2008/741/EC: Commission Decision of 11 September 2008 establishing that Article 30(1) of 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 is not applicable to the production and wholesale of electricity in Poland (notified under document number C(2008) 4805) (Text with EEA relevance)
Date: 2008-09-11
Institutions: European Commission
Subjects: Poland, award of contract, competition law, electrical energy, electrical industry, energy distribution, energy transport, public contract

19.9.2008

EN

Official Journal of the European Union

L 251/35

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COMMISSION

COMMISSION DECISION

of 11 September 2008

establishing that Article 30(1) of 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 is not applicable to the production and
wholesale of electricity in Poland

(notified under document number C(2008) 4805)

(Only the Polish text is authentic)

(Text with EEA relevance)

(2008/741/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

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,

(4)

Having regard to the request submitted by the Republic of
Poland by a letter received on 19 May 2008,

After consulting the Advisory Committee for Public Contracts,

Whereas:

I. FACTS

(1)

pursuant

to Article

On 19 May 2008, the Commission received a Polish
request
of Directive
2004/17/EC, transmitted to the Commission by letter.
The Commission requested additional information by e-
mail of 11 July 2008, which was transmitted by the
Polish authorities by e-mail of 28 July 2008, after the
end of the deadline set for answering.

30(4)

(2)

The request
concerns production and wholesale of electricity.

submitted by the Republic of Poland

The request is introduced, and thus endorsed, by the
independent national authority, (Urzędu Regulacji Ener­
getyki, the Polish energy regulatory office).

II. LEGAL FRAMEWORK

that
Article 30 of Directive 2004/17/EC provides
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 characte­
ristics 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.

(2) OJ L 27, 30.1.1997, p. 20.
(3) OJ L 176, 15.7.2003, p. 37.

L 251/36

EN

Official Journal of the European Union

19.9.2008

(5)

(6)

are

unbundling,

Poland has implemented and applied not only Directive
96/92/EC but also Directive 2003/54/EC, opting for legal
and organisational unbundling for
transmission and
distribution networks except for the smallest distribution
to
companies, which, while continuing to be subject
accounting
from the
exempted
requirements of
legal and organisational unbundling
having less than 100 000 customers or serving electricity
systems with consumption lower than 3 TWh in 1996. It
is, however, foreseen that Distribution System Operators
(DSOs) will
function within publicly owned vertically
integrated groups at least for 2008. Consequently, and
in
of
the
Article 30(3), access to the market should be deemed
not to be restricted.

accordance with

subparagraph

first

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 Poland concerns production
and wholesale of electricity in Poland.

(9)

The Polish request considers that the relevant geogra­
phical market is limited to the national territory. The
market presents a unified character with no obstacles
for electricity generated in one region of the country to
be purchased by a recipient from a different region (the
majority of electrical energy capacity is installed in the
south of Poland, but energy from this region is sold
throughout Poland).
according to the
Furthermore,
2007 Activity Report (1), in ‘2006 system congestion of
structural character … was existent at the borders with
Germany, the Czech Republic and Slovakia. …’ In 2006
9,74 % of the total generation of electricity was exported
from Poland, whereas imports to Poland in the same year
amounted to 2,94 % of total generation (net exports thus
accounted for 6,8 % of total generation in 2006). The
2007 Activity Report concludes that the ‘most important

(1) English Language version of the 2007 Activity Report, issued
by the President of the Energy Regulatory Office in Poland,
dated
http://www.ure.gov.pl/portal/en/1/17/Activity_Report_2007.html

31 October

24.4.2008

published

2007

and

on

(10)

issue related to electricity exchange is limited transfer
capacity of the Polish grid resulting in congestion on
interconnectors. It is mainly caused by a high market
pressure resulting from significant price differences of
electricity in Poland and Germany, the Czech Republic
and Sweden.’ Consequently, the territory of the Republic
of Poland 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.

that

the degree of
the total market

The Communication from the Commission to the
and the European Parliament: Report on
Council
progress
in creating the internal gas and electricity
market (2), hereafter referred to as the ‘2005 Report’
‘many national markets display a high
states
impeding the
degree of concentration of the industry,
development of effective competition’ (3). Consequently,
in respect of electricity generation,
it considered that,
‘one
competition on
for
indicator
national markets
the
share of
is
biggest three producers’ (4). For 2006, the Polish authori­
ties have indicated a share of the three largest generators
of 44,2 % of the attainable power and 52,3 % of the
gross production (5). In 2007, according to the reply of
the Polish authorities received on 28 July, the shares rose
to 51,7 % of the attainable power and 58,0 % of the
gross production (6). According to the Polish authorities,
the market shares of the three largest operators on the
wholesale market amounted to 48,1 % in 2006 and rose
to 55,4 % in 2007 (7). It has to be highlighted, that the
figures provided by the Polish authorities show a clear
growth, between 2006 and 2007, of the market shares
of the three largest operators in each field. These levels of
concentration are
corresponding
to which Commission Decisions
percentage,
2006/211/EC (8) and 2007/141/EC (9) refer to for the
UK. They are similar to (or somewhat higher than) the
referred to in Commission Decision
level
2008/585/EC (10)
in respect of Austria and the Polish
levels of concentration are finally lower than the corre­
sponding levels referred to in Commission Decisions
2006/422/EC (11) and 2007/706/EC (12) concerning, re­
spectively Finland (73,6 %) and Sweden (86,7 %). In all
three cases, however, these levels of concentration are
‘offset’ by the ‘competitive pressure on the … market
deriving from the potential to import electricity from
outside …’ (13). As described under
recital 9 above,
there are system congestions and limited transfer capa­
cities so that imports amount to less than 3 % of the

than the

(52,2 %)

higher

39,

(2) COM(2005) 568 final of 15.11.2005.
(3) The 2005 Report, p. 2.
(4) Cf. the 2005 Report, p. 7.
(5) Cf. point 5.1 of the request.
(6) Cf. page 1 of the reply.
(7) Cf. Point 5.1 of the request and page 2 of the reply.
(8) OJ L 76, 15.3.2006, p. 6.
(9) OJ L 62, 1.3.2007, p. 23.
(10) OJ L 188, 16.7.2008, p. 28.
(11) OJ L 168, 21.6.2006, p. 33.
(12) OJ L 287, 1.11.2007, p. 18.
(13) See, e.g. Recital 12 of Decision 2007/706/EC.

in the
Swedish and Finnish cases, the existence of a regional market has
been left open, which, if taken as reference, brought the levels of
concentration to 40 %.

Indeed,

19.9.2008

EN

Official Journal of the European Union

L 251/37

In addition,

load power’ (3).

total Polish generation as compared, e. g., to the Austrian
case where ‘imported electricity accounted for approxi­
mately a quarter (1) of its total needs (2), in particular for
according to a
base
document issued by the President of the Polish Energy
‘the current
Regulatory Office (4)
structure and the
concentration degree of
industry activity
have resulted first from the horizontal and then from
vertical consolidation of
industry
companies. The consolidation process, which has nega­
tively
competition conditions on the
domestic market, will carry on to substantially affect
competition development on the wholesale market.’
This level of concentration therefore cannot be taken
as an indicator of direct exposure to competition of
the generation and wholesale markets.

state-owned power

affected the

the power

(11)

total

In fact,

indicator.

amount of

electricity produced

[hereinafter TSO] will

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 addi­
‘any market participant who
tional
cannot easily match its generation portfolio to the
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
or two main generators’ (5). Despite having a relatively
low spread (6) between the buying price from the TSO

(1) 23,5 % according to information given by the Austrian authorities.
(2) i.e. the quantity of electricity needed for internal consumption and

exports.

(3) See Recital 10 of Decision 2008/585/EC.
(4) The English language version of ‘Roadmap of prices liberalisation for
all electricity consumers – Towards
rights and
effective competition in the power industry sector’, dated February
2008, and published on 30.5.2008 on http://www.ure.gov.pl/porta­
l/en/1/18/Roadmap_of_prices_liberalisation_for_all_electricity_con­
sumers.html, p. 10. In the following, this document will be referred
to as ‘Roadmap’.

the customers

(5) Commission Staff Working Document, Technical Annex to the
2005 Report, SEC(2005)1448, hereinafter referred to as ‘Technical
Annex’, p. 67–68.

(6) According to the Final Report, paragraph 993, table 52, the Polish
balancing market operates with a spread of 13, 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.

for

and the selling price, the Polish balancing market and its
main characteristics – in particular the lack of an intra-
day market or access to other market platforms that may
function as a substitute as well as certain aspects of
balancing costs – are such that the ‘current structure of
tariffs
transmission services, under which all
customers are charged with the balancing and congestion
management
appropriate
economical signals for the market participants’ (7). The
can
the
functioning
indicator that
therefore not be taken as an additional
electricity
directly
are
and wholesale
exposed to competition.

Polish balancing market

production

costs,

send

does

not

of

the

competitive

the same time generators,

state of
In respect of large industrial

(12) Given the characteristics of the product concerned (elec­
tricity) and the scarcity or unavailability of suitable
substitutable products or
services, price competition
and price formation assume greater importance when
the
assessing
electricity
markets.
(end)users, who
are most liable to procure their electricity directly from
suppliers which are at
the
number of customers switching supplier may serve as
an indicator of price competition and, thus,
indirectly,
‘a natural
indicator of the effectiveness of competition.
If few customers are switching, there is likely to be a
the market, even if
problem with the functioning of
the benefits from the possibility of renegotiating with
ignored’ (8).
the historical
should not be
‘the existence of regulated end-user prices
Furthermore,
is clearly a key determinant of customer behaviour […].
Although the retaining of controls may be justified in a
period of
cause
distortions as the need for investment approaches’ (9).

increasingly

these will

transition,

supplier

(13) According to the latest available information, switching
rates amount
large and very large
to 15,84 % for
industrial customers in Poland (10), representing about
7,6 % of total supplies (11). This must be seen against
in the
the background of
previous Decisions concerning the electricity sector in
which switching rates for large and very large industrial
users
75 % (Decision
2006/422/EC concerning Finland) to 41,5 % (Decision
Furthermore,
2008/585/EC

the situation as

from more

concerning

Austria).

set out

ranged

than

(7) See Roadmap, p. 11.
(8) 2005 Report, p. 9.
(9) Technical Annex, p. 17.
(10) See ‘Table 2: Annual Switching Rate Electricity 2006 (by volume)’,
p. 5 et seq. of ‘Commission Staff Working Document: Accom­
panying document
to the Report on Progress in Creating the
Internal Gas and Electricity Market’, COM(2008)192 final of
15.4.2008.

(11) See 2007 Activity Report, p. 72.

L 251/38

EN

Official Journal of the European Union

19.9.2008

to provide

there are still end-user price controls for household
customers, where operators have
the
regulator with the tariffs
they wish to apply. The
situation in Poland is therefore not satisfactory as far
as the level of switching of large and very large industrial
(end)users (1) and end-user price control are concerned
and can not be
taken as an indicator of direct
exposure to competition.

(17)

In respect of production and wholesale of electricity in
Poland, the situation can thus be summarised as follows:
market shares of the three biggest generators and whole­
salers are relatively high without this being counterba­
lanced by readily available imported electricity; as set out
in recital 11 the functioning of the balancing markets is
not sufficient
to be taken as an indicator of direct
exposure to competition, the degree of switching is low
and end-user price controls subsist for some groups of
customers.

quently, Directive 2004/17/EC continues to apply when
contracting entities award contracts intended to enable
generation and wholesale of electricity to be carried out
in Poland or when they organise design contests for the
pursuit of such activities in Poland.

This Decision is based on the legal and factual situation
as of May to July 2008 as it appears from the infor­
mation submitted by the Republic of Poland or
published on websites administered by the Polish auth­
orities,
the 2005 Report and the Technical Annex
thereto, the 2007 Communication and the 2007 Staff
It may be
Document as well as
revised,
in the legal or
factual situation mean that the conditions for the appli­
cability of Article 30(1) of Directive 2004/17/EC are met,

should significant changes

the Final Report.

(14)

(15)

HAS ADOPTED THIS DECISION:

Article 1

Article 30(1) of Directive 2004/17/EC is not applicable to
production and wholesale of electricity in Poland. Consequently,
Directive 2004/17/EC shall continue to apply to contracts
awarded by contracting entities and intended to enable them
to carry out such activities in Poland.

Article 2

This Decision is addressed to the Republic of Poland.

Done at Brussels, 11 September 2008.

For the Commission

Charlie McCREEVY
Member of the Commission

Finally, the overall context of the energy sector in Poland
can not be disregarded. Thus, the Commission’s ‘Recom­
mendation for a Council Recommendation on the 2008
up-date of the broad guidelines for the economic policies
of the Member States and the Community and on the
employment
implementation
policies’ (2)
the
competition in network industries,
framework for
including through a review of
the role of regulators,
and vigorously continue the process of the liberalisation
of energy markets’ (3), another indication that electricity
production and wholesale are not (yet) fully exposed to
competition in Poland.

of Member
that

Poland ‘improve

recommends

States

IV. CONCLUSIONS

(16)

In view of the factors examined in recitals 9 to 15, it
should be concluded that production and wholesale of
electricity are currently not directly exposed to compe­
tition in Poland. Therefore Article 30(1) of Directive
2004/17/EC is not applicable to contracts intended to
enable the pursuit of those activities in Poland. Conse­

(1) See 2007 Activity Report, p. 71:

‘The number of companies
executing TPA rights’ – i.e.switching – ‘has been steadily growing
since 2001 but the overall figures are far from satisfactory’.

(2) Part IV of the Commission’s Communication from the Commission
to the Spring European Council: Strategic report on the renewed
Lisbon strategy for growth and jobs:
launching the new cycle
(2008 to 2010), COM(2007) 803 final of 11.12.2007. Published
http://ec.europa.eu/growthandjobs/pdf/european-dimension-
at
200712-annual-progress-report/200712-countries-specific-recom­
mendations_en.pdf

(3) P. 31, point 5. This is also consistent with some statements of the
2007 Activity Report: ‘In Poland the energy market has not yet fully
developed.’ (p. 2-3); ‘Still the structure of the Polish energy market
could hardly be described as fully competitive’ (p. 12).