2006/653/EC: Commission Decision of 25 September 2006 granting the Republic of Cyprus a derogation from certain provisions of Directive 2003/54/EC of the European Parliament and of the Council (notified under document number C(2006) 4177)
Date: 2006-09-25
Institutions: European Commission
Subjects: Cyprus, derogation from EU law, electrical energy, energy production, single market

L 270/72

EN

Official Journal of the European Union

29.9.2006

COMMISSION DECISION

of 25 September 2006

granting the Republic of Cyprus a derogation from certain provisions of Directive 2003/54/EC of
the European Parliament and of the Council

(notified under document number C(2006) 4177)

(Only the Greek text is authentic)

(2006/653/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,

establishing the European

Having regard to Directive 2003/54/EC of
the European
Parliament and of the Council of 26 June 2003 concerning
common rules
in electricity and
the internal market
repealing Directive 96/92/EC) (1), and in particular Article
26(1) thereof,

for

Having regard to the application submitted by the Republic of
Cyprus on 28 June 2004,

After informing the Member States of the application,

Whereas:

(1)

(2)

(3)

On 28 June 2004, the Republic of Cyprus submitted an
application to the Commission, for a derogation from the
provisions of Article 21(1)(b) of Directive 2003/54/EC
for the period ending on 31 December 2008 and from
Article 21(1)(c) for the period ending on 31 December
2013. Express authority for the submission of such appli-
cation is contained in Article 26(1) of that Directive.

the

to be

request

assessed. Moreover,

The information provided was initially not adequate to
permit
the
consumption data presented included some consumption
in the northern part of Cyprus. In the light of Article 1
paragraph 1 of Protocol No 10 on Cyprus to the
Accession Treaty,
the figures related to that part of
Cyprus were considered immaterial to the examination.
On request, Cyprus provided additional elements of
information.

The Republic of Cyprus qualifies as a ‘small
isolated
system’ as defined in point
(26) of Article 2 of
Directive 2003/54/EC. According to that provision,
‘small
system with

system’ means

isolated

any

(1) OJ L 176, 15.7.2003, p. 37. Directive amended by Council Directive

2004/85/EC (OJ L 236, 7.7.2004, p. 10).

consumption of
less than 3 000 GWh in 1996, and
where less than 5 % of annual consumption is obtained
through interconnections with other systems. In 1996,
the Republic of Cyprus consumed 2 315,3 GWh. The
Republic of Cyprus is an isolated not
interconnected
power system.

The documents annexed to the application and those
subsequently submitted provide sufficient evidence that
it
is not possible for the time being to achieve the
in electricity given
objective of a competitive market
the size and structure of the electricity market on the
island and the fact
this system
becoming interconnected with the main grid of a
Member State is remote. An immediate opening up of
the market would create substantial problems relating in
particular to the security of supply of electricity.

the prospect of

that

The Electricity Authority of Cyprus (ECA) is currently the
only licensed supplier of electricity in Cyprus. A consid-
erable burden has been placed on it by the government’s
decision, motivated by environmental considerations, to
diversify the fuel mix, which currently depends on heavy
fuel. For that reason, natural gas has been required to be
introduced in the generation mix. ECA has agreed to
build combined cycle units that will use natural gas in
2010. The required investments will place on ECA an
extra burden that would be a disadvantage compared
to its competitors.

the government has provided generous
Furthermore,
incentives to potential
investors in renewable energy
sources notably for wind, photovoltaic and biomass
capacity. The interest shown by the private sector is
considerable. Electricity from renewable energy sources
enjoys preferential access to the system. However, the
unrestricted introduction and operation of electricity
generation from renewable energy sources would create
difficulties with regard to the stability of the system and
security of supply.

The opening up of the market would necessarily entail
costly reinforcement of the transmission system, to avoid
a negative impact on the reliability and security of the
network. This would result in a tariff increase that would
increase prices for the final customers. At present, no
meaningful competition would be possible.

(4)

(5)

(6)

(7)

29.9.2006

EN

Official Journal of the European Union

L 270/73

(8)

The Commission, having examined the reasoning of the
Republic of Cyprus application, is satisfied that the dero-
gation and the conditions for its application will not
prejudice the eventual achievement of the objectives of
Directive 2003/54/EC.

(9)

The derogation requested by the Republic of Cyprus
should therefore be granted.

(10) However, whilst the application gives a fair description of
the present situation, it does not take into consideration
possible developments in the medium- and long-term,
which are liable to lead to significant changes. The
situation should therefore be monitored regularly.

HAS ADOPTED THIS DECISION:

Article 2

The derogation may be withdrawn by the Commission if
substantial changes occur
the
Republic of Cyprus.

in the electricity sector of

To that end, Cyprus shall monitor the evolution of the elec-
tricity sector and shall report to the Commission any substantial
changes therein,
in particular information on new generating
licenses, new entrants in the market, price movements and
new infrastructure plans that may necessitate a review of the
derogation.

In addition,
the Republic of Cyprus shall submit a general
report to the Commission every two years, starting no later
than 31 December 2007. The reports shall set out tarification
and pricing policy together with measures taken to protect
customers’ interests in the light of the derogation.

Article 1

Article 3

A derogation from points (b) and (c) respectively of Article
21(1) of Directive 2003/54/EC is granted to the Republic of
Cyprus.

The derogation from Article 21(1)(b) of Directive 2003/54/EC
shall apply until 31 December 2008.

The derogation from Article 21(1)(c) of Directive 2003/54/EC
shall apply until 31 December 2013.

This Decision is addressed to the Republic of Cyprus.

Done at Brussels, 25 September 2006.

For the Commission

Andris PIEBALGS
Member of the Commission