Common Position (EC) No 8/2009 of 9 January 2009 adopted by the Council, acting in accordance with the procedure referred to in Article 251 of the Treaty establishing the European Community, with a view to the adoption of a Directive of the European Parliament and of the Council concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (Text with EEA relevance)
Date: 2009-02-09
Institutions: Council of the European Union
Subjects: approximation of laws, electrical energy, energy distribution, energy grid, energy production, energy supply, energy transport, market access, single market

24.3.2009

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Official Journal of the European Union

C 70 E/1

III

(Preparatory Acts)

COUNCIL

COMMON POSITION (EC) No 8/2009

adopted by the Council on 9 January 2009

with a view to the adoption of Directive 2009/…/EC of the European Parliament and of the Council
of … concerning common rules for the internal market in electricity and repealing Directive
2003/54/EC

(Text with EEA relevance)

(2009/C 70 E/01)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 47(2) and Articles 55 and 95
thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Economic and
Social Committee (1),

Having regard to the opinion of
Regions (2),

the Committee of

the

(3)

(4)

Acting in accordance with the procedure
Article 251 of the Treaty (3),

laid down in

(5)

Whereas:

(1)

(2)

The internal market
in electricity, which has been
progressively implemented throughout the Community
since 1999, aims at delivering real choice for all
consumers of the European Union, be they citizens or
businesses, new business opportunities
and more
cross-border
trade, so as to achieve efficiency gains,
competitive prices, and higher standards of service, and
to contribute to security of supply and sustainability.

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 (4) has made a signif-
such an
icant contribution towards
internal market in electricity.

the creation of

(1) OJ C 211, 19.8.2008, p. 23.
(2) OJ C 172, 5.7.2008, p. 55.
(3) Opinion of

the European Parliament of 18 June 2008 (not yet
Journal), Council Common Position of
published in the Official
9 January 2009 and Position of the European Parliament of … (not yet
published in the Official Journal).

(4) OJ L 176, 15.7.2003, p. 37.

The freedoms which the Treaty guarantees the citizens of
the Union — free movement of goods,
freedom to
provide services and freedom of establishment — are
achievable only in a fully open market, which enables all
consumers
suppliers and all
suppliers freely to deliver to their customers.

freely to choose their

However, at present, there are obstacles to the sale of
electricity on equal terms and without discrimination or
disadvantages
particular,
non-discriminatory network access and an equally effec-
tive level of regulatory supervision in each Member State
do not yet exist.

Community.

the

In

in

the

Commission

Communication

The
of
of
10 January 2007 entitled ‘An Energy Policy for Europe’
highlighted the importance of completing the internal
market in electricity and of creating a level playing field
for all electricity undertakings established in the Com-
munity. The Communications of
the Commission of
10 January 2007 entitled ‘Prospects for the internal gas
and electricity market’ and ‘Inquiry pursuant to Article 17
of Regulation (EC) No 1/2003 into the European gas and
electricity sectors (Final Report)’ showed that the present
rules and measures do not provide the necessary frame-
work for achieving the objective of a well-functioning
internal market.

(6) Without effective separation of networks from activities
of generation and supply (‘effective unbundling’), there is
an inherent risk of discrimination not only in the opera-
tion of the network but also in the incentives for verti-
cally integrated undertakings to invest adequately in their
networks.

(7)

The rules on legal and functional unbundling as provided
led to
for in Directive 2003/54/EC have not, however,
effective unbundling of the transmission system opera-
tors. At its meeting in Brussels on 8 and 9 March 2007,
the European Council therefore invited the Commission

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Official Journal of the European Union

24.3.2009

to develop legislative proposals for the ‘effective separa-
tion of supply and generation activities from network
operations’.

(12)

(8)

(9)

(10)

reason,

supply. For

Only the removal of the incentive for vertically integrated
to discriminate against competitors as
undertakings
regards network access and investment can ensure effec-
tive unbundling. Ownership unbundling, which implies
the appointment of the network owner as the system
operator and its independence from any supply and
production interests, is clearly an effective and stable way
to solve the inherent conflict of interests and to ensure
security of
the European
this
Parliament, in its resolution of 10 July 2007 on prospects
for the internal gas and electricity market referred to
ownership unbundling at transmission level as the most
effective tool by which to promote investments in infra-
structure in a non-discriminatory way, fair access to the
network for new entrants and transparency in the
market. Under ownership unbundling, Member States
should therefore be required to ensure that the same
person or persons are not entitled to exercise control
over a generation or supply undertaking and, at the same
time, exercise control or any right over a transmission
transmission system. Conversely,
system operator or
control over a transmission system or
transmission
system operator should preclude the possibility of exer-
cising control or any right over a generation or supply
undertaking. Within those limits, a generation or supply
undertaking should be able to have a minority share-
holding in a transmission system operator or transmis-
sion system.

The definition of the term ‘control’ is taken from Council
Regulation (EC) No 139/2004 of 20 January 2004 on
the control of concentrations between undertakings (the
EC Merger Regulation) (1).

Since ownership unbundling requires, in some instances,
the restructuring of undertakings, Member States should
be granted additional time to apply the relevant provi-
sions. In view of the vertical links between the electricity
and gas sectors, the unbundling provisions should apply
across the two sectors.

(11) Under ownership unbundling,

to ensure full

indepen-
dence of network operation from supply and generation
interests and to prevent exchanges of any confidential
information, the same person should not be a member of
the managing boards of both a transmission system
operator or a transmission system and an undertaking
performing any of the functions of generation or supply.
For the same reason, the same person should not be
entitled to appoint members of the managing boards of a
transmission system operator or a transmission system
and to exercise control or any right over a generation or
supply undertaking.

The setting up of a system operator or a transmission
operator independent from supply and generation inter-
ests should enable a vertically integrated undertaking to
maintain its ownership of network assets whilst ensuring
an effective separation of interests, provided that such
independent system operator or such independent trans-
mission operator performs all the functions of a system
operator and detailed regulation and extensive regulatory
control mechanisms are put in place.

(13) Where, on … (*), an undertaking owning a transmission
system is part of a vertically integrated undertaking,
Member States should be given a choice between owner-
ship unbundling and setting up a system operator or
transmission operator which is independent from supply
and generation interests.

(14)

(15)

To preserve fully the interests of the shareholders of verti-
cally integrated undertakings, Member States should have
the choice of implementing ownership unbundling either
by direct divestiture or by splitting the shares of the inte-
grated undertaking into shares of the network under-
taking and shares of the remaining supply and generation
undertaking, provided that
the requirements resulting
from ownership unbundling are complied with.

The full effectiveness of the independent system operator
or independent transmission operator solutions should
be ensured by way of specific additional rules. The inde-
pendence of the transmission operator should, inter alia,
be ensured through certain ‘cooling-off’ periods during
which no management or other relevant activity giving
access to the same information as could have been
obtained in a managerial position is exercised in the
vertically integrated undertaking.

(16) A Member State has the right to opt for full ownership
unbundling in its territory. Where a Member State has
exercised that right, an undertaking does not have the
right to set up anindependent system operator or an
an
independent
undertaking performing any of the functions of genera-
tion or supply cannot directly or
indirectly exercise
control or any right over a transmission system operator
from a Member State that has opted for full ownership
unbundling.

transmission operator.

Furthermore,

(17) Under this Directive different types of market organisa-
tion will exist in the internal market in electricity. The
measures that Member States could take in order to
ensure a level playing field should be based on overriding
requirements of general interest. The Commission should
be consulted on the compatibility of the measures with
the Treaty and Community law.

(1) OJ L 24, 29.1.2004, p. 1.

(*) Date of entry into force of this Directive.

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(18)

(19)

(20)

The implementation of effective unbundling should
respect the principle of non-discrimination between the
public and private sectors. To this end, the same person
should not be able to exercise control or any right, in
violation of the rules of ownership unbundling or the
independent system operator option, solely or jointly,
over the composition, voting or decision of the bodies of
both the transmission system operators or the transmis-
sion systems and the generation or supply undertakings.
With regard to ownership unbundling and the indepen-
dent system operator solution, provided that the Member
State in question is able to demonstrate that the require-
ment is complied with, two separate public bodies should
be able to control generation and supply activities on the
one hand and transmission activities on the other.

foreign trade and investment in energy in a particular
third country.

Security of supply should therefore be assessed in the
light of the factual circumstances of each case as well as
the rights and obligations arising under international law,
in particular the international agreements between the
Community and the third country concerned. Where
appropriate the Commission is encouraged to submit
recommendations to negotiate relevant agreements with
third countries addressing the security of supply of
energy to the Community or to include the necessary
issues in other negotiations with those third countries.

from each other,

Effective separation of network activities from supply and
generation activities should apply throughout the Com-
munity to both Community and non-Community under-
takings. To ensure that network activities and supply and
generation activities throughout the Community remain
independent
regulatory authorities
should be empowered to refuse certification to transmis-
sion system operators that do not comply with the
unbundling rules. To ensure the consistent application of
those rules across the Community, the regulatory authori-
ties should take utmost account of
the Commission's
opinion when the former take decisions on certification.
To ensure, in addition, respect for the international obli-
gations of the Community, the Commission should have
the right to give an opinion on certification in relation to
a transmission system owner or a transmission system
operator which is controlled by a person or persons
from a third country or third countries.

than at

(21) Non discriminatory access to the distribution network
determines downstream access to customers at retail
level. The scope for discrimination as regards third-party
is less significant at
access and investment, however,
distribution level
transmission level where
congestion and the influence of generation or supply
interests are generally greater than at distribution level.
Moreover, legal and functional unbundling of distribution
to Directive
system operators was required, pursuant
2003/54/EC, only from 1 July 2007 and its effects on
the internal market in electricity still need to be evalu-
ated. The rules on legal and functional unbundling
currently in place can lead to effective unbundling
provided they are more clearly defined, properly imple-
mented and closely monitored. To create a level playing
field at retail
level, the activities of distribution system
operators should therefore be monitored so that they are
vertical
prevented from taking advantage of
integration as regards their competitive position on the
market, in particular in relation to household and small
non-household customers.

their

economy and for

competitiveness of

The safeguarding of energy supply is an essential element
of public security and is therefore inherently connected
to the efficient functioning of the internal market in elec-
tricity. Electricity can reach the citizens of the Union only
through the network. Functioning electricity markets and,
in particular, the networks and other assets associated
with electricity supply are essential for public security, for
the
the
the
well-being of the citizens of the Union. Persons from
third countries should therefore be allowed to control a
transmission system or a transmission system operator
only if they comply with the requirements of effective
separation that apply inside the Community. Without
prejudice to the international obligations of the Com-
munity,
the electricity
transmission system sector is of high importance to the
Community and therefore additional
safeguards are
necessary regarding the preservation of the security of
supply of energy to the Community to avoid any threats
to public order and public security in the Community
and the welfare of the citizens of the Union. The security
of supply of energy to the Community requires, in par-
ticular, an assessment of the independence of network
operation, the level of the Community's and individual
Member States' dependence on energy supply from third
countries, and the treatment of both domestic and

the Community considers that

(22)

In the case of small systems the provision of ancillary
services may have to be ensured by transmission system
operators interconnected with small systems.

(23)

To avoid imposing a disproportionate financial and
administrative burden on small distribution system
operators, Member States should be able, where neces-
sary, to exempt such companies from the legal distribu-
tion unbundling requirements.

(24) Authorisation procedures should not lead to an adminis-
trative burden disproportionate to the size and potential
impact of electricity producers.

(25)

Further measures should be taken in order to ensure
transparent and non-discriminatory tariffs for access to
networks. Those tariffs should be applicable to all system
users on a non-discriminatory basis.

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(26) Directive 2003/54/EC introduced a requirement

for
Member States
to establish regulators with specific
competences. However, experience shows that the effec-
tiveness of regulation is frequently hampered through a
lack of independence of regulators from government, and
insufficient powers and discretion. For this reason, at its
meeting in Brussels on 8 and 9 March 2007,
the
European Council
invited the Commission to develop
legislative proposals providing for further harmonisation
of the powers and strengthening of the independence of
national energy regulators. It should be possible for those
national regulatory authorities to cover both the electri-
city and the gas sectors.

(27)

(28)

Energy regulators need to be able to take decisions on all
relevant regulatory issues if the internal market in electri-
city is to function properly, and to be fully independent
from any other public or private interests. This precludes
neither judicial review nor parliamentary supervision in
accordance with the constitutional laws of the Member
States. In addition, approval of the budget of the regu-
lator by the national
legislator does not constitute an
obstacle to budgetary autonomy.

In order to ensure effective market access for all market
players, including new entrants, non-discriminatory and
cost-reflective balancing mechanisms are necessary. As
soon as the electricity market is sufficiently liquid, this
should be achieved through the setting up of transparent
market-based mechanisms for the supply and purchase of
electricity, needed in the framework of balancing require-
ments. In the absence of such a liquid market, national
regulatory authorities should play an active role to ensure
that
and
cost-reflective. At the same time, appropriate incentives
should be provided to balance the in-put and off-take of
electricity and not to endanger the system.

are non-discriminatory

balancing

tariffs

(29) National regulatory authorities should be able to fix or
approve tariffs, or
the methodologies underlying the
calculation of the tariffs, on the basis of a proposal by
the transmission system operator or distribution system
operator(s), or on the basis of a proposal agreed between
those operator(s) and the users of
In
carrying out those tasks, national regulatory authorities
should ensure that transmission and distribution tariffs
are non-discriminatory and cost-reflective, and should
take account of the long-term, marginal, avoided network
costs
from distributed generation and demand-side
management measures.

the network.

(30)

Energy regulators should have the power to issue binding
decisions in relation to electricity undertakings and to
impose effective, proportionate and dissuasive penalties
on electricity undertakings which fail to comply with
their obligations or to propose that a competent court
impose such penalties on them. Energy regulators should
also be granted the power to decide, irrespective of the

of

on

rules,

competition

application
appropriate
measures promoting effective competition necessary for
the proper functioning of the internal market in electri-
city. The establishment of virtual power plants —
meaning an electricity release programme whereby an
undertaking producing electricity is obliged, either to sell
or make available a certain volume of electricity or to
grant access to part of its generation capacity, to inter-
ested suppliers for a certain period of time — is one of
the possible measures that can be used to promote effec-
tive competition and ensure the proper functioning of
the market. Energy regulators should also be granted the
to contribute to ensuring high standards of
power
universal and public service in compliance with market
opening, to the protection of vulnerable customers, and
to the full effectiveness of consumer protection measures.
Those provisions should be without prejudice to both the
Commission's powers concerning the application of
competition rules including the examination of mergers
with a Community dimension, and the rules on the
internal market such as the free movement of capital.

(31)

(32)

The independent body to which a party affected by the
decision of a national regulator has a right to appeal
could be a court or other tribunal empowered to conduct
a judicial review.

The internal electricity market suffers from a lack of
liquidity and transparency hindering the efficient alloca-
tion of resources, risk hedging and new entry. There is a
need for enhancement of competition and security of
supply through facilitated integration of new power
plants into the electricity network in all Member States,
in particular encouraging new market entrants. Trust in
the market, its liquidity and the number of market parti-
cipants needs to increase, and, therefore, regulatory over-
sight of undertakings active in the supply of electricity
needs to be increased. Such requirements should be
without prejudice to, and compatible with, existing Com-
munity legislation on financial markets. Energy regulators
and financial market regulators need to cooperate in
order to enable each other to have an overview over the
markets concerned.

Prior to the adoption by the Commission of guidelines
defining further the record keeping requirements,
the
Agency for the Cooperation of Energy Regulators estab-
lished by Regulation (EC) No …/2009 (1) of the European
Parliament and of the Council
(the ‘Agency’), and the
Committee of European Securities Regulators (the ‘CESR’)
should confer and advise the Commission in regard to
their content. The Agency and the CESR should also
cooperate to investigate further and advise on whether
transactions in electricity supply contracts and electricity
derivatives should be subject to pre and/or post-trade
transparency requirements and, if so, what the content of
those requirements should be.

(1) OJ L …

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(33) All Community industry and commerce, including small
and medium-sized enterprises, and all citizens of
the
Union that enjoy the economic benefits of the internal
market should also be able to enjoy high levels of
consumer protection. In particular, household customers
and, where Member States deem it appropriate, small
enterprises should also be able to enjoy public service
guarantees, in particular with regard to security of supply
and reasonable tariffs, for reasons of fairness, competi-
tiveness and indirectly to create employment.

(34) Nearly all Member States have chosen to ensure competi-
tion in the electricity generation market through a trans-
parent authorisation procedure. However, Member States
should ensure the possibility to contribute to security of
supply through the launching of a tendering procedure
or an equivalent procedure in the event that sufficient
electricity generation capacity is not built on the basis of
the authorisation procedure. Member States should have
the possibility, in the interests of environmental protec-
tion and the promotion of infant new technologies, of
tendering for new capacity on the basis of published
criteria. New capacity includes, inter alia, renewables and
combined heat and power.

(35)

In the interests of security of supply, the supply/demand
balance in individual Member States should be moni-
tored, and monitoring should be followed by a report on
the situation at Community level, taking account of inter-
connection capacity between areas. Such monitoring
should be carried out sufficiently early to enable appro-
priate measures to be taken if security of supply is
compromised. The construction and maintenance of the
necessary network infrastructure, including interconnec-
tion capacity, should contribute to ensuring a stable elec-
tricity supply. The maintenance and construction of the
necessary network infrastructure, including interconnec-
tion capacity and decentralised electricity generation, are
important elements in ensuring a stable electricity supply.

(36) Member States should ensure that household customers
and, where Member States deem it appropriate, small
enterprises, enjoy the right to be supplied with electricity
of a specified quality at clearly comparable, transparent
and reasonable prices. In order to ensure the mainte-
nance of the high standards of public service in the Com-
munity, all measures taken by Member States to achieve
the objective of this Directive should be regularly notified
to the Commission. The Commission should regularly
publish a report analysing measures taken at national
level to achieve public service objectives and comparing
their effectiveness, with a view to making recommenda-
tions as regards measures to be taken at national level to
achieve high public service standards. Member States
should take the necessary measures to protect vulnerable
customers in the context of the internal market in electri-
city. Such measures may differ according to the particular
circumstances in the Member States in question and may
include specific measures relating to the payment of elec-
tricity bills, or more general measures taken in the social

security system. When universal service is also provided
to small enterprises, measures
such
universal service is provided may differ according to
whether they are aimed at household customers or small
enterprises.

to ensure that

(37)

Respect for the public service requirements is a funda-
mental requirement of this Directive, and it is important
that common minimum standards,
respected by all
Member States, are specified in this Directive, which take
the objectives of common protection,
into account
security of supply, environmental protection and equiva-
lent levels of competition in all Member States.
It is
important that the public service requirements can be
taking into account
interpreted on a national basis,
to the respect of
national circumstances and subject
Community law.

(38) Member States may appoint a supplier of last resort. That
supplier may be the sales division of a vertically inte-
grated undertaking, which also performs the functions of
distribution, provided that
the unbundling
requirements of this Directive.

it meets

(39) Measures implemented by Member States to achieve the
objectives of social and economic cohesion may include,
in particular, the provision of adequate economic incen-
tives, using, where appropriate, all existing national and
Community tools. Such tools may include liability
mechanisms to guarantee the necessary investment.

(40)

(41)

To the extent to which measures taken by Member States
to fulfil public service obligations constitute State aid
under Article 87(1) of the Treaty, there is an obligation
under Article 88(3) of the Treaty to notify them to the
Commission.

service

requirements and the

The public
common
minimum standards that follow from them need to be
further strengthened to make sure that all consumers can
benefit
from competition. A key aspect of supplying
customers is access to consumption data, and consumers
must have access to their data so that they can invite
competitors to make an offer based on those data.
Consumers should also have the right to be properly
informed about
their energy consumption. Regularly
provided information on energy costs will create incen-
tives for energy savings because it will give customers
direct feedback on the effects of investment in energy
efficiency and change of behaviour.

(42) With a view to creating an internal market in electricity,
Member States should foster the integration of
their
national markets and the cooperation of system operators
at Community and regional level.

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(43)

(44)

Regulatory authorities should also provide information
on the market to permit the Commission to exercise its
role of observing and monitoring the internal market in
electricity and its short, medium and long term evolu-
tion,
such as generation capacity,
different sources of electricity generation, transmission
and distribution infrastructure, cross-border trade, invest-
ments, wholesale and consumer prices, market liquidity
and environmental and efficiency improvements.

including aspects

Since the objective of this Directive, namely the creation
of a fully operational internal electricity market, cannot
be sufficiently achieved by the Member States and can
therefore be better achieved at Community level,
the
Community may adopt measures, in accordance with the
principle of subsidiarity as set out in Article 5 of the
Treaty. In accordance with the principle of proportion-
ality, as set out in that Article, this Directive does not go
beyond what
to achieve that
objective.

is necessary in order

(45) Under Regulation (EC) No …/2009 of

the Commission may adopt guidelines

the European
Parliament and of the Council of … on conditions for
access to the network for cross-border exchanges in elec-
tricity (1),
to
achieve the necessary degree of harmonisation. Such
guidelines, which
implementing
measures, are, also with regard to certain provisions of
this Directive, a useful tool which can be adapted quickly
where necessary.

constitute

binding

(46)

(47)

(48)

The measures necessary for the implementation of this
Directive should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down the
procedures for
implementing powers
the exercise of
conferred on the Commission (2).

the

for providing

guidelines necessary

In particular, the Commission should be empowered to
adopt
the
minimum degree of harmonisation required to achieve
the aim of this Directive. Since those measures are of
general scope and are designed to amend non-essential
elements of this Directive, by supplementing it with new
non-essential elements, they must be adopted in accord-
ance with the
regulatory procedure with scrutiny
provided for in Article 5a of Decision 1999/468/EC.

In accordance with point 34 of
the Interinstitutional
Agreement on better law-making (3), Member States are
encouraged to draw up, for themselves and in the interest
of the Community, their own tables, illustrating, as far as
possible, the correlation between this Directive and the
transposition measures, and to make them public.

(49) Given the scope of the amendments made to Directive
2003/54/EC herein, it is desirable, for reasons of clarity
and rationalisation, that the provisions in question should
be recast by bringing them all together in a single text in
a new Directive.

(1) OJ L …
(2) OJ L 184, 17.7.1999, p. 23.
(3) OJ C 321, 31.12.2003, p. 1.

(50)

This Directive respects
rights, and
observes the principles, recognised in particular by the
Charter of Fundamental Rights of the European Union,

the fundamental

HAVE ADOPTED THIS DIRECTIVE:

CHAPTER I

Subject matter, scope and definitions

Article 1

Subject matter and scope

This Directive establishes common rules for the generation,
transmission, distribution and supply of electricity. It lays down
the rules relating to the organisation and functioning of the
electricity sector, access to the market, the criteria and proce-
dures applicable to calls for tenders and the granting of authori-
sations and the operation of systems.

Article 2

Definitions

For the purposes of
apply:

this Directive, the following definitions

(1) ‘generation’ means the production of electricity;

(2) ‘producer’ means a natural or legal person generating

electricity;

(3) ‘transmission’ means the transport of electricity on the
extra high-voltage and high-voltage interconnected system
with a view to its delivery to final customers or to distribu-
tors, but not including supply;

(4) ‘transmission system operator’ means a natural or legal
person responsible for operating, ensuring the mainte-
nance of and,
if necessary, developing the transmission
system in a given area and, where applicable, its intercon-
ensuring the
nections with other
systems,
long-term ability of
reasonable
the system to meet
demands for the transmission of electricity;

and for

(5) ‘distribution’ means

electricity on
high-voltage, medium-voltage and low-voltage distribution
systems with a view to its delivery to customers, but not
including supply;

transport of

the

(6) ‘distribution system operator’ means a natural or legal
person responsible for operating, ensuring the mainte-
nance of and,
if necessary, developing the distribution
system in a given area and, where applicable, its intercon-
ensuring the
nections with other
systems
reasonable
the system to meet
long-term ability of
demands for the distribution of electricity;

and for

(7) ‘customers’ means wholesale and final customers of

electricity;

(8) ‘wholesale customers’ means any natural or legal persons
who purchase electricity for the purpose of resale inside or
outside the system where they are established;

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Official Journal of the European Union

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(9) ‘final customers’ means customers purchasing electricity

for their own use;

(10) ‘household customers’ means customers purchasing electri-
their own household consumption, excluding

city for
commercial or professional activities;

(11) ‘non-household customers’ means any natural or legal
persons purchasing electricity which is not for their own
household use and shall include producers and wholesale
customers;

(12) ‘eligible customers’ means customers who are free to
their choice

purchase electricity from the supplier of
within the meaning of Article 32;

(13) ‘interconnectors’ means equipment used to link electricity

systems;

(14) ‘interconnected system’ means a number of transmission
and distribution systems linked together by means of one
or more interconnectors;

(15) ‘direct

line’ means either an electricity line linking an
isolated generation site with an isolated customer or an
electricity line linking an electricity producer and an elec-
tricity supply undertaking to supply directly their own
premises, subsidiaries and eligible customers;

(16) ‘economic precedence’ means the ranking of sources of
electricity supply in accordance with economic criteria;

(17) ‘ancillary services’ means all services necessary for the

operation of a transmission or distribution system;

(18) ‘system users’ means any natural or legal persons supplying
to, or being supplied by, a transmission or distribution
system;

(19) ‘supply’ means the sale, including resale, of electricity to

customers;

(20) ‘integrated electricity undertaking’ means a vertically or

horizontally integrated undertaking;

(21) ‘vertically integrated undertaking’ means an electricity
undertaking or a group of electricity undertakings where
the same person or the same persons are entitled, directly
or indirectly, to exercise control, and where the under-
taking or group of undertakings perform at least one of
the functions of transmission or distribution, and at least
one of the functions of generation or supply of electricity;

(22) ‘related undertaking’ means affiliated undertakings, within
the meaning of Article 41 of the Seventh Council Direc-
13
tive
on
of
83/349/EEC
1983
Article 44(2)(g) (*) of
the Treaty on consolidated
accounts (1), and/or associated undertakings, within the
meaning of Article 33(1) of that Directive, and/or under-
takings which belong to the same shareholders;

based

June

(*) The title of Directive 83/349/EEC has been adjusted to take account of
the Treaty establishing the
the renumbering of
European Community in accordance with Article 12 of the Treaty of
Amsterdam; the original reference was to Article 54(3)(g).

the Articles of

(1) OJ L 193, 18.7.1983, p. 1.

(23) ‘horizontally integrated undertaking’ means an undertaking
performing at least one of the functions of generation for
sale, or transmission, or distribution, or supply of electri-
city, and another non-electricity activity;

(24) ‘tendering procedure’ means the procedure through which
planned additional requirements and replacement capacity
are covered by supplies from new or existing generating
capacity;

(25) ‘long-term planning’ means the planning of the need for
investment in generation and transmission and distribution
capacity on a long-term basis, with a view to meeting the
demand of the system for electricity and securing supplies
to customers;

(26) ‘small isolated system’ means any system with consump-
tion of less than 3 000 GWh in the year 1996, where less
than 5 % of annual consumption is obtained through inter-
connection with other systems;

(27) ‘micro isolated system’ means any system with consump-
tion less than 500 GWh in the year 1996, where there is
no connection with other systems;

(28) ‘security’ means both security of supply and provision of

electricity, and technical safety;

(29) ‘energy efficiency/demand-side management’ means

a
global or integrated approach aimed at influencing the
amount and timing of electricity consumption in order to
reduce primary energy consumption and peak loads by
giving precedence to investments in energy efficiency
measures, or other measures, such as interruptible supply
contracts, over investments to increase generation capacity,
if the former are the most effective and economical option,
taking into account the positive environmental impact of
reduced energy consumption and the security of supply
and distribution cost aspects related to it;

(30) ‘renewable energy sources’ means renewable non-fossil
energy sources (wind, solar, geothermal, wave, tidal, hydro-
power, biomass,
landfill gas, sewage treatment plant gas
and biogases);

(31) ‘distributed generation’ means generation plants connected

to the distribution system;

(32) ‘electricity supply contract’ means a contract for the supply
of electricity, but does not include an electricity derivative;

(33) ‘electricity derivative’ means a financial instrument speci-
fied in points 5, 6 or 7 of Section C of Annex I to Direc-
tive 2004/39/EC of the European Parliament and of the
Council of 21 April 2004 on markets in financial instru-
ments (2), where that instrument relates to electricity;

(34) ‘control’ means any rights, contracts or any other means
which, either separately or in combination, and having
regard to the considerations of fact or law involved, confer
the possibility of exercising decisive influence on an under-
taking, in particular by:

(a) ownership or the right to use all or part of the assets

of an undertaking;

(2) OJ L 145, 30.4.2004, p. 1.

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(b) rights or contracts which confer decisive influence on
the composition, voting or decisions of the organs of
an undertaking;

The first subparagraph shall be implemented in a transparent
and non-discriminatory way and shall not impede the opening
of the market provided for in Article 32.

least one of

(35) ‘electricity undertaking’ means any natural or legal person
carrying out at
the following functions:
generation, transmission, distribution, supply, or purchase
of electricity, which is responsible for the commercial,
technical and/or maintenance tasks related to those func-
tions, but shall not include final customers.

4. When financial compensation, other forms of compensa-
tion and exclusive rights which a Member State grants for the
fulfilment of the obligations set out in paragraphs 2 and 3 are
provided, this shall be done in a non-discriminatory and trans-
parent way.

CHAPTER II

General rules for the organisation of the sector

Article 3

Public service obligations and customer protection

1. Member States shall ensure, on the basis of their institu-
tional organisation and with due regard to the principle of
subsidiarity, that, without prejudice to paragraph 2, electricity
undertakings are operated in accordance with the principles of
this Directive with a view to achieving a competitive, secure and
environmentally sustainable market in electricity, and shall not
discriminate between those undertakings as regards either rights
or obligations.

2.
Having full regard to the relevant provisions of the Treaty,
in particular Article 86 thereof, Member States may impose on
undertakings operating in the electricity sector, in the general
economic interest, public service obligations which may relate
to security, including security of supply, regularity, quality and
price of
including
supplies and environmental protection,
energy efficiency and climate protection. Such obligations shall
be clearly defined,
transparent, non-discriminatory, verifiable
and shall guarantee equality of access for electricity undertakings
of the Community to national consumers. In relation to security
of supply, energy efficiency/demand-side management and for
the fulfilment of environmental goals, as referred to in this para-
graph, Member States may introduce the implementation of
long-term planning, taking into account the possibility of third
parties seeking access to the system.

5. Member States shall take appropriate measures to protect
in particular, ensure that there are
final customers, and shall,
adequate safeguards to protect vulnerable customers, including
measures to help them avoid disconnection.
In this context,
Member States may take measures to protect final customers in
remote areas. They shall ensure high levels of consumer protec-
tion, particularly with respect to transparency regarding contrac-
tual
information and dispute
settlement mechanisms. Member States shall ensure that the
eligible customer is in fact able to switch to a new supplier. As
those measures shall
regards at
include those set out in Annex I.

terms and conditions, general

least household customers,

6. Member States
shall ensure that electricity suppliers
specify in or with the bills and in promotional materials made
available to final customers:

(a) the contribution of each energy source to the overall fuel

mix of the supplier over the preceding year;

(b) at least the reference to existing reference sources, such as
web-pages, where information on the environmental impact,
in terms of at least CO2 emissions and the radioactive waste
resulting from the electricity produced by the overall fuel
mix of
the supplier over the preceding year is publicly
available.

With respect to electricity obtained via an electricity exchange
or imported from an undertaking situated outside the Com-
munity, aggregate figures provided by the exchange or the
undertaking in question over the preceding year may be used.

Member States shall take the necessary steps to ensure that the
information provided by suppliers to their customers pursuant
to this Article is reliable.

or

not

sheet

annual

balance

turnover

3. Member States shall ensure that all household customers,
and, where Member States deem it appropriate, small enterprises
(namely enterprises with fewer than 50 occupied persons and
an
exceeding
EUR 10 million), enjoy universal service, that is the right to be
supplied with electricity of a specified quality within their terri-
tory at reasonable, easily and clearly comparable and transparent
prices. To ensure the provision of universal service, Member
States may appoint a supplier of last resort. Member States shall
impose on distribution companies an obligation to connect
customers to their network under terms, conditions and tariffs
set in accordance with the procedure laid down in Article 36(6).
Nothing in this Directive shall prevent Member States from
strengthening the market position of the domestic, small and
medium-sized consumers by promoting the possibilities of
voluntary aggregation of
that class of
consumers.

representation for

the objectives of

implement appropriate measures to
7. Member States shall
achieve
cohesion
and economic
social
and environmental protection, which may include energy effi-
ciency/demand-side management measures
to
combat climate change, and security of supply. Such measures
may include, in particular, the provision of adequate economic
incentives, using, where appropriate, all existing national and
Community tools, for the maintenance and construction of the
necessary network infrastructure,
including interconnection
capacity.

and means

8. Member States may decide not to apply the provisions of
Articles 7, 8, 31 and/or 33 insofar as their application would
obstruct the performance, in law or in fact, of the obligations
imposed on electricity undertakings in the general economic
interest and insofar as the development of trade would not be
affected to such an extent as would be contrary to the interests

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Official Journal of the European Union

C 70 E/9

of the Community. The interests of the Community include,
inter alia, competition with regard to eligible customers in
accordance with this Directive and Article 86 of the Treaty.

9. Member States shall, upon implementation of this Direc-
tive, inform the Commission of all measures adopted to fulfil
universal
including
service and public service obligations,
consumer protection and environmental protection, and their
possible effect on national and international competition,
whether or not such measures require a derogation from this
Directive. They shall inform the Commission subsequently every
two years of any changes to such measures, whether or not they
require a derogation from this Directive.

cooperation of transmission system operators at a regional level,
and foster the consistency of their legal and regulatory frame-
work. The geographical areas covered by such regional coopera-
tion shall include cooperation in geographical areas defined in
accordance with Article 12(3) of Regulation (EC) No …/2009.
Such cooperation may cover other geographical areas.

2. Member States shall ensure, through the implementation
of this Directive, that transmission system operators have one
or more integrated system(s) at regional level covering two or
more Member States for capacity allocation and for checking
the security of the network.

Article 4

Monitoring of security of supply

in particular, cover

Member States shall ensure the monitoring of security of supply
issues. Where Member States consider it appropriate, they may
delegate that task to the regulatory authorities referred to in
Article 34. Such monitoring shall,
the
supply/demand balance on the national market, the level of
expected future demand and envisaged additional capacity being
planned or under construction, and the quality and level of
maintenance of the networks, as well as measures to cover peak
demand and to deal with shortfalls of one or more suppliers.
The competent authorities shall publish every two years, by
31 July, a report outlining the findings resulting from the moni-
toring of those issues, as well as any measures taken or envi-
saged to address them and shall forward that report to the
Commission forthwith.

Article 5

Technical rules

connected

consumers'

Member States shall ensure that
technical safety criteria are
defined and that technical rules establishing the minimum tech-
nical design and operational requirements for the connection to
the system of generating installations, distribution systems,
directly
interconnector
circuits and direct lines are developed and made public. These
technical rules shall ensure the interoperability of systems and
shall be objective and non-discriminatory. They shall be notified
to the Commission in accordance with Article 8 of Directive
98/34/EC of the European Parliament and of the Council of
22 June 1998 laying down a procedure for the provision of
information in the field of technical standards and regulations
and of the rules on information society services (1).

equipment,

Article 6

Promotion of regional cooperation

3.
If vertically integrated transmission system operators parti-
cipate in a joint undertaking established for implementing such
cooperation, the joint undertaking shall establish and implement
a compliance programme which sets out the measures to be
taken to ensure that discriminatory and anticompetitive conduct
is excluded. That compliance programme shall set out
the
specific obligations of employees to meet
the objective of
excluding discriminatory and anticompetitive conduct. It shall
be subject to the approval of the Agency. Compliance with the
program shall be independently monitored by the compliance
officers of
integrated transmission system
operators.

vertically

the

CHAPTER III

Generation

Article 7

Authorisation procedure for new capacity

1.
For the construction of new generating capacity, Member
States shall adopt an authorisation procedure, which shall be
conducted in accordance with objective,
and
non-discriminatory criteria.

transparent

2. Member States shall lay down the criteria for the grant of
authorisations for the construction of generating capacity in
their territory. Those criteria may relate to:

(a) the safety and security of the electricity system, installations

and associated equipment;

(b) the protection of public health and safety;

(c) the protection of the environment;

(d) land use and siting;

(e) the use of public ground;

(f) energy efficiency;

(g) the nature of the primary sources;

1. Member States shall cooperate among themselves for the
purpose of integrating their national markets at least at the
level. In particular, Member States shall promote the
regional

(h) the characteristics particular to the applicant, such as tech-

nical, economic and financial capabilities;

(1) OJ L 204, 21.7.1998, p. 37.

(i) compliance with measures adopted pursuant to Article 3.

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3. Member States shall ensure that authorisation procedures
for small and/or distributed generation take into account their
limited size and potential impact.

4.
The authorisation procedures and criteria shall be made
public. Applicants shall be informed of the reasons for any
refusal to grant an authorisation. The reasons must be objective,
non-discriminatory, well-founded and duly substantiated. Appeal
procedures shall be made available to the applicant.

5. Member States shall designate an authority or a public or
private body independent from electricity generation, transmis-
sion, distribution and supply activities, which may be a regula-
tory authority referred to in Article 34(1), to be responsible for
the organisation, monitoring and control of
the tendering
procedure referred to in paragraphs 1 to 4. Where a transmis-
sion system operator is fully independent from other activities
not relating to the transmission system in ownership terms, the
transmission system operator may be designated as the body
responsible for organising, monitoring and controlling the
tendering procedure. This authority or body shall take all neces-
sary steps to ensure confidentiality of the information contained
in the tenders.

Article 8

Tendering for new capacity

CHAPTER IV

1. Member States shall ensure the possibility, in the interests
of security of supply, of providing for new capacity or energy
a
efficiency/demand-side management measures
tendering procedure or any procedure equivalent in terms of
transparency and non-discrimination, on the basis of published
criteria. Those procedures may, however, be launched only
where, on the basis of the authorisation procedure, the gener-
ating capacity to be built or the energy efficiency/demand-side
management measures to be taken are insufficient to ensure
security of supply.

through

2. Member States may ensure the possibility, in the interests
of environmental protection and the promotion of infant new
technologies, of
tendering for new capacity on the basis of
published criteria. Such tendering may relate to new capacity or
efficiency/demand-side management measures. A
energy
tendering procedure may, however, be launched only where, on
the basis of the authorisation procedure the generating capacity
to be built or the measures to be taken, are insufficient to
achieve those objectives.

Details of the tendering procedure for means of generating
3.
capacity
efficiency/demand-side management
measures shall be published in the Official Journal of the European
Union at least six months prior to the closing date for tenders.

energy

and

The tender specifications shall be made available to any inter-
ested undertaking established in the territory of a Member State
so that it has sufficient time in which to submit a tender.

With a view to ensuring transparency and non-discrimination,
the tender specifications shall contain a detailed description of
the contract specifications and of the procedure to be followed
by all tenderers and an exhaustive list of criteria governing the
selection of tenderers and the award of the contract, including
incentives, such as subsidies, which are covered by the tender.
Those specifications may also relate to the fields referred to in
Article 7(2).

In invitations to tender for the requisite generating capa-
4.
city, consideration must also be given to electricity supply offers
with long-term guarantees
from existing generating units,
provided that additional requirements can be met in this way.

Transmission system operation

Article 9

Unbundling of

transmission systems and transmission

system operators

1. Member States shall ensure that from … (*):

(a) each undertaking which owns a transmission system acts as

a transmission system operator;

(b) the same person or persons are not entitled:

(i) directly or indirectly to exercise control over an under-
taking performing any of the functions of generation or
supply, and directly or indirectly to exercise control or
exercise any right over a transmission system operator
or over a transmission system; or

(ii) directly or indirectly to exercise control over a transmis-
sion system operator or over a transmission system, and
directly or indirectly to exercise control or exercise any
right over an undertaking performing any of the func-
tions of generation or supply;

(c) the same person or persons are not entitled to appoint
members of the supervisory board, the administrative board
or bodies legally representing the undertaking, of a transmis-
sion system operator or a transmission system, and directly
or indirectly to exercise control or exercise any right over an
undertaking performing any of the functions of generation
or supply; and

(d) the same person is not entitled to be a member of the
supervisory board, the administrative board or bodies legally
representing the undertaking, of both an undertaking
performing any of the functions of generation or supply
and a transmission system operator or a transmission
system.

(*) Date of transposition of this Directive plus one year, i.e. 30 months

after the date of entry into force of this Directive.

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The rights referred to in points (b) and (c) of paragraph 1

2.
shall include, in particular:

(a) the power to exercise voting rights; or

(b) the power to appoint members of the supervisory board,
the administrative board or bodies legally representing the
undertaking.

3.
For the purpose of point (b) of paragraph 1, the notion
‘undertaking performing any of the functions of generation or
supply’ shall include ‘undertaking performing any of the func-
tions of production and supply’ within the meaning of Directive
2009/…/EC of the European Parliament and of the Council
of … concerning common rules for the internal market in
natural gas (1), and the terms ‘transmission system operator’ and
‘transmission system’
‘transmission system
operator’ and ‘transmission system’ within the meaning of
Directive 2009/…/EC.

include

shall

4. Member States may allow for derogations from points (b)
and (c) of paragraph 1 until … (*), provided that transmission
system operators are not part of a vertically integrated
undertaking.

5.
The obligation set out in point (a) of paragraph 1 shall be
deemed to be fulfilled in a situation where two or more under-
takings which own transmission systems have created a joint
venture which acts as a transmission system operator in two or
more Member States for the transmission systems concerned.
No other undertaking may be part of the joint venture, unless it
has been approved under Article 13 as an independent system
operator or as an independent transmission operator for the
purposes of Chapter V.

For the implementation of this Article, where the person
6.
(c) and (d) of paragraph 1 is the
referred to in points (b),
Member State or another public body,
two separate public
bodies exercising control over a transmission system operator or
over a transmission system on the one hand, and over an under-
taking performing any of the functions of generation or supply
on the other, shall be deemed not to be the same person or
persons.

7. Member States shall ensure that neither commercially
sensitive information referred to in Article 16 held by a trans-
mission system operator which was part of a vertically inte-
grated undertaking, nor the staff of such a transmission system
operator, is transferred to undertakings performing any of the
functions of generation and supply.

8. Where on … (**), the transmission system belongs to a
vertically integrated undertaking a Member State may decide not
to apply paragraph 1.

In such case, the Member State concerned shall either:

9. Where, on … (**), the transmission system belongs to a
vertically integrated undertaking and there are arrangements in
place which guarantee more effective independence of the trans-
mission system operator than the provisions of Chapter V, a
Member State may decide not to apply paragraph 1.

10.
Before an undertaking is approved and designated as a
transmission system operator under paragraph 9 of this Article,
it shall be certified according to the procedures laid down in
Article 10(4), (5) and (6) of this Directive and in Article 3 of
Regulation (EC) No …/2009, pursuant to which the Commis-
sion shall verify that the arrangements in place clearly guarantee
transmission system
more
operator than the provisions of Chapter V.

independence of

effective

the

11.
Vertically integrated undertakings which own a transmis-
sion system shall not in any event be prevented from taking
steps to comply with paragraph 1.

12.
Undertakings performing any of the functions of genera-
tion or supply shall not in any event be able to directly or indir-
ectly take control over or exercise any right over unbundled
transmission system operators in Member States which apply
paragraph 1.

Article 10

Designation and certification of

transmission system

operators

1.
Before an undertaking is approved and designated as trans-
mission system operator, it shall be certified according to the
procedures laid down in paragraphs 4, 5 and 6 of this Article
and in Article 3 of Regulation (EC) No …/2009.

2.
Undertakings which own a transmission system and which
have been certified by the national regulatory authority as
having complied with the requirements of Article 9, pursuant to
the certification procedure below, shall be approved and desig-
nated as transmission system operators by Member States. The
designation of transmission system operators shall be notified to
the Commission and published in the Official
the
European Union.

Journal of

3.
Transmission system operators shall notify to the regula-
tory authority any planned transaction which may require a
their compliance with the requirements of
reassessment of
Article 9.

Regulatory authorities

4.
continuing
compliance of transmission system operators with the require-
ments of Article 9. They shall open a certification procedure to
ensure such compliance:

shall monitor

the

(a) upon notification by the transmission system operator

(a) designate an independent system operator in accordance

pursuant to paragraph 3;

with Article 13; or

(b) comply with the provisions of Chapter V.

(1) OJ L …
(*) Date of transposition of this Directive plus two years, i.e. 42 months

after entry into force of this Directive.
(**) Date of entry into force of this Directive.

(b) on their own initiative where they have knowledge that a
planned change in rights or influence over transmission
system owners or transmission system operators may lead
to an infringement of Article 9, or where they have reason
to believe that such an infringement may have occurred; or

(c) upon a reasoned request from the Commission.

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5.
The regulatory authorities shall adopt a decision on the
certification of a transmission system operator within a period
of four months from the date of the notification by the trans-
mission system operator or from the date of the Commission
request. After expiry of that period, the certification shall be
deemed to be granted. The explicit or tacit decision of the regu-
latory authority shall become effective only after the conclusion
of the procedure set out in paragraph 6.

6.
The explicit or tacit decision on the certification of a
transmission system operator shall be notified without delay to
the Commission by the regulatory authority, together with all
the relevant
to that decision. The
Commission shall act in accordance with the procedure laid
down in Article 3 of Regulation (EC) No …/2009.

information with respect

7.
The regulatory authorities and the Commission may
request from transmission system operators and undertakings
performing any of the functions of generation or supply any
information relevant for the fulfillment of their tasks under this
Article.

Regulatory authorities and the Commission shall preserve

8.
the confidentiality of commercially sensitive information.

considering that question the regulatory authority or other
competent authority so designated shall take into account:

(i) the rights and obligations of

the Community with
respect to that third country arising under international
law,
including any agreement concluded with one or
more third countries to which the Community is a
party and which addresses the issues of security of
energy supply;

(ii) the rights and obligations of the Member State with
respect to that third country arising under agreements
insofar as they are in compliance
concluded with it,
with Community law; and

(iii) other specific facts and circumstances of the case and

the third country concerned.

4.
The regulatory authority shall notify the decision to the
Commission without delay, together with all the relevant infor-
mation with respect to that decision.

shall

States

provide

5. Member
regulatory
authority and/or the designated competent authority referred to
in point (b) of paragraph 3, before the regulatory authority
adopts a decision on the certification, to request an opinion
from the Commission on whether:

the

for

Article 11

(a) the entity concerned complies with the requirements of

Article 9; and

Certification in relation to third countries

1. Where certification is requested by a transmission system
owner or a transmission system operator which is controlled by
a person or persons from a third country or third countries, the
regulatory authority shall notify the Commission.

The regulatory authority shall also notify to the Commission
without delay any circumstances that would result in a person
or persons from a third country or third countries acquiring
control of a transmission system or a transmission system
operator.

(b) granting certification will not put at risk the security of

energy supply to the Community.

The Commission shall examine the request referred to in
6.
paragraph 5 as soon as it is received. Within a period of two
months after receiving the request, it shall deliver its opinion to
the national regulatory authority or, if the request was made by
the designated competent authority, to that authority.

In preparing the opinion, the Commission may request the
views of the Agency, the Member State concerned, and inter-
ested parties. In the event that the Commission makes such a
request, the two-month period shall be extended by two months.

2.
Transmission system operators shall notify to the regula-
tory authority any circumstances that would result in a person
or persons from a third country or third countries acquiring
control of the transmission system or the transmission system
operator.

In the absence of an opinion by the Commission within the
period referred to in the first and second subparagraphs, the
Commission shall be deemed not to raise objections to the deci-
sion of the regulatory authority.

The regulatory authority shall adopt a draft decision on
3.
the certification of a transmission system operator within four
months from the date of notification by the transmission
system operator. It shall refuse the certification if it has not
been demonstrated:

the control by a person or
7. When assessing whether
persons from a third country or third countries will put at risk
the security of energy supply to the Community, the Commis-
sion shall take into account:

(a) the specific facts of the case and the third country or third

(a) that the entity concerned complies with the requirements of

countries concerned; and

Article 9; and

(b) to the regulatory authority or

to another competent
authority designated by the Member State that granting
certification will not put at risk the security of energy
In
supply of

the Member State and the Community.

(b) the rights and obligations of the Community with respect to
that third country or third countries arising under interna-
tional law, including an agreement concluded with one or
more third countries to which the Community is a party
and which addresses the issues of security of supply.

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the Commission's opinion.

8.
The national regulatory authority shall, within a period of
two months after the expiry of the period referred to in para-
graph 6, adopt its final decision on the certification. In adopting
its final decision the national regulatory authority shall take
utmost account of
In any event
Member States shall have the right to refuse certification where
granting certification puts at risk the Member State's security of
energy supply. Where the Member State has designated another
competent authority to assess point (b) of paragraph 3, it may
require the national regulatory authority to adopt its final deci-
sion in accordance with the assessment of
that competent
authority. The national regulatory authority's final decision and
the Commission's opinion shall be published together.

9.
Nothing in this Article shall affect the right of Member
States to exercise, in compliance with Community law, national
legal controls to protect legitimate public security interests.

10.
The Commission may adopt guidelines setting out the
details of the procedure to be followed for the application of
this Article. Those measures, designed to amend non-essential
elements of this Directive by supplementing it, shall be adopted
in accordance with the regulatory procedure with scrutiny
referred to in Article 46(2).

This Article, with exception of point (a) of paragraph 3,
11.
shall also apply to Member States which are subject to a deroga-
tion under Article 44.

Article 12

Tasks of transmission system operators

Each transmission system operator shall be responsible for:

(a) ensuring the long-term ability of the system to meet reason-
able demands for the transmission of electricity, operating,
maintaining and developing under economic conditions
secure, reliable and efficient transmission systems with due
regard to the environment;

(b) contributing to security of supply through adequate trans-

mission capacity and system reliability;

(c) managing electricity flows on the system,

taking into
account exchanges with other interconnected systems. To
that end, the transmission system operator shall be respon-
sible for ensuring a secure, reliable and efficient electricity
system and, in that context, for ensuring the availability of
all necessary ancillary services insofar as such availability is
independent
transmission system with
which its system is interconnected;

from any other

(d) providing to the operator of any other system with which
its system is interconnected sufficient information to ensure
the secure and efficient operation, coordinated development
and interoperability of the interconnected system;

(e) ensuring non-discrimination as between system users or
classes of system users, particularly in favour of its related
undertakings; and

Article 13

Independent system operator

1. Where the transmission system belongs to a vertically
integrated undertaking on … (*), Member States may decide not
to apply Article 9(1) and designate an independent system
operator upon a proposal from the transmission system owner.
Such designation shall be
the
Commission.

to approval by

subject

The Member State may approve and designate an indepen-

2.
dent system operator only where:

(a) the candidate operator has demonstrated that it complies

with the requirements of Article 9(1)(b), (c) and (d);

(b) the candidate operator has demonstrated that it has at its
technical, physical and

disposal
human resources to carry out its tasks under Article 12;

the required financial,

(c) the candidate operator has undertaken to comply with a
10-year network development plan monitored by the regu-
latory authority;

(d) the transmission system owner has demonstrated its ability
to comply with its obligations under paragraph 5. To this
end, it shall provide all the draft contractual arrangements
with the candidate undertaking and any other
relevant
entity;

(e) the candidate operator has demonstrated its ability to
comply with its obligations under Regulation (EC)
No …/2009 including the cooperation of
transmission
system operators at European and regional level.

Undertakings which have been certified by the regulatory
3.
authority as having complied with the
requirements of
Article 11 and Article 13(2) shall be approved and designated
as independent system operators by Member States. The certifi-
this Directive and
cation procedure in either Article 10 of
Article 3 of Regulation (EC) No …/2009 or in Article 11 of this
Directive shall be applicable.

inter-transmission

system operator

Each independent system operator shall be responsible for
4.
granting and managing third-party access, including the collec-
tion of access charges, congestion charges, and payments under
the
compensation
mechanism in compliance with Article 13 of Regulation (EC)
No …/2009, as well as for operating, maintaining and devel-
oping the transmission system, and for ensuring the long-term
ability of the system to meet reasonable demand through invest-
ment planning. When developing the transmission system, the
independent system operator shall be responsible for planning
(including authorisation procedure), construction and commis-
sioning of the new infrastructure. For this purpose, the indepen-
dent system operator shall act as a transmission system operator
in accordance with this Chapter. The transmission system owner
shall not be responsible for granting and managing third-party
access, nor for investment planning.

(f) providing system users with the information they need for

efficient access to the system.

(*) Date of entry into force of this Directive.

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5. Where an independent system operator has been desig-
nated, the transmission system owner shall:

(a) provide all the relevant cooperation and support to the inde-
its tasks,

pendent system operator for the fulfilment of
including in particular all relevant information;

(b) finance the investments decided by the independent system
operator and approved by the regulatory authority, or give
its agreement to financing by any interested party including
the independent system operator. The relevant
financing
arrangements shall be subject to approval by the regulatory
authority. Prior to such approval, the regulatory authority
shall consult the transmission system owner together with
the other interested parties;

(c) provide for the coverage of liability relating to the network
assets, excluding the liability relating to the tasks of the
independent system operator; and

(d) provide guarantees

to facilitate financing any network
expansions with the exception of those investments where,
pursuant to point (b), it has given its agreement to financing
by any interested party including the independent system
operator.

6.
In close cooperation with the regulatory authority, the
relevant national competition authority shall be granted all rele-
vant powers to effectively monitor compliance of the transmis-
sion system owner with its obligations under paragraph 5.

Article 14

Unbundling of transmission system owners

1.
A transmission system owner, where an independent
system operator has been appointed, which is part of a vertically
integrated undertaking shall be independent at least in terms of
its legal form, organisation and decision making from other
activities not relating to transmission.

In order to ensure the independence of the transmission
the following

referred to in paragraph 1,

2.
system owner
minimum criteria shall apply:

(a) persons responsible for the management of the transmission
system owner shall not participate in company structures of
the integrated electricity undertaking responsible, directly or
indirectly, for the day-to-day operation of the generation,
distribution and supply of electricity;

(b) appropriate measures shall be taken to ensure that

the
professional interests of persons responsible for the manage-
ment of
the transmission system owner are taken into
account in a manner that ensures that they are capable of
acting independently; and

(c) the transmission system owner shall establish a compliance
programme, which sets out measures taken to ensure that
discriminatory conduct is excluded, and ensure that obser-

it

the

set out

is adequately monitored. The compliance
vance of
specific obligations of
shall
programme
employees to meet
those objectives. An annual report,
setting out the measures taken, shall be submitted by the
person or body responsible for monitoring the compliance
programme to the regulatory authority and shall be
published.

The Commission may adopt guidelines to ensure full and
3.
effective compliance of
the transmission system owner with
paragraph 2 of this Article. Those measures, designed to amend
non-essential elements of this Directive by supplementing it,
shall be adopted in accordance with the regulatory procedure
with scrutiny referred to in Article 46(2).

Article 15

Dispatching and balancing

1. Without prejudice to the supply of electricity on the basis
of contractual obligations,
including those which derive from
the tendering specifications, the transmission system operator
shall, where it has
such a function, be responsible for
dispatching the generating installations in its area and for deter-
mining the use of interconnectors with other systems.

2.
The dispatching of generating installations and the use of
interconnectors shall be determined on the basis of criteria
which may be approved by the Member State and which must
be objective, published and applied in a non-discriminatory
manner, ensuring the proper functioning of the internal market
in electricity. The criteria shall take into account the economic
precedence of electricity from available generating installations
or interconnector transfers and the technical constraints on the
system.

3.
A Member State may require the system operator, when
dispatching generating installations, to give priority to gener-
ating installations using renewable energy sources or waste or
producing combined heat and power.

A Member State may, for reasons of security of supply,
4.
direct that priority be given to the dispatch of generating instal-
lations using indigenous primary energy fuel sources, to an
extent not exceeding, in any calendar year, 15 % of the overall
primary energy necessary to produce the electricity consumed
in the Member State concerned.

5. Member States may require transmission system operators
to comply with minimum standards for the maintenance and
development of the transmission system, including interconnec-
tion capacity.

Transmission system operators shall procure the energy
6.
they use to cover energy losses and reserve capacity in their
system according
and
market-based procedures, whenever they have such a function.

to transparent, non-discriminatory

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C 70 E/15

7.
Rules adopted by transmission system operators for balan-
cing the electricity system shall be objective, transparent and
non-discriminatory, including rules for charging system users of
their networks for energy imbalance. The terms and conditions,
including the rules and tariffs, for the provision of such services
by transmission system operators shall be established pursuant
to a methodology compatible with Article 36(6) in a non-discri-
minatory and cost-reflective way and shall be published.

be prohibited. A transmission system operator may,
however, render services to the vertically integrated under-
taking as long as:

(i) the provision of those services does not discriminate
between system users, is available to all system users on
the same terms and conditions and does not restrict,
distort or prevent competition in generation or supply;
and

Article 16

(ii) the terms and conditions of

the provision of
services are approved by the regulatory authority;

those

Confidentiality for transmission system operators and
transmission system owners

1. Without prejudice to Article 29 or any other legal duty to
disclose information, each transmission system operator and
each transmission system owner shall preserve the confidenti-
ality of commercially sensitive information obtained in the
course of carrying out its activities, and shall prevent informa-
tion about its own activities which may be commercially advan-
tageous from being disclosed in a discriminatory manner. In
particular it shall not disclose any commercially sensitive infor-
mation to the remaining parts of the undertaking, unless this is
necessary for carrying out a business transaction. In order to
ensure the full respect of the rules on information unbundling,
Member States shall ensure that the transmission system owner
and the remaining part of the undertaking do not use joint
services, such as joint legal services, apart from purely adminis-
trative or IT functions.

2.
Transmission system operators shall not, in the context of
sales or purchases of electricity by related undertakings, misuse
commercially sensitive information obtained from third parties
in the context of providing or negotiating access to the system.

CHAPTER V

Independent Transmission Operator

Article 17

Assets, equipment, staff and identity

1.
Transmission system operators shall be equipped with all
financial, technical, physical and human resources necessary for
fulfilling their obligations under this Directive and carrying out
the activity of electricity transmission, in particular:

(a) assets that are necessary for the activity of electricity trans-
mission, including the transmission system, shall be owned
by the transmission system operator;

(b) personnel, necessary for the activity of electricity transmis-
sion, including the performance of all corporate tasks, shall
be employed by the transmission system operator;

(c) leasing of personnel and rendering of services, to and from
any other parts of the vertically integrated undertaking shall

(d) without prejudice to the decisions of the Supervisory Body
under Article 20, appropriate financial resources for future
investment projects and/or for the replacement of existing
assets shall be made available to the transmission system
operator in due time by the vertically integrated undertaking
following an appropriate request
from the transmission
system operator.

The activity of electricity transmission shall include at least

2.
the following tasks in addition to those listed in Article 12:

(a) the representation of the transmission system operator and
contacts to third parties and the regulatory authorities;

(b) the representation of

the transmission system operator
within the European Network of Transmission System
Operators for Electricity (‘ENTSO for Electricity’);

(c) granting and managing third-party access on a non-discrimi-
natory basis between system users or classes of system
users;

(d) the collection of all the transmission system related charges
including access charges, balancing charges for ancillary
services such as purchasing of services (balancing costs,
energy for losses);

(e) the operation, maintenance and development of a secure,

efficient and economic transmission system;

(f) investment planning ensuring the long-term ability of the
reasonable demand and guaranteeing

system to meet
security of supply;

(g) the setting up of appropriate joint ventures, including with
transmission system operators, power
one or more
exchanges, and the other relevant actors pursuing the objec-
tives to develop the creation of regional markets or to facili-
tate the liberalisation process; and

(h) all corporate services, including legal services, accountancy

and IT services.

Transmission system operators shall be organised in the
form of a limited liability company as referred to in

3.
legal
Article 1 of Council Directive 68/151/EEC (1).

(1) First Council Directive 68/151/EEC of 9 March 1968 on coordination
of safeguards which, for the protection of the interests of members and
others, are required by Member States of companies within the
meaning of the second paragraph of Article 58 of the Treaty, with a
view to making such safeguards equivalent throughout the Community
(OJ L 65, 14.3.1968, p. 8).

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4.
The transmission system operator shall not, in its corpo-
rate identity, communication, branding and premises, create
confusion in respect of the separate identity of the vertically
integrated undertaking or any part thereof.

5.
The transmission system operator shall not share IT
systems or equipment, physical premises and security access
systems with any part of the vertically integrated undertaking
nor use the same consultants or external contractors for IT
systems or equipment, and security access systems.

6.
The accounts of transmission system operators shall be
audited by an auditor other than the one auditing the vertically
integrated undertaking or any part of it.

Article 18

Independence of the transmission system operator

1. Without prejudice to the decisions of
the Supervisory
Body under Article 20, the transmission system operator shall
have:

(a) effective decision-making rights, independent from the verti-
cally integrated undertaking, with respect to assets necessary
to operate, maintain or develop the transmission system;
and

(b) the power to raise money on the capital market in particular

through borrowing and capital increase.

2.
The transmission system operator shall at all times act so
as to ensure it has the resources it needs in order to carry out
the activity of transmission properly and efficiently and develop
and maintain an efficient, secure and economic transmission
system.

the

vertically

Subsidiaries of

3.
integrated undertaking
performing functions of generation or supply shall not have any
indirect shareholding in the transmission system
direct or
operator. The transmission system operator shall neither have
any direct or indirect shareholding in any subsidiary of the verti-
cally integrated undertaking performing functions of generation
or supply, nor receive dividends or any other financial benefit
from that subsidiary.

operator, including loans from the transmission system operator
to the vertically integrated undertaking, shall comply with
market conditions. The transmission system operator shall keep
detailed records of such commercial and financial relations and
make them available to the regulatory authority upon request.

The

transmission system operator

7.
for
approval by the regulatory authority all commercial and finan-
cial agreements with the vertically integrated undertaking.

submit

shall

The

transmission system operator

8.
inform the
regulatory authority of the financial resources, referred to in
Article 17(1)(d), available for future investment projects and/or
for the replacement of existing assets.

shall

9.
The vertically integrated undertaking shall refrain from
any action impeding or prejudicing the transmission system
operator from complying with its obligations in this Chapter
and shall not require the transmission system operator to seek
permission from the vertically integrated undertaking in
fulfilling those obligations.

10.
An undertaking which has been certified by the regula-
tory authority as being in compliance with the requirements of
this Chapter shall be approved and designated as a transmission
system operator by the Member State concerned. The certifica-
tion procedure in either Article 10 of this Directive and Article 3
of Regulation (EC) No …/2009 or in Article 11 of this Directive
shall apply.

Article 19

Independence of the staff and the management of the
transmission system operator

the

regarding

Decisions

appointment

1.
and renewal,
working conditions including remuneration, and termination of
the term of office of the persons responsible for the manage-
ment and/or members of the administrative bodies of the trans-
mission system operator shall be taken by the Supervisory Body
of the transmission system operator appointed in accordance
with Article 20.

the transmission system operator

4.
The overall management structure and the corporate
statutes of the transmission system operator shall ensure effec-
in
tive independence of
compliance with this Chapter. The vertically integrated under-
taking shall not determine, directly or indirectly, the competitive
behaviour of the transmission system operator in relation to the
day to day activities of the transmission system operator and
management of the network, or in relation to activities neces-
sary for the preparation of the 10-year network development
plan developed pursuant to Article 22.

5.
In fulfilling their tasks in Article 12 and Article 17(2) of
this Directive, and in complying with Articles 14, 15 and 16 of
Regulation (EC) No …/2009,
transmission system operators
shall not discriminate against different persons or entities and
shall not restrict, distort or prevent competition in generation
or supply.

6.
cally integrated undertaking and the

Any commercial and financial relations between the verti-
transmission system

the administrative bodies of

2.
The identity and the conditions governing the term, the
duration and the termination of office of the persons nominated
by the Supervisory Body for appointment or renewal as persons
responsible for the executive management and/or as members
of
transmission system
operator, and the reasons for any proposed decision terminating
such term of office, shall be notified to the regulatory authority.
Those conditions and the decisions referred to in paragraph 1
shall become binding only if the regulatory authority has raised
no objections within three weeks of notification.

the

The regulatory authority may object to the decisions referred to
in paragraph 1 where:

(a) doubts arise as to the professional independence of a nomi-
the management and/or

nated person responsible for
member of the administrative bodies; or

(b) in the case of premature termination of a term of office,
doubts exist regarding the justification of such premature
termination.

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3.
No professional position or responsibility, interest or busi-
ness relationship, directly or indirectly, with the vertically inte-
grated undertaking or any part of it or its controlling share-
holders other than the transmission system operator shall be
exercised for a period of three years before the appointment of
the persons responsible for the management and/or members of
the administrative bodies of the transmission system operator
who are subject to this subparagraph.

The first subparagraph shall apply to the majority of
the
persons responsible for the management and/or members of the
administrative bodies of the transmission system operator.

the administrative bodies of

The persons responsible for the management and/or members
of
transmission system
operator, who are not subject to the first subparagraph, shall
have exercised no management or other relevant activity in the
vertically integrated undertaking for a period of at least six
months before their appointment.

the

The persons

responsible for

4.
the management and/or
members of the administrative bodies, and employees of the
transmission system operator shall have no other professional
position or
relationship,
directly or indirectly, with any other part of the vertically inte-
grated undertaking or with its controlling shareholders.

interest or business

responsibility,

The persons

responsible for

5.
the management and/or
members of the administrative bodies, and employees of the
transmission system operator shall hold no interest in or receive
any financial benefit, directly or indirectly, from any part of the
vertically integrated undertaking other than the transmission
system operator. Their
remuneration shall not depend on
activities or results of the vertically integrated undertaking other
than those of the transmission system operator.

6.
Effective rights of appeal to the regulatory authority shall
be guaranteed for any complaints by the persons responsible for
the management and/or members of the administrative bodies
of the transmission system operator against premature termina-
tions of their term of office.

7.
After termination of their term of office in the transmis-
sion system operator, the persons responsible for its manage-
ment and/or members of its administrative bodies shall have no
professional position or responsibility, interest or business rela-
tionship with any part of the vertically integrated undertaking
other than the transmission system operator, or with its control-
ling shareholders for a period of not less than four years.

8.
The second subparagraph of paragraph 3 and paragraph 7
shall be applicable to all the persons belonging to the executive
management and to those directly reporting to them on matters
related to the operation, maintenance or development of the
network.

Article 20

Supervisory Body

holders within the transmission system operator, in particular
decisions regarding the approval of the annual and longer-term
financial plans, the level of indebtedness of the transmission
system operator and the amount of dividends distributed to
shareholders. The decisions falling under the remit of the Super-
visory Body shall exclude those that are related to the day to
day activities of the transmission system operator and manage-
ment of the network, and to activities necessary for the prepara-
the 10-year network development plan developed
tion of
pursuant to Article 22.

2.
The Supervisory Body shall be composed of members
representing the vertically integrated undertaking, members
representing third party shareholders and, where the relevant
legislation of a Member State so provides, members representing
other interested parties such as employees of the transmission
system operator.

The first subparagraph of Article 19(2),

3.
the first sub-
paragraph of Article 19(3) and Article 19(4) to (7) shall apply
to at least half of the members of the Supervisory Body minus
one.

Point (a) of the second subparagraph of Article 19(2) shall apply
to all the members of the Supervisory Body.

Article 21

Compliance programme and compliance officer

1. Member States shall ensure that
transmission system
operators establish and implement a compliance programme
which sets out the measures taken in order to ensure that discri-
minatory conduct is excluded, and ensure that the compliance
with that programme is adequately monitored. The compliance
programme shall set out the specific obligations of employees to
meet those objectives. It shall be subject to approval by the
regulatory authority. Without prejudice to the powers of the
national regulator, compliance with the program shall be inde-
pendently monitored by a compliance officer.

The compliance officer shall be appointed by the Supervi-
2.
sory Body. The compliance officer may be a natural or legal
person. Article 19(2)
to (7) shall apply to the compliance
officer. The regulatory authority may object to the appointment
of a compliance officer for reasons of lack of independence or
professional capacity.

3.

The compliance officer shall be in charge of:

(a) monitoring
programme;

the

implementation

of

the

compliance

(b) elaborating an annual report, setting out the measures taken
the compliance programme and

in order to implement
submitting it to the regulatory authority;

(c) reporting to the Supervisory Body and issuing recommenda-
its

programme

compliance

and

the

tions
implementation;

on

1.
The transmission system operator shall have a Supervisory
Body which shall be in charge of taking decisions which may
have a significant impact on the value of the assets of the share-

(d) notifying the

regulatory authority on any substantial
breaches with regard to the implementation of the compli-
ance programme; and

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Official Journal of the European Union

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(e) reporting to the regulatory authority on any commercial
relations between the vertically integrated

and financial
undertaking and the transmission system operator.

4.
The compliance officer shall submit the proposed deci-
sions on the investment plan or on individual investments in
the network to the regulatory authority. This shall occur at the
latest when the management and/or the competent administra-
tive body of the transmission system operator submits them to
the Supervisory Body.

5. Where the vertically integrated undertaking, in the general
assembly or through the vote of the members of the Supervi-
sory Body it has appointed, has prevented the adoption of a
decision with the effect of preventing or delaying investments in
the network, the compliance officer shall report this to the regu-
latory authority.

6.
The conditions governing the mandate or the employment
conditions of the compliance officer shall be subject to approval
by the regulatory authority and shall ensure the independence
of the compliance officer.

The compliance officer shall report regularly, either orally
7.
or in writing, to the regulatory authority and shall have the
right to report regularly, either orally or in writing, to the Super-
visory Body of the transmission system operator.

The compliance officer may attend all meetings of the
8.
management or administrative bodies of
the transmission
system operator, and those of the Supervisory Body and the
general assembly. The compliance officer shall attend all meet-
ings that address the following matters:

(a) conditions for access to the network, as defined in Regu-
lation (EC) No …/2009, in particular regarding tariffs, third
party access services, capacity allocation and congestion
management,
secondary
markets;

transparency,

balancing

and

(b) projects undertaken in order

to operate, maintain and
develop the transmission system, including interconnection
and connection investments;

(c) energy purchases or sales necessary for the operation of the

transmission system.

Article 22

Network development and powers to make investment
decisions

1.
Every year, transmission system operators shall submit to
the regulatory authority a 10-year network development plan
based on existing and forecast supply and demand after having
consulted all the relevant stakeholders. The plan shall contain
efficient measures in order to guarantee the adequacy of the
system and the security of supply.

2.

The 10-year network development plan shall in particular:

(a) indicate to market participants the main transmission infra-
structure that need to be built or upgraded over the next
ten years;

(b) contain all the investments already decided and identify new
investments which have to be executed in the next three
years; and

(c) provide for a time frame for all investment projects.

3. When elaborating the 10-year network development plan,
the transmission system operator shall make reasonable assump-
tions about the evolution of the generation, supply, consump-
tion and exchanges with other countries, taking into account
investment plans for regional and Community-wide networks.

4.
The regulatory authority shall consult all actual or poten-
tial system users on the 10-year network development plan in
an open and transparent manner. Persons or undertakings
claiming to be potential system users may be required to
substantiate such claims. The regulatory authority shall publish
the result of
in particular possible
needs for investments.

the consultation process,

the
The regulatory authority shall examine whether
5.
10-year network development plan covers all investment needs
identified during the consultation process, and whether it is
consistent with the non-binding Community-wide 10-year
network development plan referred to in Article 8(3)(b) of
Regulation (EC) No …/2009.
If any doubt arises as to the
consistency with the non-binding Community-wide 10-year
network development plan,
the regulatory authority shall
consult the Agency. The regulatory authority may require the
transmission system operator to amend its plan.

The compliance officer shall monitor the compliance of

9.
the transmission system operator with Article 16.

The regulatory authority shall monitor and evaluate the

6.
implementation of the 10-year network development plan.

10.
The compliance officer shall have access to all relevant
data and to the offices of the transmission system operator and
to all the information necessary for the fulfilment of his task.

After prior approval by the regulatory authority,

11.
Supervisory Body may dismiss the compliance officer.

the

7.
In circumstances where the transmission system operator,
other than for overriding reasons beyond its control, does not
execute an investment, which, under the 10-year network devel-
opment plan, was to be executed in the following three years,
Member States shall ensure that
the regulatory authority is
required to take at least one of the following measures to ensure
that the investment in question is made if such investment is
still relevant on the basis of the most recent 10-year network
development plan:

12.
The compliance officer shall have access to the offices of
the transmission system operator without prior announcement.

(a) to require the transmission system operator to execute the

investments in question;

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Official Journal of the European Union

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(b) to organise a tender procedure open to any investors for the

investment in question; or

(c) to oblige the transmission system operator to accept a
increase to finance the necessary investments and

capital
allow independent investors to participate in the capital.

its powers
When the regulatory authority has made use of
it may oblige the
under point (b) of the first subparagraph,
transmission system operator to agree to one or more of the
following:

(a) financing by any third party;

(b) construction by any third party;

(c) building the new assets concerned itself;

(d) operating the new asset concerned itself.

The transmission system operator shall provide the investors
with all
information needed to realise the investment, shall
connect new assets to the transmission network and shall gener-
ally make its best efforts to facilitate the implementation of the
investment project.

The relevant financial arrangements shall be subject to approval
by the regulatory authority.

8. When the regulatory authority has made use of its powers
under the first subparagraph of paragraph 7, the relevant tariff
regulations shall cover the costs of the investments in question.

Article 23

Decision-making powers regarding the connection of new
power plant to the transmission system

The transmission system operator

1.
shall establish and
publish transparent and efficient procedures for non-discrimina-
tory connection of new power plants to the transmission
system. Those procedures shall be subject to the approval of
national regulatory authorities.

2.
The transmission system operator shall not be entitled to
refuse the connection of a new power plant on the grounds of
possible future limitations to available network capacities, such
as congestion in distant parts of the transmission system. The
transmission
necessary
information.

system operator

supply

shall

3.
The transmission system operator shall not be entitled to
refuse a new connection point, on the ground that it will lead
to additional costs linked with necessary capacity increase of
system elements in the close-up range to the connection point.

CHAPTER VI

Distribution system operation

Article 24

Designation of distribution system operators

Member States shall designate or shall require undertakings that
own or are responsible for distribution systems to designate, for

a period of time to be determined by Member States having
regard to considerations of efficiency and economic balance,
one or more distribution system operators. Member States shall
ensure that distribution system operators act in accordance with
Articles 25, 26 and 27.

Article 25

Tasks of distribution system operators

The distribution system operator shall maintain a secure,
1.
reliable and efficient distribution system in its area with due
regard for the environment.

In any event,

it must not discriminate between system
2.
users or classes of system users, particularly in favour of its
related undertakings.

The distribution system operator shall provide system
3.
users with the information they need for efficient access to the
system.

4.
A Member State may require the distribution system
to give
operator, when dispatching generating installations,
priority to generating installations using renewable energy
sources or waste or producing combined heat and power.

Each distribution system operator shall procure the energy
5.
it uses to cover energy losses and reserve capacity in its system
according to transparent, non-discriminatory and market based
procedures, whenever it has such a function. That requirement
shall be without prejudice to using electricity acquired under
contracts concluded before 1 January 2002.

6. Where a distribution system operator is responsible for
balancing the distribution system, rules adopted by it for that
purpose shall be objective, transparent and non-discriminatory,
including rules for
their
networks for energy imbalance. Terms and conditions, including
rules and tariffs, for the provision of such services by distribu-
tion system operators shall be established in accordance with
Article 36(6) in a non-discriminatory and cost-reflective way
and shall be published.

the charging of system users of

7. When planning the development of
the distribution
network, energy efficiency/demand-side management measures
and/or distributed generation that might supplant the need to
upgrade or replace electricity capacity shall be considered by the
distribution system operator.

Article 26

Unbundling of distribution system operators

1. Where the distribution system operator is part of a verti-
cally integrated undertaking, it shall be independent at least in
terms of its legal form, organisation and decision making from
other activities not relating to distribution. Those rules shall not
create an obligation to separate the ownership of assets of the
distribution system operator
from the vertically integrated
undertaking.

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2.
In addition to the requirements under paragraph 1, where
the distribution system operator is part of a vertically integrated
undertaking, it shall be independent in terms of its organisation
and decision-making from the other activities not related to
distribution. In order to achieve this, the following minimum
criteria shall apply:

(a) those persons responsible for the management of the distri-
bution system operator must not participate in company
structures of the integrated electricity undertaking respon-
sible, directly or indirectly, for the day-to-day operation of
the generation, transmission or supply of electricity;

(b) appropriate measures must be taken to ensure that

the
professional
the persons responsible for the
management of the distribution system operator are taken
into account in a manner that ensures that they are capable
of acting independently;

interests of

the distribution system operator shall have at

(c) the distribution system operator must have effective deci-
sion-making rights, independent from the integrated electri-
city undertaking, with respect to assets necessary to operate,
maintain or develop the network. In order to fulfil those
tasks,
its
disposal the necessary resources including human, technical,
physical and financial resources. This should not prevent the
existence of appropriate coordination mechanisms to ensure
that the economic and management supervision rights of
the parent company in respect of return on assets, regulated
indirectly in accordance with Article 36(6), in a subsidiary
this shall enable the parent
are protected.
company to approve the annual
financial plan, or any
equivalent instrument, of the distribution system operator
and to set global limits on the levels of indebtedness of its
subsidiary. It shall not permit the parent company to give
instructions
regarding day-to-day operations, nor with
respect to individual decisions concerning the construction
or upgrading of distribution lines, that do not exceed the
terms of
the approved financial plan, or any equivalent
instrument; and

In particular,

the

shall

set out

(d) the distribution system operator must establish a compli-
ance programme, which sets out measures taken to ensure
that discriminatory conduct is excluded, and ensure that
observance of it is adequately monitored. The compliance
programme
specific obligations of
employees to meet that objective. An annual report, setting
out the measures taken, shall be submitted by the person or
compliance
the
for monitoring
body
programme,
the distribution
system operator, to the regulatory authority referred to in
Article 34(1) and shall be published. The compliance officer
of the distribution system operator shall be fully indepen-
dent and shall have access to all the necessary information
of the distribution system operator and any affiliated under-
taking to fulfil his task.

the compliance officer of

responsible

4. Member States may decide not to apply paragraphs 1, 2
and 3 to integrated electricity undertakings serving less than
100 000 connected customers, or
isolated
systems.

serving small

Article 27

Confidentiality obligation of distribution system operators

Without prejudice to Article 29 or any other legal duty to
disclose information,
the distribution system operator must
preserve the confidentiality of commercially sensitive informa-
tion obtained in the course of carrying out its business, and
shall prevent information about its own activities which may be
commercially advantageous being disclosed in a discriminatory
manner.

Article 28

Combined operator

Article 26(1) shall not prevent the operation of a combined
transmission and distribution system operator provided that
operator complies with Articles 9(1), or 13 and 14, or Chapter V
or falls under Article 44(2).

CHAPTER VII

Unbundling and transparency of accounts

Article 29

Right of access to accounts

1. Member States or any competent authority they designate,
including the regulatory authorities referred to in Article 34,
shall,
insofar as necessary to carry out their functions, have
right of access to the accounts of electricity undertakings as set
out in Article 30.

2. Member States and any designated competent authority,
including the regulatory authorities, shall preserve the confiden-
tiality of commercially sensitive information. Member States
may provide for the disclosure of such information where this is
necessary in order for the competent authorities to carry out
their functions.

3. Where the distribution system operator is part of a verti-
cally integrated undertaking, Member States shall ensure that the
activities of the distribution system operator are monitored so
that it cannot take advantage of its vertical integration to distort
In particular, vertically integrated distribution
competition.
system operators
in their communication and
branding, create confusion in respect of the separate identity of
the supply branch of the vertically integrated undertaking.

shall not,

Article 30

Unbundling of accounts

1. Member States shall take the necessary steps to ensure that
the accounts of electricity undertakings are kept in accordance
with paragraphs 2 and 3.

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2.
Electricity undertakings, whatever their system of owner-
ship or legal form, shall draw up, submit to audit and publish
their annual accounts in accordance with the rules of national
law concerning the annual accounts of limited liability compa-
nies
Fourth Council Directive
to the
78/660/EC of 25 July 1978 based on Article 44(2)(g) (*) of the
Treaty on the annual accounts of certain types of companies (1).

adopted pursuant

Undertakings which are not legally obliged to publish their
annual accounts shall keep a copy of these at the disposal of the
public in their head office.

3.
Electricity undertakings shall, in their internal accounting,
keep separate accounts for each of their transmission and distri-
bution activities as they would be required to do if the activities
in question were carried out by separate undertakings, with a
view to avoiding discrimination, cross-subsidisation and distor-
tion of competition. They shall also keep accounts, which may
be consolidated, for other electricity activities not relating to
transmission or distribution. Until 1 July 2007, they shall keep
separate accounts for supply activities for eligible customers and
for non-eligible customers. Revenue from
supply activities
ownership of the transmission or distribution system shall be
specified in the accounts. Where appropriate, they shall keep
consolidated accounts for other, non-electricity activities. The
internal accounts shall include a balance sheet and a profit and
loss account for each activity.

The audit referred to in paragraph 2 shall, in particular,
the obligation to avoid discrimination and

4.
verify
cross-subsidies referred to in paragraph 3 is respected.

that

CHAPTER VIII

Organisation of access to the system

Article 31

Third-party access

1. Member States shall ensure the implementation of a
system of third party access to the transmission and distribution
systems based on published tariffs, applicable to all eligible
customers and applied objectively and without discrimination
between system users. Member States shall ensure that those
tariffs, or the methodologies underlying their calculation, are
approved prior to their entry into force in accordance with
Article 36 and that those tariffs, and the methodologies —
where only methodologies are approved — are published prior
to their entry into force.

2.
The transmission or distribution system operator may
refuse access where it lacks the necessary capacity. Duly substan-
in particular
tiated reasons must be given for such refusal,
having regard to Article 3. Member States shall ensure, where
appropriate and when refusal of access takes place, that the

transmission or distribution system operator provides relevant
information on measures that would be necessary to reinforce
the network. The party requesting such information may be
charged a reasonable fee reflecting the cost of providing such
information.

Article 32

Market opening and reciprocity

1. Member States shall ensure that the eligible customers
comprise:

(a) until 1 July 2004, the eligible customers as specified in
Article 19(1) to (3) of Directive 96/92/EC. Member States
shall publish by 31 January each year the criteria for the
definition of those eligible customers;

(b) from 1 July 2004, all non-household customers;

(c) from 1 July 2007, all customers.

2.

To avoid imbalance in the opening of electricity markets:

(a) contracts for

the supply of electricity with an eligible
customer in the system of another Member State shall not
be prohibited if the customer is considered as eligible in
both systems involved; and

(b) where transactions as described in point

(a) are refused
because the customer is eligible in only one of the two
systems, the Commission may, taking into account the situa-
tion in the market and the common interest, oblige the
refusing party to execute the requested supply at the request
of the Member State where the eligible customer is located.

Article 33

Direct lines

1. Member States
enable:

shall

take the measures necessary to

(a) all electricity producers and electricity supply undertakings
established within their
territory to supply their own
premises, subsidiaries and eligible customers through a
direct line;

(b) any eligible customer within their territory to be supplied
and supply

a producer

line by

direct

through a
undertakings.

2. Member States shall lay down the criteria for the grant of
authorisations for the construction of direct lines in their terri-
tory. Those criteria shall be objective and non-discriminatory.

(*) The title of Directive 78/660/EEC has been adjusted to take account of
the Treaty establishing the
the renumbering of
European Community in accordance with Article 12 of the Treaty of
Amsterdam; the original reference was to Article 54(3)(g).

the Articles of

(1) OJ L 222, 14.8.1978, p. 11.

The possibility of supplying electricity through a direct
3.
line as referred to in paragraph 1 of this Article shall not affect
the possibility of contracting electricity in accordance with
Article 31.

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4. Member States may issue an authorisation to construct a
direct line subject either to the refusal of system access on the
basis, as appropriate, of Article 31 or to the opening of a
dispute settlement procedure under Article 36.

5. Member States may refuse to authorise a direct line if the
granting of such an authorisation would obstruct the provisions
of Article 3. Duly substantiated reasons shall be given for such
refusal.

CHAPTER IX

National regulatory authorities

Article 34

Designation and independence of regulatory authorities

Each Member State shall designate a single national regula-

1.
tory authority at national level.

2.
Paragraph 1 of this Article shall be without prejudice to
the designation of other regulatory authorities at regional level
within Member States, provided that there is one senior repre-
sentative for representation and contact purposes at Community
level within the Board of Regulators of the Agency in compli-
ance with Article 13(1) of Regulation (EC) No …/2009.

3.
By way of derogation from paragraph 1 of this Article, a
Member State may designate regulatory authorities for small
systems on a geographically separate region whose consump-
tion, in 2008, accounted for less than 3 % of the total consump-
tion of the Member State of which it is part. This derogation
shall be without prejudice to the appointment of one senior
representative for representation and contact purposes at Com-
munity level within the Board of Regulators of the Agency in
compliance with Article 13(1) of Regulation (EC) No …/2009.

4. Member States shall guarantee the independence of the
regulatory authority and shall ensure that it exercises its powers
impartially and transparently. For this purpose, Member State
shall ensure that, when carrying out
the regulatory tasks
conferred upon it by this Directive and related legislation, the
regulatory authority:

(a) is legally distinct and functionally independent from any

other public or private entity;

(b) ensures that its staff and the persons responsible for its

management:

(i) act independently from any market interest; and

(ii) do not seek or take direct instructions from any govern-
ment or other public or private entity when carrying
out the regulatory tasks. This requirement is without
prejudice to close cooperation, as appropriate, with
other relevant national authorities or to general policy
guidelines issued by the government not related to the
regulatory powers and duties under Article 36.

In order to protect the independence of the regulatory

5.
authority, Member States shall in particular ensure that:

(a) the regulatory authority can take autonomous decisions,
independently from any political body, and has autonomy
in the implementation of the budget, and adequate human
and financial resources to carry out its duties;

(b) the regulatory authority's top management is appointed for
at least five years, and may be relieved from office during its
term only if it no longer fulfills the conditions set out in
this Article or it has been guilty of serious misconduct
under national law.

Article 35

General objectives of the regulatory authority

In carrying out the regulatory tasks specified in this Directive,
the regulatory authority shall take all reasonable measures in
pursuit of the following objectives within the framework of
their duties and powers as laid down in Article 36,
in close
consultation with other relevant national authorities, as appro-
priate, and without prejudice to their competencies:

(a) promoting, in close cooperation with the Agency, regulatory
authorities of other Member States and the Commission, a
competitive, secure and environmentally sustainable internal
electricity market within the Community, and effective
market opening for all customers and suppliers in the Com-
munity;

(b) developing competitive and properly functioning regional
markets within the Community in view of the achievement
of the objectives referred to in point (a);

States,

(c) eliminating restrictions on trade in electricity between
Member
appropriate
cross-border transmission capacities to meet demand and
enhancing the integration of national markets which may
facilitate electricity flows across the Community;

developing

including

(d) promoting the development of secure, reliable and efficient
non-discriminatory systems as well as system adequacy;

(e) facilitating the access of new generation capacity to the
network, in particular removing barriers that could prevent
access of new market entrants;

(f) ensuring that system operators and system users are granted
appropriate incentives, in both the short and the long term,
to increase efficiencies in system performance and foster
market integration;

(g) ensuring the efficient functioning of their national market,
consumer

competition and

effective

and promoting
protection;

(h) contributing to high standards of universal and public
service for electricity, the protection of vulnerable custo-
mers, and the effectiveness of
the consumer protection
measures set out in Annex I.

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Article 36

Duties and powers of the regulatory authority

distribution system operators, suppliers and customers and
other market
to Regulation (EC)
pursuant
No …/2009;

parties

1.

The regulatory authority shall have the following duties:

(n) monitoring investment in generation capacities in relation

to security of supply; and

(a) ensuring compliance of

transmission and distribution
system operators and, where relevant, system owners, as
well as of any electricity undertakings, with their obliga-
tions under this Directive and other relevant Community
legislation, including as regards cross-border issues;

(b) cooperating in relation to cross-border issues with the regu-
the Member States

latory authority or authorities of
concerned;

(c) complying with, and implementing, any relevant

legally

binding decisions of the Agency and of the Commission;

(d) reporting annually on its activity and the fulfilment of its
duties to the relevant authorities of the Member States, the
Agency and the Commission. Such reports shall cover the
steps taken and the results obtained as regards each of the
tasks listed in this Article;

(e) ensuring that there are no cross-subsidies between trans-

mission, distribution, and supply activities;

(f) monitoring investment plans of the transmission system
operators, and providing in its annual report an assessment
of the investment plans of the transmission system opera-
tors as regards their consistency with the non-binding
Community-wide 10-year network development plan
referred to in Article 8(3)(b) of Regulation (EC) No …/2009;

(g) monitoring compliance with network security and relia-
bility rules and monitoring standards and requirements for
quality of network service;

(h) monitoring the level of transparency and ensuring compli-
transparency

undertakings with

electricity

of

ance
obligations;

and retail

(i) monitoring the level of market opening and competition at
wholesale
including on electricity
levels,
exchanges, prices for household customers, switching rates,
disconnection rates and complaints by household custo-
mers, as well as any distortion or restriction of competi-
tion,
information, and
bringing any relevant cases to the relevant competition
authorities;

including providing any relevant

(j) monitoring the time taken by transmission and distribution

system operators to make connections and repairs;

(k) publishing recommendations, at least annually, in relation

to compliance of supply tariffs with Article 3;

(l) ensuring access to customer consumption data, the provi-
sion, for optional use, of a harmonised format at national
level for consumption data and the access to data under
point (h) of Annex I;

(m) monitoring the implementation of rules relating to the
roles and responsibilities of transmission system operators,

(o) monitoring the implementation of safeguards measures as

referred to in Article 41.

2. When a Member State has so provided, the monitoring
duties set out in paragraph 1 may be carried out by other autho-
rities than the regulatory authority. In such a case, the informa-
tion resulting from such monitoring shall be made available to
the regulatory authority as soon as possible.

While preserving their independence, without prejudice to their
own specific competencies and consistent with the principles of
better regulation, the regulatory authority shall, as appropriate,
transmission system operators and, as appropriate,
consult
closely cooperate with other relevant national authorities when
carrying out the duties set out in paragraph 1.

Any approvals given by a regulatory authority or the Agency
under this Directive are without prejudice to any duly justified
future use of its powers by the regulatory authority under this
Article or to any penalties imposed by other relevant authorities
or the Commission.

3.
In addition to the duties conferred upon it under para-
graph 1 of this Article, when an independent system operator
has been designated under Article 13, the regulatory authority
shall:

(a) monitor the transmission system owner's and the indepen-
dent system operator's compliance with their obligations
under this Article, and issue penalties for non-compliance in
accordance with point (d) of paragraph 4;

(b) monitor the relations and communications between the
independent system operator and the transmission system
owner so as to ensure compliance of
the independent
system operator with its obligations, and in particular
approve contracts and act as a dispute settlement authority
between the independent system operator and the transmis-
sion system owner in respect of any complaint submitted by
either party pursuant to paragraph 9;

(c) without prejudice to the procedure under Article 13(2)(c),
for the first 10-year network development plan, approve the
investments planning and the multi-annual network devel-
opment plan presented annuallyby the independent system
operator;

(d) ensure that network access tariffs collected by the indepen-
dent system operator include remuneration for the network
owner or network owners, which provides for adequate
remuneration of the network assets and of any new invest-
ments made therein, provided they are economically and
efficiently incurred;

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(e) have the powers to carry out inspections, including unan-
nounced inspections, at the premises of transmission system
owner and independent system operator; and

(d) to monitor commercial and financial relations including
loans between the vertically integrated undertaking and the
transmission system operator;

(f) monitor the use of congestion charges collected by the inde-
pendent system operator in accordance with Article 16(6)
of Regulation (EC) No …/2009.

4. Member States shall ensure that regulatory authorities are
granted the powers enabling them to carry out
the duties
referred to in paragraphs 1, 3 and 6 in an efficient and expedi-
tious manner. For this purpose, the regulatory authority shall
have at least the following powers:

(a) to issue binding decisions on electricity undertakings;

(b) to carry out investigations into the functioning of the elec-
tricity markets, and to decide upon and impose any neces-
to promote effective
sary and proportionate measures
competition and ensure the proper
the
functioning of
market. Where appropriate, the regulatory authority shall
also have the power to cooperate with the national competi-
tion authority or the Commission in conducting an investi-
gation relating to competition law;

(c) to request any information from electricity undertakings

relevant for the fulfilment of its tasks;

(d) to impose effective, proportionate and dissuasive penalties
on electricity undertakings not complying with their obliga-
tions under this Directive or any relevant legally binding
decisions of the regulatory authority or of the Agency, or to
propose to a competent court to impose such penalties.
This shall
include the power to impose or propose the
imposition of penalties of up to 10 % of the annual turn-
over of the transmission system operator on the transmis-
sion system operator or of up to 10 % of the annual turn-
over of the vertically integrated undertaking on the vertically
integrated undertaking, as the case may be, for non-compli-
ance with their respective obligations pursuant to this Direc-
tive; and

(e) appropriate rights of investigations, and relevant powers of
for dispute settlement under paragraphs 9

instructions
and 10.

5.
In addition to the duties and powers conferred on it under
paragraphs 1 and 4 of this Article, when a transmission system
operator has been designated in accordance with Chapter V, the
regulatory authority shall be granted at
the following
duties and powers:

least

(a) to issue penalties in accordance with point (d) of paragraph 4
for discriminatory behaviour in favour of the vertically inte-
grated undertaking;

(b) to monitor communications between the transmission
system operator and the vertically integrated undertaking so
as to ensure compliance of the transmission system operator
with its obligations;

(c) to act as dispute settlement authority between the vertically
integrated undertaking and the transmission system operator
in respect of
to
paragraph 9;

submitted pursuant

any complaint

(e) to approve all commercial and financial agreements between
the vertically integrated undertaking and the transmission
system operator on the condition that they comply with
market conditions;

(f) to request justification from the vertically integrated under-
taking when notified by the compliance officer in accord-
ance with Article 21(4). Such justification shall in particular
include evidence to the end that no discriminatory beha-
viour to the advantage of the vertically integrated under-
taking has occurred;

(g) to carry out inspections, including unannounced ones, on
the premises of the vertically integrated undertaking and the
transmission system operator; and

(h) to assign all or specific tasks of the transmission system
operator to an independent system operator appointed in
accordance with Article 13 in case of a persistent breach by
the transmission system operator of its obligations under
this Directive, in particular in case of repeated discrimina-
tory behaviour to the benefit of the vertically integrated
undertaking.

6.
The regulatory authorities shall be responsible for fixing
or approving prior to their entry into force at least the meth-
odologies used to calculate or establish the terms and conditions
for:

(a) connection and access to national networks, including trans-
mission and distribution tariffs or
their methodologies.
Those tariffs or methodologies shall allow the necessary
investments in the networks to be carried out in a manner
allowing those investments to ensure the viability of the
networks;

(b) the provision of balancing services.

7.
In fixing or approving the tariffs or methodologies, the
regulatory authorities shall ensure that transmission and distri-
bution system operators are granted appropriate incentive, over
both the short and long term, to increase efficiencies, foster
market
the
related research activities.

integration and security of supply and support

Regulatory authorities shall have the authority to require
8.
transmission and distribution system operators, if necessary, to
modify the terms and conditions, including tariffs or methodol-
ogies referred to in this Article, to ensure that they are propor-
tionate and applied in a non-discriminatory manner.

issue a decision within a period of

9.
Any party having a complaint against a transmission or
distribution system operator with respect to the issues referred
to in paragraphs 1 to 8 may refer the complaint to the regula-
tory authority which, acting as dispute settlement authority,
shall
two months after
receipt of the complaint. That period may be extended by two
months where additional information is sought by the regula-
tory authority. That extended period may be further extended
with the
regulatory
authority's decision shall have binding effect unless and until
overruled on appeal.

complainant. The

agreement of

the

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Any party who is affected and who has a right

to
10.
complain concerning a decision on methodologies
taken
pursuant to this Article or, where the regulatory authority has a
duty to consult, concerning the proposed methodologies, may,
at the latest within two months, or a shorter time period as
provided by Member States, following publication of the deci-
sion or proposal for a decision, submit a complaint for review.
Such a complaint shall not have suspensive effect.

11. Member States shall create appropriate and efficient
mechanisms for regulation, control and transparency so as to
avoid any abuse of a dominant position,
in particular to the
detriment of consumers, and any predatory behaviour. These
mechanisms shall take account of the provisions of the Treaty,
and in particular Article 82 thereof.

12. Member States shall ensure that the appropriate measures
are taken, including administrative action or criminal proceed-
ings in conformity with their national law, against the natural or
legal persons responsible where confidentiality rules imposed by
this Directive have not been respected.

13.
Complaints referred to in paragraphs 9 and 10 shall be
without prejudice to the exercise of rights of appeal under Com-
munity and/or national law.

Decisions

14.
reasoned and justified to allow for judicial review.

taken by regulatory authorities

shall be

other and with the Agency. Those measures, designed to amend
non-essential elements of this Directive by supplementing it,
shall be adopted in accordance with the regulatory procedure
with scrutiny referred to in Article 46(2).

Article 38

Compliances with guidelines

1.
Any regulatory authority and the Commission may
request the opinion of the Agency on the compliance of a deci-
sion taken by a regulatory authority with guidelines referred to
in this Directive or in Regulation (EC) No …/2009.

2.
The Agency shall provide its opinion to the regulatory
authority which has requested it or to the Commission, respec-
tively, and to the regulatory authority which has taken the deci-
sion in question within four months from the date of receipt of
the request.

3. Where the regulatory authority which has taken the deci-
sion does not comply with the Agency's opinion within four
months from the date of receipt of that opinion, the Agency
shall inform the Commission accordingly.

15. Member States shall ensure that suitable mechanisms
exist at national level under which a party affected by a decision
of a regulatory authority has a right of appeal to a body inde-
pendent of the parties involved.

4.
Any regulatory authority may inform the Commission
where it considers that a decision relevant for cross-border trade
taken by another regulatory authority does not comply with the
guidelines referred to in this Directive or in Regulation (EC)
No …/2009 within two months from the date of that decision.

Article 37

Regulatory regime for cross-border issues

1.
Regulatory authorities shall closely consult and cooperate
with each other, and shall provide each other and the Agency
with any information necessary for the fulfilment of their tasks
under this Directive. In respect of the information exchanged,
the receiving authority shall ensure the same level of confidenti-
ality as that required of the originating authority.

2.
Regulatory authorities shall cooperate at least at a regional
level to foster the creation of operational arrangements in order
to enable an optimal management of the network, promote
joint electricity exchanges and the allocation of cross-border
capacity, and to enable a minimum level of interconnection
capacity,
including through new interconnection, within the
region and between regions to allow for development of effec-
tive competition and improvement of security of supply.

3.
The actions referred to in paragraph 2 shall be carried out,
as appropriate, in close consultation with other relevant national
authorities and without prejudice to their specific competencies.

4.
The Commission may adopt guidelines on the extent of
the duties of the regulatory authorities to cooperate with each

5. Where the Commission, within two months after having
been informed by the Agency in accordance with paragraph 3,
or by a regulatory authority in accordance with paragraph 4, or
on its own initiative, within three months from the date of the
decision, finds that the decision of a regulatory authority raises
serious doubts as to its compatibility with the guidelines referred
to in this Directive or in Regulation (EC) No …/2009, the
Commission may decide to examine the case further. In such a
case, it shall invite the regulatory authority and the parties to
the proceedings before the regulatory authority to submit
observations.

6. Where the Commission takes a decision to examine the
case further, it shall, within four months of the date of such
decision, issue a final decision:

(a) not to raise objections against the decision of the regulatory

authority; or

(b) to require the regulatory authority concerned to withdraw
its decision on the basis that that the guidelines have not
been complied with.

7. Where the Commission has not
taken a decision to
examine the case further or a final decision within the time-
limits set in paragraphs 5 and 6 respectively, it shall be deemed
not to have raised objections to the decision of the regulatory
authority.

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8.
The regulatory authority shall comply with the Commis-
sion decision to withdraw their decision within a period of two
months and shall inform the Commission accordingly.

9.
The Commission may adopt guidelines setting out the
details of the procedure to be followed for the application of
this Article. Those measures, designed to amend non-essential
elements of this Directive by supplementing it, shall be adopted
in accordance with the regulatory procedure with scrutiny
referred to in Article 46(2).

Article 39

Record keeping

1. Member States shall require supply undertakings to keep
at the disposal of the national authorities, including the national
regulatory authority, the national competition authorities and
the Commission, for the fulfilment of their tasks, for at least
five years, the relevant data relating to all transactions in electri-
city supply contracts and electricity derivatives with wholesale
customers and transmission system operators.

2.
The data shall include details on the characteristics of the
relevant transactions such as duration, delivery and settlement
rules, the quantity, the dates and times of execution and the
transaction prices and means of
identifying the wholesale
customer concerned, as well as specified details of all unsettled
electricity supply contracts and electricity derivatives.

3.
The regulatory authority may decide to make available to
market participants elements of this information provided that
commercially sensitive information on individual market players
or individual transactions is not released. This paragraph shall
not apply to information about financial instruments which fall
within the scope of Directive 2004/39/EC.

this Article,

To ensure the uniform application of

4.
the
Commission may adopt guidelines which define the methods
and arrangements for record keeping as well as the form and
content of the data that shall be kept. Those measures, designed
to amend non-essential elements of this Directive by supple-
menting it, shall be adopted in accordance with the regulatory
procedure with scrutiny referred to in Article 46(2).

CHAPER X

Retail markets

Article 40

Retail markets

In order to facilitate the emergence of well functioning and
transparent retail markets in the Community, Member States
shall ensure that the roles and responsibilities of transmission
system operators, distribution system operators, supply under-
takings and customers and if necessary other market partici-
pants are defined with respect
to contractual arrangements,
commitment to customers, data exchange and settlement rules,
data ownership and metering responsibility.

Those rules shall be made public, be designed with the aim to
facilitate customers' and suppliers' access to networks, and they
shall be subject to review by the regulatory authorities or other
relevant national authorities.

CHAPTER XI

Final provisions

Article 41

Safeguard measures

In the event of a sudden crisis in the energy market and where
the physical safety or security of persons, apparatus or installa-
tions or system integrity is threatened, a Member State may
temporarily take the necessary safeguard measures.

Such measures must cause the least possible disturbance in the
functioning of the internal market and must not be wider in
scope than is strictly necessary to remedy the sudden difficulties
which have arisen.

The Member State concerned shall, without delay, notify those
measures to the other Member States, and to the Commission,
which may decide that
the Member State concerned must
amend or abolish such measures, insofar as they distort compe-
tition and adversely affect trade in a manner which is at variance
with the common interest.

5. With respect to transactions in electricity derivatives of
supply undertakings with wholesale customers and transmission
system operators, this Article shall apply only once the Commis-
sion has adopted the guidelines referred to in paragraph 4.

Article 42

Level playing field

The provisions of this Article shall not create additional
6.
obligations towards the authorities referred to in paragraph 1
for entities falling within the scope of Directive 2004/39/EC.

1. Measures that the Member States may take pursuant to
this Directive in order to ensure a level playing field shall be
compatible with the Treaty, notably Article 30 thereof, and with
Community law.

In the event that the authorities referred to in paragraph 1
7.
need access to data kept by entities falling within the scope of
Directive 2004/39/EC, the authorities responsible under that
Directive shall provide them with the required data.

The measures referred to in paragraph 1 shall be propor-
2.
tionate, non-discriminatory and transparent. Those measures
may be put into effect only following the notification to and
approval by the Commission.

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3.
The Commission shall act on the notification referred to
in paragraph 2 within two months of the receipt of the notifica-
tion. That period shall begin on the day following receipt of the
complete information. In the event that the Commission has
not acted within that two-month period, it shall be deemed not
to have raised objections to the notified measures.

Article 43

Monitoring of imports of electricity

shall

Member States
inform the Commission every three
months of imports of electricity, in terms of physical flows, that
have taken place during the previous three months from third
countries.

State in question may submit a request to the Commission for
exemption from the requirement in question.

Such request shall be notified, without delay, by the Member
State to the Commission, together with all the relevant informa-
tion necessary to demonstrate that the conclusion reached in
the report on effective network access being ensured will be
maintained.

its receipt of a notification,

Within three months of
the
Commission shall adopt an opinion with respect to the request
by the Member State concerned, and where appropriate, submit
proposals to the European Parliament and to the Council to
amend the relevant provisions of this Directive. The Commis-
sion may propose, in the proposals to amend this Directive, to
exempt the Member State concerned from specific requirements,
subject to that Member State implementing equally effective
measures as appropriate.

Article 44

Derogations

Article 46

Committee

1. Member States which can demonstrate, after this Directive
has been brought into force, that there are substantial problems
for the operation of their small isolated systems, may apply for
derogations from the relevant provisions of Chapters IV, VI, VII,
and VIII, as well as Chapter III, in the case of micro isolated
systems, as far as refurbishing, upgrading and expanding existing
capacity are concerned, which may be granted to them by the
Commission. The Commission shall inform the Member States
of
taking into
account
for confidentiality. That decision shall be
published in the Official Journal of the European Union.

those applications before taking a decision,

respect

2.
Article 9 shall not apply to Cyprus, Luxembourg and/or
Malta. In addition, Articles 26, 31 and 32 shall not apply to
Malta.

For the purposes of Article 9(1)(b), the notion ‘undertaking
performing any of the functions of generation or supply’ shall
not include final customers who perform any of the functions
of generation and/or supply of electricity, either directly or via
undertakings over which they exercise control, either individu-
ally or jointly, provided that the final customers including their
shares of the electricity produced in controlled undertakings are,
on an annual average, net consumers of electricity and provided
that the economic value of the electricity they sell to third
parties is insignificant in proportion to their other business
operations.

Article 45

Review procedure

In the event that in the report referred to in Article 47(6) the
Commission reaches the conclusion that given the effective
manner in which network access has been carried out in a
Member State — which gives rise to fully effective, non-discri-
minatory and unhindered network access — certain obligations
imposed by this Directive on undertakings (including those with
respect to legal unbundling for distribution system operators)
are not proportionate to the objective pursued, the Member

1.

The Commission shall be assisted by a committee.

2. Where reference is made to this paragraph, Article 5a(1)
to (4), and Article 7 of Decision 1999/468/EC shall apply,
having regard to the provisions of Article 8 thereof.

Article 47

Reporting

1.
The Commission shall monitor and review the application
of this Directive and submit an overall progress report to the
European Parliament and the Council for the first time by … (*),
and thereafter on an annual basis. The progress report shall
cover at least:

(a) the experience gained and progress made in creating a
complete and fully operational internal market in electricity
and the obstacles that remain in this respect,
including
aspects of market dominance, concentration in the market,
predatory or anti-competitive behaviour and the effect of
this in terms of market distortion;

(b) the extent to which the unbundling and tarification require-
in
ments contained in this Directive have been successful
ensuring fair and non-discriminatory access to the Commu-
nity's electricity system and equivalent levels of competition,
as well as the economic, environmental and social conse-
for
quences of
customers;

the electricity market

the opening of

(c) an examination of issues relating to system capacity levels
and security of supply of electricity in the Community, and
in particular the existing and projected balance between
demand and supply, taking into account the physical capa-
city for exchanges between areas;

(d) special attention will be given to measures taken in Member
States to cover peak demand and to deal with shortfalls of
one or more suppliers;

(*) One year following the entry into force of Directive 2003/54/EC.

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(e) the implementation of

Article 26(2) with a view to a possible revision of
threshold;

the derogation provided under
the

(f) a general assessment of the progress achieved with regard to
bilateral relations with third countries which produce and
export or transport electricity, including progress in market
integration, the social and environmental consequences of
the trade in electricity and access to the networks of such
third countries;

(g) the need for possible harmonisation requirements that are

not linked to the provisions of this Directive; and

the

(h) the manner in which Member States have implemented in
practice
labelling
contained in Article 3(6), and the manner in which any
Commission recommendations on this issue have been
taken into account.

requirements

regarding

energy

5. Where appropriate, and in particular in the event that the
detailed specific report referred to in paragraph 3 determines
that the conditions referred to in paragraph 4 have not been
guaranteed in practice, the Commission shall submit proposals
to the European Parliament and the Council to ensure fully
effective
transmission system operators
by … (**).

independence of

6.
The Commission shall, by 1 January 2006, forward to the
European Parliament and Council, a detailed report outlining
progress in creating the internal electricity market. That report
shall, in particular, consider:

— the existence of non-discriminatory network access;

— effective regulation;

Where appropriate, the progress report may include recommen-
in particular, the scope and modalities of
dations as regards,
labelling provisions,
including the way in which reference is
made to existing reference sources and the content of those
sources, and, notably, how information relating to environ-
mental impact, as regards at least CO2 emissions, and radioactive
waste, resulting from electricity generation from different energy
sources could be made available in a transparent, easily acces-
sible and comparable manner throughout the European Union,
how the measures taken by the Member States to control the
accuracy of the information provided by suppliers could be
streamlined, and which measures could counteract the negative
effects of market dominance and market concentration.

— the development of interconnection infrastructure and the

security of supply situation in the Community;

— the extent to which the full benefits of

the opening of
markets are accruing to small enterprises and household
customers, notably with respect
to public service and
universal service standards;

— the extent to which markets are in practice open to effective
competition, including aspects of market dominance, market
concentration and predatory or anti-competitive behaviour;

2.
Every two years, the progress report referred to in para-
graph 1 shall also include an analysis of the different measures
taken in the Member States to meet public service obligations,
together with an examination of
those
measures and, in particular, their effects on competition in the
electricity market. Where appropriate, the report may include
recommendations as to the measures to be taken at national
level
to achieve high public service standards, or measures
intended to prevent market foreclosure.

the effectiveness of

3.
The Commission shall, by … (*), submit, as part of the
general review, to the European Parliament and the Council, a
to which the
detailed specific report outlining the extent
unbundling requirements under Chapter V have been successful
in ensuring full and effective independence of
transmission
system operators, using effective and efficient unbundling as a
benchmark.

4.
For the purpose of its assessment under paragraph 3, the
Commission shall take into account in particular the following
criteria: fair and non-discriminatory network access, effective
regulation, the development of the network to meet market
needs, undistorted incentives to invest, the development of inter-
connection infrastructure, effective competition in the energy
markets of the Community and the security of supply situation
in the Community.

— the extent

to which customers are actually switching

suppliers and renegotiating tariffs;

— price developments, including supply prices, in relation to

the degree of the opening of markets; and

— the experience gained in the application of this Directive as
far as the effective independence of system operators in
vertically integrated undertakings is concerned and whether
other measures in addition to functional independence and
separation of accounts have been developed which have
effects equivalent to legal unbundling.

Where appropriate, the Commission shall submit proposals to
the European Parliament and the Council, in particular to guar-
antee high public service standards.

Where appropriate, the Commission shall submit proposals to
to
the European Parliament and the Council,
ensure full and effective independence of distribution system
operators before 1 July 2007. When necessary, those proposals
in conformity with competition law, also concern
shall,
measures
issues of market dominance, market
concentration and predatory or anti-competitive behaviour.

in particular

to address

(*) Two years after the date referred to in the first subparagraph of
Article 49(1), i.e. 42 months after the entry into force of this Directive.

(**) Three years after the date referred to in the first subparagraph of
Article 49(1), i.e. 54 months after entry into force of this Directive.

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Article 48

Repeal

2. Member States shall communicate to the Commission the
text of the main provisions of national law which they adopt in
the field covered by this Directive.

Directive 2003/54/EC is repealed from … (*) without prejudice
to the obligations of Member States concerning the deadlines
for transposition and application of the said Directive. Refer-
ences to the repealed Directive shall be construed as references
to this Directive and shall be read in accordance with the corre-
lation table in Annex II.

Article 49

Transposition

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
Directive by … (*). They shall forthwith inform the Commission
thereof.

Article 50

Entry into force

This Directive shall enter
following that of its publication in the Official
European Union.

into force on the twentieth day
Journal of the

Article 51

Addressees

This Directive is addressed to the Member States.

They shall apply these provisions from … (*), with the exception
of Article 11, which they shall apply from … (**).

Done at, …

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

For the European Parliament

The President

…

For the Council

The President

…

(*) 18 months after entry into force of this Directive.
(**) 42 months after entry into force of this Directive.

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ANNEX I

MEASURES ON CONSUMER PROTECTION

Without prejudice to Community rules on consumer protection,
the European
Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts (1) and
Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (2), the measures referred to in
Article 3 are to ensure that customers:

in particular Directive 97/7/EC of

(a) have a right to a contract with their electricity service provider that specifies:

— the identity and address of the supplier;

— the services provided, the service quality levels offered, as well as the time for the initial connection;

— if offered, the types of maintenance service offered;

— the means by which up-to-date information on all applicable tariffs and maintenance charges may be obtained;

— the duration of the contract, the conditions for renewal and termination of services and of the contract, the exis-

tence of any right of withdrawal;

— any compensation and the refund arrangements which apply if contracted service quality levels are not met; and

— the method of initiating procedures for settlement of disputes in accordance with point (f).

Conditions shall be fair and well-known in advance. In any case, this information should be provided prior to the
conclusion or confirmation of the contract. Where contracts are concluded through intermediaries, the information
relating to the matters set out in this point shall also be provided prior to the conclusion of the contract;

(b) are given adequate notice of any intention to modify contractual conditions and are informed about their right of
withdrawal when the notice is given. Service providers shall notify their subscribers directly of any increase in charges,
at an appropriate time no later than one normal billing period after the increase comes into effect. Member States
shall ensure that customers are free to withdraw from contracts if they do not accept the new conditions notified to
them by their electricity service provider;

(c) receive transparent information on applicable prices and tariffs and on standard terms and conditions, in respect of

access to and use of electricity services;

(d) are offered a wide choice of payment methods. Any difference in terms and conditions shall reflect the costs to the
supplier of the different payment systems. General terms and conditions shall be fair and transparent. They shall be
given in clear and comprehensible language. Customers shall be protected against unfair or misleading selling
methods;

(e) are not charged for changing supplier;

(f) benefit from transparent, simple and inexpensive procedures for dealing with their complaints. Such procedures
shall enable disputes to be settled fairly and promptly with provision, where warranted, for a system of reimbursement
and/or compensation. They should, wherever possible, be in line with the principles set out in Commission Recom-
mendation 98/257/EC of 30 March 1998 on the principles applicable to the bodies responsible for out-of-court settle-
ment of consumer disputes (3);

(g) when having access to universal service under the provisions adopted by Member States pursuant to Article 3(3), are

informed about their rights regarding universal service;

(h) have at their disposal their consumption data, and shall be able to, by explicit agreement and free of charge, give any
undertaking with a supply license access to its metering data. The party responsible for data management shall be
obliged to give those data to the undertaking. Member States shall define a format for the data and a procedure for
suppliers and consumers to have access to the data. No additional costs shall be charged to the consumer for this
service;

(i) are properly informed of actual electricity consumption and costs frequently enough to enable them to regulate their
own electricity consumption. That information shall be given by using a sufficient time frame, which takes account of
the capability of customer's metering equipment and the electricity product in question. Due account shall be taken of
the cost-efficiency of such measures. No additional costs shall be charged to the consumer for this service;

(j) may change supplier at any time in the year within the framework of the electricity product in question, and shall be

entitled to a final invoice no later than three months following the last supply by the previous supplier.

(1) OJ L 144, 4.6.1997, p. 19.
(2) OJ L 95, 21.4.1993, p. 29.
(3) OJ L 115, 17.4.1998, p. 31.

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ANNEX II

CORRELATION TABLE

Directive 2003/54/EC

This Directive

Article 1

Article 2

Article 3

Article 4

Article 5

—

Article 6

Article 7

Article 8

Article 10

—

—

Article 9

—

—

Article 11

Article 12

—

—

—

—

—

—

—

Article 13

Article 14

Article 15

Article 16

Article 17

Article 18

Article 19

Article 20

Article 21

Article 1

Article 2

Article 3

Article 4

Article 5

Article 6

Article 7

Article 8

—

Article 9

Article 10

Article 11

Article 12

Article 13

Article 14

Article 15

Article 16

Article 17

Article 18

Article 19

Article 20

Article 21

Article 22

Article 23

Article 24

Article 25

Article 26

Article 27

Article 28

Article 29

Article 30

Article 31

Article 32

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Directive 2003/54/EC

This Directive

Article 22

Article 23(1) (first and second sentence)

—

Article 23 (rest)

—

—

—

—

Article 24

—

Article 25

Article 26

Article 27

—

Article 28

Article 29

Article 30

Article 31

Article 32

Annex A

Article 33

Article 34

Article 35

Article 36

Article 37

Article 38

Article 39

Article 40

Article 41

Article 42

Article 43

Article 44

Article 45

Article 46

Article 47

Article 48

Article 49

Article 50

Article 51

Annex I

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STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

1. On 19 September 2007, the Commission presented a proposal for a Directive amending Directive
2003/54/EC, based on Articles 47(2), 55 and 95 of the Treaty, together in a package with four other
proposals concerning the internal energy market.

2. The Committee of the Regions and the European Economic and Social Committee delivered their

opinions on the complete package on 10 (1) and 22 April 2008 (2) respectively.

3. The European Parliament adopted its Opinion (3) at first reading on 18 June 2008, approving

156 amendments. The Commission did not present a modified proposal.

4. On 9 January 2009, the Council adopted its Common Position in accordance with Article 251 of the

Treaty, in the form of a recast directive.

II. OBJECTIVE OF THE PROPOSAL

5. The proposal is part of the third internal energy market package, together with the Regulation on
conditions for access to the network for cross-border exchanges in electricity,
the Directive
concerning common rules for the internal market in natural gas, the Regulation on conditions for
access to the natural gas transmission networks, and the Regulation establishing an Agency for the
Cooperation of Energy Regulators. It aims at completing the internal electricity market by introducing
in particular:

— provisions regarding the effective separation of

transmission from generation and supply
including a procedure for the certification of transmission system operators of the

activities,
Community as well as from third countries;

— provisions aiming at improving the independence of national energy regulators and at harmo-

nising their powers at Community level;

— provisions aiming at improving regional cooperation;

— provisions improving the functioning of the energy market.

III. ANALYSIS OF THE COMMON POSITION

6. General Remarks

6.1. The Council has considered it more effective, more transparent and coherent with Directive
2003/54/EC as well as more reader friendly to recast the provisions of the Directive. However, in
doing this, the Council has as a general principle fully respected the amending proposal of the
Commission in the sense that it has not opened any other provision not being part of the Commis-
sion proposal, unless changes were necessary following from the changes introduced by the
Council to the proposal, changed references resulting from the renumbering of the Articles etc. To
the extent possible the Council has followed the Commission's approach regarding an identical
treatment of the electricity and gas sectors.

The Commission has accepted all the changes introduced by the Council to its proposal.

6.2. Concerning the 156 amendments adopted by the European Parliament, the Council has followed the

Commission in

— accepting the following 21 amendments:

fully (sometimes with redrafting): 33, 50, 68, 119, and 137;

partly/in principle/in spirit: 5, 10, 35, 95, 97, 98, 101, 105, 111, 125, 127, 129, 130, 133,
135, and 138;

and

— rejecting the following 38 amendments: 3, 7, 9, 13, 154, 168, 27, 28, 31, 32, 37, 156, 51-53,
62-64, 67, 69, 75, 76, 78, 81, 91, 96, 103, 104, 169, 116, 157, and 139-145, on grounds of
substance and/or of form.

(1) OJ C 172, 5.7.2008, p. 55.
(2) OJ C 211, 19.8.2008, p. 23.
(3) Not yet published in the Official Journal.

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6.3. The Council has deviated from the Commission position in

— accepting one amendment: 90

and

— rejecting the following 106 amendments: 1, 2, 4, 6, 8, 11, 12, 14-26, 29, 30, 34, 36, 38, 39,
155, 41, 42, 44-48, 54-61, 65, 66, 70-74, 77, 79, 80, 82-89, 92-94, 99, 100, 102, 106-110,
112-115, 117, 118, 120-124, 126, 128, 131, 132, 134, 136, 146-153.

7.

Specific Remarks

7.1. Regarding the EP amendments where the Council has deviated from the Commission position:

a) The Council has accepted amdt 90 because it is as the EP of the opinion that it is not appro-
priate to take decisions through committee procedure on DSO activities and independence.

b) The Council has rejected the 106 amendments listed above (point 6.3) on the following

grounds:

i) The amendments concern provisions which are not part of the Commission proposal;
those amendments have been rejected as a question of principle (see above under 6.1):
amdts 1, 2, 4, 8, 16, 17-19, 21, 24, 29, 30, 34, 36, 38, 39, 155, 41, 42, 44-48, 56-60,
71-74, 77, 79, 80, 83-88, 92-94, 146-149.

ii) The amendments do not have added value, mainly because the issues are (partly) suffi-
ciently covered by other parts of the text: amdt 14 is already (partly) covered by recitals 30
and 31; amdt 26 is referring to a recital which is giving a non-exhaustive list of examples;
amdt 65: the issue is sufficiently covered by Art. 9; amdt 66: the issue is covered by
Art. 47 on reporting; amdt 82: the issue is sufficiently covered by Articles 16 and 29;
amdt 99:
the issue is sufficiently covered by Art. 36(6-8); amdt 100: details on
cross-border cooperation are already laid down in Art. 37; amdt 102: the first part is suffi-
ciently covered by Art. 10 on certification of TSOs, the second part by Art. 36(6-8);
amdt 110: the power of regulators to impose sanctions is already reflected in Art. 36(4) —
see also below under vi); amdt 117 is already covered by Art. 36(6); amdt 124: the issue is
sufficiently covered by Art. 36(1)(h); amdt 131: the issue is covered in a general way by
Art. 35(c) and Art. 16 of the electricity Regulation; amdt 153 is covered by point j of the
Annex.

iii) The amendments introduce text which is not appropriate or necessary in this Directive or
which is not in line with the scope of the Directive: 12, 61, 106-108, 109, 113, 114, 121,
134, 136, 150-152.

iv) The amendment is introducing a recital which does not have a corresponding Article:

amdts 6, 15, 20.

v) The Council considers that the list of duties and powers of the regulatory authorities as in
Art. 36 of the Common Position is sufficient; the following amendments go (partly)
beyond the tasks the Council is attributing to the regulators: amdts 112, 115 (which is also
partly covered by Art. 40 on retail markets transferred from the electricity Regulation),
118 (which is also partly covered by Art. 36(4)), 120-123, 128, 132.

vi) The amendments introduce text which does not correspond to the role which the Council

is giving to the Agency: 11, 23, 55, 110, 126.

vii) The amendment introduces text which does not correspond to the role which the Council

is attributing to TSOs: amdt 70.

viii) The Council

is of the view that the Common Position reflects sufficiently the aim of

regional cooperation; amdts 22, 25 and 54 are therefore not necessary.

ix) The Council considers that it is up to Member States to decide to which authority they
delegate the task of monitoring DSO activities and therefore does not accept amdt 89.

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7.2 Concerning the Commission proposal, the Council has introduced certain other modifications (of

substance and/or of form); the main ones are set out below.

a) Effective separation of network operation from generation and supply activities

In addition to the two options proposed by the Commission (ownership unbundling (OU) and
the Independent System Operator (ISO)), the Council,
in agreement with the Commission,
considered it appropriate to introduce a third option, the Independent Transmission Operator
(ITO), for the case a transmission system operator is part of a vertically integrated undertaking
(VIU) at
the Directive (new Chapter V with the Articles 17-23,
corresponding recitals 15 and 16). The three options are on equal footing and will be available
for both the electricity and the gas sector.

the entry into force of

The ITO-provisions will ensure the effective independence of the operator (Arts. 17 and 18), its
management (Art. 19) and the supervisory body (Art. 20) and that conflicts of interest are
avoided. The setting up of a compliance programme and compliance officer (Art. 21) is also
contributing to this aim. Moreover, undistorted investment incentives and the development of
interconnection infrastructure (Art. 22) as well as fair and non-discriminatory network access
(Art. 23) will be ensured.

Additional powers and competences for
the regulatory authorities have been added in
Art. 36(5) in order to ensure compliance with the provisions of Chapter V. In addition, two
paragraphs have been added to Art. 6 regarding regional cooperation where ITOs are involved.
Finally, Art. 47 on reporting provides in paragraphs 3 to 5 that the Commission will assess, as
part of a general review, the implementation of the ITO option against certain criteria two years
after the date of transposition of the Directive.

The ITO provisions of the Common Position aim at balancing concerns on the scope, timeframe
and enforceability of the ITO-option with preserving the financial
interest of the VIU and
keeping it workable. That is one of the reasons why the Council has not considered it appro-
priate to introduce provisions on a trustee.

In order to take account of cases where arrangements are in place for a transmission system
belonging to a VIU which guarantee more effective independence of the TSO than the provi-
sions of Chapter V, an additional provision has been introduced in Article 9(9).

b) Level playing field

Linked to the future presence of three different unbundling models on the Community market
is the introduction of a so-called level playing field clause in Article 42, together with the
corresponding recital 17. It gives notably a number of criteria for measures which Member
States have the possibility to take in order to ensure a level playing field.

c) Certification of TSOs of the Community and of third countries

The Common Position has two Articles on certification of TSOs: a general one (Article 10), and
one on certification in relation to third countries (Article 11) which has replaced Article 8a of
the Commission proposal. Article 11 ensures on the one hand that TSOs of third countries
have to respect the same unbundling rules as Community TSOs; on the other hand, it intro-
duces the criterion of security of energy supply of the Member States and the Community
which has to be taken into account when certification is granted.

In addition, the Council has considered it appropriate to transfer the part of the certification
procedure which sets out the role of the Commission in this procedure to a new Article 3 of
the electricity Regulation. Moreover, the main decision on certification will remain with the
national regulatory authorities while the Commission is requested to give its opinion on the
certification. National regulators must take utmost account of that opinion.

C 70 E/36

EN

Official Journal of the European Union

24.3.2009

d) Regulatory authorities

The Council has introduced two additional paragraphs to Article 34 which ensure that the prin-
ciple of a single regulator at national level combined with unique representation (e.g. at the
Agency)
is compatible with the current existence in some Member States of regulators at
regional level or for small and isolated parts of the territory (Art. 34(2 + 3)).

While ensuring the independence of the regulatory authorities, the text of the Common Position
also clarifies that this does not mean that regulators are free from judicial control or parliamen-
tary supervision (recital 27) or can ignore broader objectives e.g. on environmental sustainability
or on public service obligations (Art. 34(4)).

The Common Position also ensures that, when carrying out their duties, regulators have the
possibility to act, where relevant, in close cooperation with other authorities, such as competi-
tion ones, while preserving their independence and without duplicating the tasks (e.g. moni-
toring) usually carried out by other authorities (Art. 36(2)).

e) Regulatory regime for cross-border issues

The paragraphs setting out the role of the Agency (Article 37, paragraphs 3 and (partly) 4)
have, for legal reasons, been transferred to the Agency Regulation (new Article 8). The Agency
will be involved as a last resort, at the request of national regulators or if national regulators
don't reach an agreement within a certain time frame.

f) Retail markets

The Council has considered it appropriate to redraft the Article on retail markets, taking i.a. out
the cross border reference, and transfer it from the electricity Regulation (Art. 7a of the
Commission proposal) to the Directive (new Article 40).

g) Derogations

In the light of the recast, the Council considered it appropriate to update Article 44, in particu-
lar regarding a derogation from the unbundling provisions for small Member States.

Moreover, a clarification has been added to Article 44(2) regarding the notion ‘undertaking
performing any of the functions of generation or supply’ for the case of net final customers that
also perform, in a marginal way, the functions of generation/supply of electricity.

h) Other points

— The Council

considered it

shareholding of
producer/supplier in ownership unbundled TSOs as long as this does not entail any control
or any influence of one on the other and cannot lead to a conflict of interest (Article 9(2)).

to exclude minority

appropriate not

— The Common Position contains, with respect to public ownership, the possibility to achieve
ownership unbundling with two separate public bodies through a provision recognising that
two distinct public bodies can be considered as two persons for the purpose of imple-
menting ownership unbundling (Article 9(6)).

— Some technical drafting changes have been made to clarify the provision on combined opera-
tors (Article 28). This provision allows that a combined operator can be operated, alterna-
tively, either as an ownership unbundled operator, as an Independent System Operator or as
an Independent Transmission Operator.

— Recital 30 introduces and explains the notion of virtual power plants as one of the possible

measures to promote effective competition.

— Finally, in line with the recast format, the Council has introduced a new Article to repeal the

current legislative act (Art. 48)