2008/585/EC: Commission Decision of 7 July 2008 exempting the production of electricity in Austria from the application of Directive 2004/17/EC of the European Parliament and of the Council coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors (notified under document number C(2008) 3382) (Text with EEA relevance)
Date: 2008-07-07
Institutions: European Commission
Subjects: Austria, award of contract, competition law, electrical energy, electrical industry, energy production, public contract

L 188/28

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Official Journal of the European Union

16.7.2008

COMMISSION

COMMISSION DECISION

of 7 July 2008

exempting the production of electricity in Austria from the application of Directive 2004/17/EC of
the European Parliament and of the Council coordinating the procurement procedures of entities
operating in the water, energy, transport and postal services sectors

(notified under document number C(2008) 3382)

(Only the German text is authentic)

(Text with EEA relevance)

(2008/585/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(2)

The request
concerns production of electricity.

submitted by the Republic of Austria

Having regard to the Treaty
Community,

establishing the European

Having regard to Directive 2004/17/EC of
the European
Parliament and of the Council of 31 March 2004 coordinating
the procurement procedures of entities operating in the water,
energy, transport and postal services sectors (1), and in particular
Article 30(4) and (6) thereof,

Having regard to the request submitted by the Republic of
Austria by e-mail of 10 January 2008,

After consulting the Advisory Committee for Public Contracts,

(3)

(4)

Whereas:

I. FACTS

(1)

On 10 January 2008, Austria transmitted a request
pursuant to Article 30(4) of Directive 2004/17/EC to
the Commission by e-mail. The Commission requested
additional
information by e-mail of 4 February 2008,
which, following a prolongation of the initial deadline,
was transmitted by the Austrian authorities by e-mail of
29 February 2008.

the regulator of

The request is accompanied by a letter from the inde­
(Energie-Control
pendent national authority, E-Control
GmbH,
the Austrian electricity and
natural gas markets), which limits itself to a statement
that ‘… no objection exists against an exemption from
the application of Public Procurement Law in the field of
electricity generation.’

II. LEGAL FRAMEWORK

Article 30 of Directive 2004/17/EC provides
that
contracts intended to enable the performance of one of
the activities to which the Directive applies shall not be
subject to the Directive if, in the Member State in which
it is carried out, the activity is directly exposed to compe­
tition on markets to which access is not restricted. Direct
exposure to competition is assessed on the basis of
objective criteria, taking account of the specific charac­
teristics of the sector concerned. Access is deemed to be
unrestricted if the Member State has implemented and
applied the relevant Community legislation opening a
given sector or a part of it. This legislation is listed in
Annex XI of Directive 2004/17/EC, which, for the elec­
the
tricity sector,
European
of
and
19 December 1996 concerning common rules for the
internal market in electricity (2). Directive 96/92/EC has
been superseded 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 electricity and repealing Directive 96/92/EC (3), which
requires an even higher degree of market opening.

to Directive 96/92/EC of
Council

refers
Parliament

the

of

(1) OJ L 134, 30.4.2004, p. 1. Directive as

last amended by
Commission Regulation (EC) No 213/2008 (OJ L 74, 15.3.2008,
p. 1).

(2) OJ L 27, 30.1.1997, p. 20.
(3) OJ L 176, 15.7.2003, p. 37. Directive as last amended by Directive

2008/3/EC (OJ L 17, 22.1.2008, p. 6).

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L 188/29

(5)

(6)

Austria has implemented and applied not only Directive
96/92/EC but also Directive 2003/54/EC, opting for legal
and functional unbundling for transmission and distri­
bution networks except
the smallest companies,
for
which are exempted from the requirements of functional
unbundling. Consequently, and in accordance with the
first
to the
access
subparagraph of Article 30(3),
market should be deemed not to be restricted.

Direct exposure to competition should be evaluated on
the basis of various indicators, none of which are, per se,
In respect of the markets concerned by this
decisive.
decision,
the market share of the main players on a
given market constitutes one criterion which should be
taken into account. Another criterion is the degree of
concentration on those markets. Given the characteristics
of the markets concerned, further criteria should also be
taken into account
the
balancing market, price competition and the degree of
customer switching.

the functioning of

such as

(7)

This Decision is without prejudice to the application of
the rules on competition.

III. ASSESSMENT

(8)

The request submitted by Austria concerns production of
electricity in Austria.

(9)

Austria is divided into three balancing zones and internal
congestion points are experienced within one of these
(the APG balancing zone in which congestion can arise
between the Vienna and Graz areas,
interconnected
through the Steirmarkleitung). The question could
the geographical market
therefore be raised whether
would be smaller than national (1). However, according
to the available information, in most cases the effects of
these internal congestion points are coped with through
the application of
the
such as
transmission
appliance of phase shifters
capacity. In a few cases it may be necessary to use addi­
tional power plants to stabilise the network. When these
internal congestion points require that producers in the
north of Austria reduce their generation capacity, which
according to the Austrian authorities takes place only
exceptionally,
they are paid damages by the network
operator. Furthermore, there are no congestion points
and the
between this balancing zone
two other
zones, nor between the APG
Austrian balancing

technical measures
to control

(1) See COM(2006) 851 final of 10.1.2007. Commission Communi­
cation:
to Article 17 of Regulation (EC) No
1/2003 into the European gas and electricity sectors, hereinafter
referred to as ‘Final Report’, Annex B, point A1, 2).

Inquiry pursuant

are

therefore,

balancing zone and Germany. The effect of the internal
congestion points
according to the
available information, not significant in terms of energy
supply and competition. The absence of congestion in
the connections with Germany has raised the question
whether a geographical market covering these two
exist, which the Commission has
countries might
the
concluded not
territory of the Republic of Austria should be considered
to constitute the relevant market for the purposes of
evaluating the conditions laid down in Article 30(1) of
Directive 2004/17/EC, although it cannot be seen as
being isolated from the surrounding countries.

to be the case (2). Consequently,

(10)

(11)

that

SEC(2008)

the degree of
the total market

The Communication from the Commission to the
Council
and the European Parliament: Report on
in creating the internal gas and electricity
progress
market (3), hereafter referred to as the ‘2005 Report’,
‘many national markets display a high
states
degree of concentration of the industry,
impeding the
development of effective competition’ (4). Consequently,
in respect of electricity generation,
it considered that,
‘one
competition on
for
indicator
national markets
the
share of
is
biggest three producers’ (5). For 2006, the share of the
three largest generators is indicated as 52,2 % in the
Commission Staff Working Document of 15 April
has
2008,
substantial exports and imports of electricity,
in 2005
of the order of more than 17 500 GWh exports and
It is thus a net importer
over 20 000 GWh imports.
and imported electricity accounted for approximately a
quarter (7) of its total needs (8), in particular for base load
power. There is therefore a certain degree of constraint
leading Austrian
on the pricing behaviour of
producers through imports of electricity from outside
the Austrian territory and as a result investment in the
electricity sector inside the Austrian territory takes into
account other producers in the surrounding countries, in
particular in Germany. These factors should therefore be
taken as an indication of a certain degree of direct
exposure
regards production of
electricity.

460 (6). However, Austria

to competition as

the

total

amount of

Furthermore, even though they represent a small part of
the
and/or
consumed in a Member State, the functioning of the
balancing markets should also be considered as an ad­
‘any market participant who
ditional
cannot easily match its generation portfolio to the

electricity produced

indicator. In fact,

(2) See the Final Report, Annex B, point A2, 7.
(3) COM(2005) 568 final of 15.11.2005.
(4) The 2005 Report, p. 2.
(5) Cf. the 2005 Report, p. 7.
(6) Table 6 ‘Wholesale Market Position 2006’, p. 12 of ‘Commission
Staff Working Document: Accompanying document to the Report
on Progress in Creating the Internal Gas and Electricity Market’,
COM(2008) 192 final of 15.4.2008.

(7) 23,5 % according to information given by the Austrian authorities.
(8) i.e. the quantity of electricity needed for internal consumption and

exports.

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(hereinafter TSO) will

characteristics of its customers may find itself exposed to
the difference between the price at which the trans­
mission system operator
sell
imbalance energy, and the price at which it will buy
back excess production. These prices may either be
directly imposed by the regulator on the TSO; or alter­
natively a market based mechanism will be used in which
the price is determined by bids from other producers to
regulate their production upwards or downwards […]. A
key difficulty for small market participants arises where
there is the risk of a large spread between the buying
price from the TSO and the selling price. This occurs in a
number of Member States and is likely to be detrimental
to the development of competition. A high spread may
be indicative of an insufficient level of competition in the
balancing market which may be dominated by only one
two main generators’ (1). The Austrian balancing
or
market and its main characteristics — in particular its
market based pricing and a relatively low spread (2)
between the buying price from the TSO and the selling
price — are such that it should be taken as an additional
indicator that electricity production is directly exposed to
competition.

customers in Austria (5). Furthermore, there is no end-
user price control (6)
in Austria, that is, prices are set
by the economic operators themselves and do not have
to be approved by any authority prior to their appli­
cation. The situation in Austria is therefore satisfactory
as far as switching of
large and very large industrial
(end-)users and end-user price control are concerned
and should be taken as an indicator of direct exposure
to competition.

IV. CONCLUSIONS

(14)

In view of the factors examined in recitals 9 to 13, the
condition of direct exposure to competition laid down in
Article 30(1) of Directive 2004/17/EC should be
considered to be met in respect of production of elec­
tricity in Austria.

(15)

(16)

the

large

the
In

state of
of

competitive
respect

(12) Given the characteristics of the product concerned (elec­
tricity) and the scarcity or unavailability of suitable
services, price competition
substitutable products or
and price formation assume greater importance when
electricity
assessing
markets.
industrial
(end-)users, who are most liable to procure their elec­
tricity directly from suppliers which are at
the same
time generators,
the number of customers switching
supplier may serve as an indicator of price competition
‘a natural
and, thus,
indicator of the effec­
tiveness of competition. If few customers are switching,
there is likely to be a problem with the functioning of
the market, even if the benefits from the possibility of
renegotiating with the historical supplier should not be
ignored’ (3). Furthermore, ‘the existence of regulated end-
user prices is clearly a key determinant of customer
behaviour […]. Although the retaining of controls may
be
these will
increasingly cause distortions as the need for investment
approaches’ (4).

justified in a period of

transition,

indirectly,

Furthermore, since the condition of unrestricted access to
the market is deemed to be met, Directive 2004/17/EC
award
should not
contracts intended to enable electricity generation to be
carried out in Austria nor when they organise design
contests for the pursuit of such an activity in Austria.

apply when contracting entities

This Decision is based on the legal and factual situation
as of January to February 2008 as it appears from the
information submitted by the Republic of Austria, the
2005 Report and the Technical Annex thereto,
the
2007 Communication and the 2007 Staff Document as
It may be revised, should
well as the Final Report.
situation
factual
significant changes
mean that
applicability of
Article 30(1) of Directive 2004/17/EC are no longer met,

in the legal or
the

conditions

the

for

(13) According to the latest available information, switching
rates amount to 41,5 % for large and very large industrial

HAS ADOPTED THIS DECISION:

(1) Commission Staff Working Document, Technical Annex to the
to as
SEC(2005) 1448, hereinafter

referred

2005 Report,
‘Technical Annex’, pp. 67-68.

(2) According to the Final Report, paragraph 993, Table 52,

the
Austrian balancing market operates with a spread of 27, which
places it in the lower half as spread in balancing markets in the
EU ranges between 0 and 79. This analysis looks at the effects on
electricity generation of the workings of the balancing market and
not at the degree of competition within the balancing market itself.
For this purpose it is therefore unimportant whether a low spread is
caused by competition or a price cap imposed by the regulator, just
as the elevated concentration on the balancing market is without
pertinence in this analysis.

(3) 2005 Report, p. 9.
(4) Technical Annex, p. 17.

Article 1

Directive 2004/17/EC shall not apply to contracts awarded by
contracting entities and intended to enable them to carry out
electricity generation in Austria.

(5) See the document entitled ‘Austria — Internal Market Fact Sheet’,
published at http://ec.europa.eu/energy/energy_policy/doc/factsheets/
market/market_at_en.pdf, using information from Energie-Control
GmbH, 2007.

(6) Technical Annex p. 107.

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L 188/31

This Decision is addressed to the Republic of Austria.

Article 2

Done at Brussels, 7 July 2008.

For the Commission

Charlie McCREEVY
Member of the Commission