accession to the European Community of an Adhering
Party, that party shall become a Participant as provided for in
Article 95.

The institutions shall interpret any term or other concept used
in this Treaty that is derived from European Community law in
conformity with the case law of the Court of Justice or the
Court of First Instance of the European Communities. Where
no interpretation from those Courts is available, the Ministerial
Council shall give guidance in interpreting this Treaty. It may
delegate that task to the Permanent High-Level Group. Such
guidance shall not prejudge any interpretation of the acquis
communautaire by the Court of Justice or the Court of First
Instance at a later stage.

TITLE IX

PARTICIPANTS AND OBSERVERS

Article 95

Upon a request to the Ministerial Council, any Member State of
the European Community may be represented in the Ministerial
Council, the Permanent High-Level Group and the Regulatory
Board under the conditions laid down in Articles 48, 54 and 59
as a Participant, and shall be permitted to participate in the
the Permanent High-
discussions of
Level Group, the Regulatory Board and the Fora.

the Ministerial Council,

TITLE XI

REVISION AND ACCESSION

Article 100

The Ministerial Council may, by unanimity of its Members:

(i)

amend the provisions of Title I to VII;

(ii) decide to implement other parts of the acquis commu-

nautaire related to Network Energy;

(iii) extend this Treaty to other energy products and carriers or

other essential network infrastructures;

(iv) agree on the accession to the Energy Community of a new

Party.

Article 96

1.
Upon a reasoned request of a neighbouring third country,
the Ministerial Council may, by unanimity, accept that country
as an Observer. Upon a request presented to the Ministerial
Council within six months of the date of entry into force of
this Treaty, Moldova shall be accepted as an Observer.

TITLE XII

FINAL AND TRANSITIONAL PROVISIONS

Article 101

Observers may attend the meetings of
the Permanent High-Level Group,

2.
Council,
Board and the Fora, without participating in the discussions.

the Ministerial
the Regulatory

TITLE X

DURATION

Article 97

This Treaty is concluded for a period of 10 years from the date
acting by
of
entry into force. The Ministerial Council,
unanimity, may decide to extend its duration.
If no such
decision is taken, the Treaty may continue to apply between
those Parties who voted in favour of extension, provided that
their number amounted to at least two thirds of the Parties to
the Energy Community.

Article 98

Any party may withdraw from this Treaty by giving six months
notice, addressed to the Secretariat.

Without prejudice to Articles 102 and 103, the rights and
obligations arising from agreements concluded by a Contracting
Party before the signature of this Treaty shall not be affected by
the provisions of
such
this Treaty. To the
agreements are not compatible with this Treaty, the Contracting
Party concerned shall take all appropriate measures to eliminate
the incompatibilities established, no later than one year after the
date of entry into force of this Treaty.

extent

that

Article 102

All obligations under this Treaty are without prejudice to
existing legal obligations of the Parties under the Treaty estab-
lishing the World Trade Organisation.

Article 103

Any obligations under an agreement between the European
Community and its Member States on the one hand, and a
Contracting Party on the other hand shall not be affected by
this Treaty. Any commitment taken in the context of nego-
tiations for accession to the European Union shall not be
affected by this Treaty.

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Until the adoption of the Procedural Act referred to in Article 50, the 2003 Athens Memorandum of
Understanding (1) shall define the order for holding the Presidency.

Article 104

This Treaty shall be approved by the Parties in accordance with their internal procedures.

Article 105

This Treaty shall enter into force on the first day of the month following the date on which the European
Community and six Contracting Parties have notified the completion of the procedures necessary for this
purpose.

Notification shall be sent to the Secretary-General of the Council of the European Union who shall be the
depositary for this Treaty.

IN WITNESS THEREOF the duly authorised representatives have signed this Treaty.

Done at Athens, on the twenty-fifth day of October in the year two thousand and five.

(1) Memorandum of Understanding on the Regional Energy Market in South East Europe and its Integration into the

European Community Internal Energy Market, signed in Athens on 8 December 2003.

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For the European Community

For the Republic of Albania

For the Republic of Bulgaria

For Bosnia and Herzegovina

For the Republic of Croatia

For the former Yugoslav Republic of Macedonia

For the Republic of Montenegro

For Romania

For the Republic of Serbia

For the United Nations Interim Administration Mission in Kosovo pursuant to the United Nations
Security Council Resolution 1244

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COUNCIL OF
THE EUROPEAN UNION

The Presidency

Mr. Minčo Jordanov,

Vice-President of the Government

of the former Yugoslav Republic of Macedonia.

Sir,

Athens, 25 October 2005

The European Community takes note of your letter of today's date and confirms that your letter and this
reply shall together take the place of the signature of the Treaty establishing the Energy Community by the
former Yugoslav Republic of Macedonia. However, this cannot be construed as acceptance or recognition by
the European Community, in whatever form or content of a denomination other than ‘former Yugoslav
Republic of Macedonia’.

Please accept, Sir, the assurance of my highest consideration.

On behalf of the European Community

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Republic of Macedonia
— Office of the Deputy Prime Minister —
Minčo Jordanov

Athens, 25 October 2005

Your Excellency,

Hereby I declare that the text of the Treaty establishing the Energy Community is acceptable for the Government of the
Republic of Macedonia.

With this letter, the Government of the Republic of Macedonia considers itself as signatory of the Treaty establishing
the Energy Community.

However, I declare that the Republic of Macedonia does not accept the denomination used for my country in the above-
mentioned documents having in view that the constitutional name of my country is the Republic of Macedonia.

Please accept, Your Excellency, the assurances of my highest consideration.

Minčo Jordanov

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ANNEX I

Timetable for the Implementation of the EC Directives No 2003/54 and 2003/55, and the Regulation (EC)
No 1228/2003, of 26 June 2003

1. Subject to paragraph 2 below and Article 24 of this Treaty, each Contracting Party shall implement within twelve

months of the entry into force of this Treaty:

(i) the European Community Directive 2003/54/EC of

the European Parliament and of

the Council of

26 June 2003 concerning common rules for the internal market in electricity;

(ii) the European Community Directive 2003/55/EC of

the European Parliament and of

the Council of

26 June 2003 concerning common rules for the internal market in natural gas;

(iii) the European Community 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.

2. Each Contracting Party must ensure that the eligible customers within the meaning of the European Community

Directives 2003/54/EC and 2003/55/EC are:

(i) from 1 January 2008, all non-household customers; and

(ii) from 1 January 2015, all customers.

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ANNEX II

Timetable for the Implementation of the Acquis on Environment

1. Each Contracting Party shall implement Council Directive 85/337/EEC of 27 June 1985 on the assessment of the
effects of certain public and private projects on the environment, as amended by Council Directives 97/11/EC of
3 March 1997 and Directive 2003/35/EC of the European Parliament and of the Council of 26 May 2003, on the
entry into force of this Treaty.

2. Each Contracting Party shall implement Council Directive 1999/32/EC of 26 April 1999 relating to a reduction in the

sulphur content of certain liquid fuels and amending Directive 93/12/EEC by 31 December 2011.

3. Each Contracting Party shall

implement Directive 2001/80/EC of the European Parliament and of the Council of
23 October 2001 on the limitation of emissions of certain pollutants into the air from large combustion plants by
31 December 2017.

4. Each Contracting Party shall implement Article 4(2) of Directive 79/409/EEC of the Council of 2 April 1979 on the

conservation of wild birds on the entry into force of this treaty.

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ANNEX III

Article 81 of the EC Treaty

1. The following shall be prohibited as incompatible with the common market: all agreements between undertakings,
decisions by associations of undertakings and concerted practices which may affect trade between Member States and
which have as their object or effect the prevention, restriction or distortion of competition within the common
market, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a

competitive disadvantage;

(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which,
by their nature or according to commercial usage, have no connection with the subject of such contracts.

2. Any agreements or decisions prohibited pursuant to this article shall be automatically void.

3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:

— any agreement or category of agreements between undertakings,

— any decision or category of decisions by associations of undertakings,

— any concerted practice or category of concerted practices,

which contributes to improving the production or distribution of goods or to promoting technical or economic
progress, while allowing consumers a fair share of the resulting benefit, and which does not:

(a)

impose on the undertakings concerned restrictions which are not indispensable to the attainment of these
objectives;

(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products

in question.

Article 82 of the EC Treaty

Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it
shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States.

Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

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(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a

competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by

their nature or according to commercial usage, have no connection with the subject of such contracts.

Article 86(1) and (2) of the EC Treaty

1. In the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member
States shall neither enact nor maintain in force any measure contrary to the rules contained in this Treaty, in particular
to those rules provided for in Article 12 and Articles 81 to 89.

2. Undertakings entrusted with the operation of services of general economic interest or having the character of a
in particular to the rules on
revenue-producing monopoly shall be subject to the rules contained in this Treaty,
competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the
particular tasks assigned to them. The development of trade must not be affected to such an extent as would be
contrary to the interests of the Community.

Article 87 of the EC Treaty

1. Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form
whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of
certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.

2. The following shall be compatible with the common market:

(a) aid having a social character, granted to individual consumers, provided that such aid is granted without discri-

mination related to the origin of the products concerned;

(b) aid to make good the damage caused by natural disasters or exceptional occurrences;

(c) aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of
Germany, in so far as such aid is required in order to compensate for the economic disadvantages caused by that
division.

3. The following may be considered to be compatible with the common market:

(a) aid to promote the economic development of areas where the standard of living is abnormally low or where there

is serious underemployment;

(b) aid to promote the execution of an important project of common European interest or to remedy a serious

disturbance in the economy of a Member State;

(c) aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does

not adversely affect trading conditions to an extent contrary to the common interest;

(d) aid to promote culture and heritage conservation where such aid does not affect trading conditions and compe-

tition in the Community to an extent that is contrary to the common interest;

(e) such other categories of aid as may be specified by decision of the Council acting by a qualified majority on a

proposal from the Commission.

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ANNEX IV

Contribution to the Budget

Parties

Contribution in percentage

European Community

Republic of Albania

Republic of Bulgaria

Bosnia and Herzegovina

Republic of Croatia

former Yugoslav Republic of Macedonia

Republic of Montenegro

Romania

Republic of Serbia

United Nations Interim Administration Mission in Kosovo

94,9 %

0,1 %

1 %

0,3 %

0,5 %

0,1 %

0,1 %

2,2 %

0,7 %

0,1 %