CELEX: 51993PC0643(02)
Language: en
Date: 1993-12-07
Title: Amended proposal for a EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE concerning common rules for the internal market in natural gas

COMMISSION OF THE EUROPEAN COMMUNITIES
                                            C0M(93) 643 final - COD384
                                                                COD385
                                           Brussels, 07.12.1993
                            Amended proposal for a
          EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE                          COD384
                concerning common rules for the internal market
                                 in electricity
                            Amended proposal for a
          EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE                          COD385
                concerning common rules for the internal market
                                in natural gas
  (presented by the Commission pursuant to Article 189a(2) of the EC Treaty)
 ---pagebreak---         COMPLETION OF THE INTERNAL MARKET IN ELECTRICITY AND GAS
                           AMENDED PROPOSALS
A. GENERAL EXPLANATORY MEMORANDUM
I. Background
1. In accordance with Article 8a of the EEC Treaty (Article 7a of the
   Union Treaty) the Commission submitted two proposals for directives on
   21 February 1992 concerning common rules for the internal market in
   electricity and common rules for the internal market in natural gas.1
2. These two proposals contained the following points:
       introduction of a transparent and non-discriminatory system of
       licences for the production of electricity and the construction of
       electricity and gas lines;
       introduction of an initial stage of limited access to the network
       for private producers to cover their own needs, for major
       customers exceeding certain consumption thresholds and suppliers
       under certain conditions;
       operating rules for transmission and distribution networks in
       order to guarantee the smooth functioning of the internal market;
       unbundling of management and unbundling of accounts n a harmonized
       basis as regards vertically integrated companies;
       safeguard provisions, especially for "take or pay" contracts in
       natural gas.
1  C0M(91)548 final.
 ---pagebreak---     In keeping with the principle of subsidiarity, the Member States
   remained responsible for setting captive consumer tariffs, for
   granting exclusive supply licences for consumers below the thresholds,
   for establishing public service obligations, for defining detailed
    licensing criteria and, more generally, for pursuing national energy
   policy object ives.
   These proposals made up the second stage of a three-stage approach,
   the first stage being implementation of the directives adopted in 1990
   and 1991 on the transit of gas and electricity and the transparency of
   prices of gas and electricity to the industrial end user. The third
   stage was to be defined in the light of the experience gained and was
   meant to increase the flexibility of the internal energy market.
3. These proposals have been discussed in depth both with the other
   Community institutions and with the economic and industrial sectors.
   Third-party access to the network was discussed at length, both at a
   technical level in the advisory committees representing the Member
   States, the energy industry and consumers and at a policy level in
   numerous bilateral meetings with the ministers responsible for energy,
   the Council of Ministers and the European Parliament.
4. The Council discussed these proposals in May and November 1992 and in
   June this year. In its conclusions of 30 November 1992 the Council
   said the gas and electricity markets had to be more open, more
   transparent, more efficient and more competitive, bearing in mind the
   specific natures of the two sectors and the respective situations in
   the various Member States.
   The Council stressed that the obstacles to the internal market still
   had to be removed and that fresh progress had to be made. The
    internal market, It said, had to comply with six principles: security
   of supply, environmental protection, protection of small consumers,
   transparency and non-discrimination, recognition of the differences
   between national systems and transitional provisions. There were
   still differences of opinion on some of the key points of the
   Commission's proposals, especially concerning the general mechanisms
   of third-party access to the network.
 ---pagebreak---    The Council invited the Commission to consider modifications to its
   proposals in the light of the Council's discussions and of the opinion
   of the European Parliament, concluding that discussions had. to
   continue.          .      #
   Last June the Council confirmed these conclusions and, pending the
   opinion of the European Parliament, looked forward that the new points
   put forward by the Commission (in particular the introduction of à
   system of negotiated network access rather than a regulated system)
   would be taken into account.
5. The Economic     and   Social  Committee    delivered  its opinion  on
   27 January 1993. 2 This endorsed the ultimate objective and several
   aspects of the Commission's proposals, but rejected the system and
   timetable for third-party access to the network.
6. Parliament   delivered    its opinion    at   its plenary  session  of
   17 November 1993. The amendments put forward by Parliament are based
   on the following principles:
       the need for greater harmonization to accompany the gradual
       opening-up of the gas and electricity sectors during           the
       transitional period plus the need for prior harmonization, in
       particular in the fields of environment and taxation, as a
       precondition to any further liberalization;
       definition of responsibilities incumbent upon the Member States,
       in particular as regards the public service obligations of gas and
       electricity companies-,
       obligation of the Member States to create a control body called
       "Electricity and gas council";
       protection of the concession rights of State, local and regional
       authorities and maintenance of the monopoly of distributors in
       their respective area;
2  CES 77/93.
 ---pagebreak---          liberalization of the production and transport of electricity in
        two alternative ways: either a system based on a tendering
        procedure for new capacities or a system based on the granting o-f
        transparent and non-discriminatory licences;
        access of the competent authorities of the Member States to the
        internal    accounts  of  gas and    electricity   companies,  and
        establishment of a Directive on cost transparency;
        negotiated access to networks to allow large industrial consumers
        to benefit from the direct supply of gas and electricity". For
        distribution companies this option is limited only to the sector
        of electricity and only to those Member States which have a
         licensing system for the construction of production and transport
        facilities. It is not therefore open to distribution companies in
        Member States which have opted for the tendering system and
        central planning.
II.     Amended proposals
7. Objectives of the amended proposals: the Commission takes the view
    that opening up the energy market should make for greater integration
   of the gas and electricity markets, which so far have been limited to
    national or regional level, and for greater competitiveness among
    Community companies. Energy is a major production cost factor and the
    competitiveness of companies which consume energy is a precondition
    for turning round the current trends on the Job market. That said,
   energy cannot fulfil this role until the specific aspects of the gas
   and electricity sectors are taken fully on board, these being the
    "natural" monopoly of transport networks and the size and lead time of
    investments.
8. How the gas and electricity markets operate has to be compatible with
    all the provisions of the Treaty. The Commission's amended proposals
   are as fol lows:
        questioning of exclusive or special rights where they affect trade
        between Member States;
 ---pagebreak---    -    fair access of the various operators to these markets. It is not
       acceptable in the context of an internal market that undertakings
        in a Member States where the market in electricity and gas i-s
       closed to competition can carry out their activities oh open
       markets in other Member States without the reverse being possible-,
       taking account of the specific nature of these two sectors on the
       basis of a pragmatic approach permitting gradual evolution of the
       way they operate while having a real impact on the market place
       from the outset.
9. Amendments to the proposals:
   The two main amendments concern
       the possibility of allowing the producers of electricity and gas
       to negotiate access to the network; this possibility replaces the
       regulated access provided for in the initiai proposals. It is
       accompanied by arbitration mechanisms in the event of problems in
       negotiation or in performance of the contract, although these
       mechanisms cannot replace the appeal procedures provided by
       Community law;
       the establishment in the body of proposals of a work programme
       enabling the Commission to draw up, during the second stage, the
       harmonization proposals needed for the smooth functioning of the
       market without compromising Community law.
   The amended proposals      introduce  tendering procedures    for new
   electricity transport and production capacities as alternatives to a
   transparent and non-discriminatory licensing system plus simpler
   network operating rules.
   Finally, there are amendments resulting from the entry into force of
   the Union Treaty and the introduction in this sector of the co-
   decision procedure.
 ---pagebreak--- 10.     The Commission could not accept a number of amendments which would
        have compromised the aims of the proposals and even their
        compatibility with the Treaty, namely:
        the obligation of the Member States to create an Electricity and
        gas council (consisting of representatives from undertakings in
        the sector, distribution companies, large industrial consumers,
        sma 11 and med i urn
        consumers and trade union organizations) designed      to help the
        respective authorities implement the Directives;
        the conditional link between passage to the final stage and prior
        harmonization, in particular in the sectors of environment and
        taxât ion-,
        the parts which could undermine the independence of the tendering
        procedures by conferring special responsibilities on the system
        operator in these procedures, thereby making him judge and judged
        at one and the same time;
        the introduction of separate accounting solely between the
        activities of production and transmission, on the one hand, and
        distribution    on   the other,   thus, without    separating  the
        transmission activities;
        maintenance of the supply monopoly of distribution companies.
B. AMENDED PROPOSAL CONCERNING ELECTRICITY
11.     In line with the Commission's general approach to the dossier as a
        whole, the main changes made to the proposal on the internal
        market in electricity are as follows:
    (a) The structure of the proposal: to take account of the fact that
        the rules of access to the network are now specific rules
        concerning production, transport and distribution, a special
        chapter is included.
 ---pagebreak---     (b) Greater reference to public service obligations: although the
        Treaty itself protects de facto and de lure performance of the
        special task assigned to the undertakings entrusted with the
        operation of services of general economic interest, the amended
        proposal accepts the amendments from Parliament which highlight
        the performance of these tasks in every phase of opening up the
        market to competition.
    (c) The conditions    for   third-party  access   to networks: while
        Parliament would like this to be solely in the form of long-term
        contracts with large consumers the Commission takes the view that
        these restrictions are not justified, one, because it is always
        possible to refuse access to third parties where the performance
        of the service of general economic interest assigned to the system
        operator is compromised and, two, because distribution companies
        must be able to take advantage of the same possibilities as large
        consumers so that small and medium-sized consumers can benefit
        indirectly from the advantages of an open market. Third-party
        access, which was regulated in the Commission's initial proposal,
        is a right open to autoproducers for the supply of their own
        establishments and branches and to producers and transmitters for
        the supply of     large industrial consumers and distribution
        companies. The conditions for exercising this right have to be
        negotiated both with the transmission system operator and with the
        distribution system operator, except where the supply of
        electricity arises out of a tendering procedure for the
        construction of production capacities; in this case access to the
        network is guaranteed. Disputes in the negotiation or the
        performance of such contracts can be submitted to arbitration to
        be established by the Member State. As far as Parliament's
        amendments are concerned, the Commission states quite clearly that
        recourse to arbitration can in no way affect the right of the
        parties to use the normal appeal procedures provided by Community
        law.
(2)
 ---pagebreak---     (d) The criteria and procedures for authorizing production and
        transport are simplified and completed by the option of a
        tendering system for all new production and transport capacities.
        The amended proposa.! reinforces the       independence and non-
        discriminatory   nature of    this procedure. Nonetheless,      the
        licensing system will apply to all autoproducers and independent
        producers.
    (e) The unbundling of management is dropped although independence, at
        least at the administrative level of the system operator, must be
        guaranteed. The unbundling of accounting on a harmonized basis is
        maintained and completed by way of a provision permitting access
        of the respective authorities to internal company accounts.
    (f) The rules governing the operation     of  transmission  and  supply
        networks are simplified.
12.     The amended proposal takes account     of the  six  principles put
        forward by the Council as follows:
        security of supply: the criteria for authorizing the construction
        of production capacities will expressly permit the Member States
        to determine the nature of the primary sources used to produce
        electricity. The alternative system of a tendering procedure for
        production and transport capacities will allow for continued
        central planning of investments in Member States opting for this
        system;
        environmental protection: provisions concerning the harmonization
        of production and operating conditions take account of the
        requirement for environmental protection, as do the criteria for
        authorizing the construction of new production and transport
        capacities. A special provision also allows the system operator
        when dispatching production installations to give priority to
        production installations using renewable sources of energy or
        waste or using a combined heat and power process;
 ---pagebreak---        protection of small consumers: greater reference to public
       service obligations has been introduced in order better to take
       account of the need to protect small and medium consumers. The
       system operator may refuse access to a third party where such an
       operation would prevent him from performing the public service
       obligations assigned to him. Member States will always have the
       right to set tariffs for all captive consumers;
       transparency and non-discrimination: these can be found in the
       rules governing the unbundling of accounting and in the criteria
       and procedures for authorizing new production and transport
       capacities, in the criteria and procedures for tendering and in
       the rules governing the system operators-,
       recognition of differences between national systems: the option
       of Member States to choose between a transparent and non-
       discriminatory licensing system for the construction of new
       production and transport capacities, on the one hand, and a
       tendering procedure, on the other, takes account of the existence
       of decentralized systems in some Member States and centralized
       systems in others-,
       provisions for a period commencing      1 July 1994 and ending  on
       31 December 1998 have been retained.
C. AMENDED PROPOSAL CONCERNING GAS
13.    The changes to the proposal concerning the internal market in gas
       are, mutatis mutandis, the same as for electricity as regards:
       the structure of the proposal;
       the greater reference to public service obligations;
       the conditions of third-party access to networks;
       unbundling and access to internal company accounts;
       simplified rules concerning the operation of transmission      and
       distribution networks-,
       compliance with the principles put forward by the Council.
                                   10
 ---pagebreak--- 14.    The criteria and procedures for authorizing the construction or
       operation   of    LNG    installations, storage    installations,
       transmission and distribution lines and associated equipment are
       maintained.
D. CONCLUSIONS
The amended proposals take account of several key elements contained in
the opinion of the European Parliament and of the concerns expressed by
the Council, in particular in its conclusions of 30 November 1992. The
Commission therefore asks the Council to adopt a position as soon as
possible on these proposals for completing the internal market in the
sectors of gas and electricity.
                                 11
 ---pagebreak---                                   Amended proposal for a
               EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE
              concerning common rules for the internal market in electricity
THE COUNCIL OF THE EUROPEAN                  THE EUROPEAN PARLIAMENT AND
COMMUNITIES,                                 THE COUNCIL OF THE EUROPEAN
                                             UNION,
Having regard to the Treaty establishing     Having regard to the Treaty establishing
the European Economic Community, and         the European Community, and in
in particular Article 57(2), Article 66 and  particular Article 57(2), Article 66 and
Article 100a thereof,                        Article 100a thereof,
Having regard to the proposal from the Having regard to the proposal from the
Commission,                                  Commission,
In cooperation       with   the   European
Parliament,
Having regard to the opinion of the Having regard to the opinion of the
Economic and Social Committee,               Economic and Social Committee,
Whereas it is important to adopt measures    Whereas it is important to adopt measures
with the aim of establishing the internal    with the aim of establishing the internal
market as provided for in Article 8a of the   market as provided for in Article 7a of the
Treaty; whereas the internal market is to     Treaty; whereas the internal market is to
comprise an area without internal frontiers  comprise an area without internal frontiers
in which the free movement of goods,          in which the free movement of goods,
persons, services and capital is ensured;     persons, services and capital is ensured;
Whereas the establishing of the internal      Whereas the establishing of the internal
market in electricity is particularly         market in electricity is particularly
important both in order to increase           important in order to increase efficiency in
efficiency in the production, transmission    the production, transmission and
and distribution of this product, while       distribution of this product, while
reinforcing the Community's security of       reinforcing the Community's security of
supply, and in order to ensure that all       supply;
users are able to purchase electricity on an
equal basis thus avoiding distortions of
 competition in user industries;
                                             12
 ---pagebreak--- Whereas the establishing of the internal      Whereas the establishing of the internal
electricity market needs to be progressive    electricity market needs to be progressive
and to be implemented in phases in order      and to be implemented in phases in order
to enable industry to ajust in a flexible     to enable industry to adjust in a flexible
and ordered manner to its new                 and ordered manner to its new
environment;                                  environment;
                                              Whereas the establishing of the internal
                                              market in the electricity sector should
                                              favour the interconnection and
                                              interoperability of systems;
Whereas Council Directives 90/547/EEC         Whereas Council Directives 90/547/EEC
of 29 October 1990 on the transit of          of 29 October 1990 on the transit of
electricity through transmission grids(1) and electricity through transmission grids(1)and
90/377/EEC of 29 June 1990 concerning a       90/377/EEC of 29 June 1990 concerning a
Community procedure to improve the            Community procedure to improve the
transparency of gas and electricity prices    transparency of gas and electricity prices
charged to industrial end-users(2) provide    charged to industrial end-users(2), as
for a first phase for the completion of the   amended by Commission Directive
internal electricity market;                  93/87/EEC(3) provide for a first phase for
                                              the completion of the internal electricity
                                               market;
Whereas it is now necessary to take           Whereas it is now necessary to take
further measures with a view to the           further measures with a view to the
establishing of the internal market for        establishing of the internal market for
electricity;                                   electricity;
                                               Whereas security of supply and consumer
                                               protection entail a number of public
                                               service obligations of general interest
                                               which free competition, left to itself,
                                               cannot be relied upon to fulfil;
 (1)                                           (1)
     OJNoL 313, 13.11.1990, p. 30.                  OJNoL313, 13.11.1990, p. 30.
 (2)                                           (2)
     OJ No L 185, 17.7.1990, p. 16.                 OJ No L 185, 17.7.1990, p. 16.
                                               (3)
                                                    OJ No L 277, 10.11.1993, p. 32.
                                              13
 ---pagebreak--- Whereas the need to ensure a real           Whereas the need to ensure a real
opening-up of the market and a fair         opening-up of the market and a fair
balance in the application of these         balance in the application of these
measures requires the introduction of       measures now requires the introduction of
harmonized criteria and procedures for the  harmonized criteria and procedures for the
construction and operation of generating    construction and operation of generating
installations; whereas these criteria and   installations; whereas these criteria and
procedures must be objective, transparent   procedures must be objective, transparent
and non-discriminatory in order to ensure   and non-discriminatory;
that there is no distortion of competition
arising in particular, from special
conditions as regards the location of
generating installations within the
Community and their proximity to the
market;
Whereas it is therefore necessary to Whereas it is therefore necessary to
establish common rules for the licensing establish common rules for the production,
by Member States of the construction and transmission and distribution of electricity;
operation of generating installations and
transmission and distribution lines and to
take such other steps as are required in
order to ensure the effective functioning
of the internal market;
Whereas the establishing of the internal    Whereas in establishing of the internal
market for energy, more particularly in the market for electricity full account should
electricity sector, will take into account  be taken of the Community objective of
the objective of economic and social        economic and social cohesion, particularly
cohesion;                                   in sectors such as the infrastructures,
                                            national or intracommunity, which serve
                                            for the transmission of electricity;
Whereas electricity undertakings must, in Whereas electricity undertakings must, in
the internal market, be able to operate on the internal market, be able to operate,
 normal commercial principles;              without prejudice to constraints connected
                                            with public service obligations, on normal
                                             commercial principles;
                                            14
 ---pagebreak--- Whereas provision should be made for        Whereas whatever the nature of the
customers and producers of electricity to   prevailing market organisation, access to
have access to the transmission and         the system must be open to producers and
distribution systems without discrimination autoproducers, together with the customers
and subject to the availability of capacity connected to the system, in conformity
and in return for reasonable remuneration   with this Directive;
; whereas this provision may be limited
during the next phase by Member states to
large industrial companies and with regard
to distribution companies under certain
conditions;
Whereas each transmission system must       Whereas each transmission system must
be subject to central management and        be subject to central management and
control in order to ensure the security and control in order to ensure the security and
reliability of the system in interests of   reliability of the system in the interests of
producers and customers; whereas a          producers and customers; whereas a
transmission system operator should         transmission system operator should
therefore be designated and entrusted with  therefore be designated and entrusted with
the management and development of the       the management and development of the
system; whereas the transmission system     system; whereas the transmission system
operator must behave in an objective,       operator must behave in an objective,
transparent and non-discriminatory manner   transparent and non-discriminatory
in all aspects of his operation, including  manner;
the approval of connections to the system,
charges paid for services provided and
dispatching of generating installations;
Whereas for similar reasons a distribution  Whereas at the level of distribution,
system operator must be designated to        concessionary rights of local, regional or
manage and develop each distribution         State bodies may be granted and a
 system;                                     manager must be designated to manage
                                             and develop each distribution system;
Whereas the conditions for connection to     Whereas the conditions for connection to
the transmission and distribution systems    the transmission and distribution systems
must be defined by reference to European     must be defined by reference to European
 specifications where possible or to other   specifications where possible or to other
international standards and specifications;  international standards and specifications;
                                            15
 ---pagebreak---     Whereas principles of charging should be    Whereas in order to ensure transparency
    clearly laid down in order to ensure fair   and non-discrimination the transmission
    and transparent conditions for the use of   function of vertically           integrated
    transmission and distribution systems;      undertakings should be operated
                                                independently from the other activities;
                                                whereas the accounts of all electricity
                                                undertakings should provide for maximum
                                                transparency, in particular to identify
                                                possible abuses of a dominant position,
                                                consisting for example in abnormally high
                                                or low tariffs or in discriminatory
                                                practices relating to           equivalent
                                                transactions; whereas to this end the
                                                accounts must be separate for each
                                                activity;
    Whereas in order to ensure transparency     Whereas it is also necessary to provide for
    and non-discrimination the transmission     access by the competent authorities to the
    and distribution functions of vertically    internal accounting documents of
    integrated undertakings should be operated  undertakings        without        thereby
    as separate divisions with separate         compromising commercial confidentiality;
    accounts; whereas the accounts of all
    electricity undertakings should provide for
    maximum transparency in particular to
    identify possible abuses of dominant
    position, consisting for example in
     abnormally high or low tariffs or in
     discriminatory practices relating to
     equivalent transactions;
    Whereas provision must be made for Whereas provision must be made for
     safeguards and dispute resolution safeguards and dispute resolution
     procedures;                                 procedures;
                                                16
(3)
 ---pagebreak--- Whereas, in accordance with the principle       Whereas, in accordance with the principle
of subsidiarity, general principles             of subsidiarity, general principles
providing for a framework must be               providing for a framework must be
established at Community level, but their       established at Community level, but their
detailed implementation should be left to       detailed implementation should be left to
Member States, thus allowing each               Member States, thus allowing each
Member State to choose the regime which         Member State to choose the regime which
corresponds best to its particular situation;   corresponds best to its particular situation;
whereas therefore Member States should,         whereas therefore Member States should,
subject to the Treaty provisions and those      subject to the Treaty provisions and those
made thereunder, remain free to determine       made thereunder, remain free to determine
the detailed criteria for licensing the         the detailed criteria for licensing the
construction of power stations and of           construction of power stations and of
transmission and distribution lines, and to     transmission and distribution lines, and to
determine the non-discriminatory and            determine the non-discriminatory and
objective criteria for the dispatching of       objective criteria for the dispatching of
power stations; whereas, moreover,              power stations; whereas, moreover,
Member States should be able to                 Member States should be able to
determine the extent and nature of              determine the extent and nature of
distribution companies' rights (including       distribution companies' rights (including
the grant of exclusive distribution             the grant of exclusive distribution
concessions in respect of all customers         concessions in respect of all customers
below the eligibility thresholds for access     below the eligibility thresholds for access
to the transmission and distribution            to the transmission and distribution
system) and of their public service             system) and of their public service
obligations, including the obligation to        obligations, including the obligation to
supply, the maintenance of system security      supply, the maintenance of system
and the development of the system               security and the development of the
capability to meet demand; whereas              system capability to meet demand;
Member States also retain the power to          whereas Member States also retain the
regulate all aspects of electricity tariffs for power to regulate all aspects of electricity
final customers who are not eligible for        tariffs for final customers who are not
access to the transmission and distribution     eligible for access to the transmission and
 system, for instance to ensure equal           distribution system, for instance to ensure
treatment of these customers;                   equal treatment of these customers;
                                                17
 ---pagebreak--- Whereas these measures constitute a        Whereas these measures constitute a
second phase of liberalization; whereas    second phase of liberalization; whereas
once they have been put into effect some   once they have been put into effect some
obstacles to trade in electricity between  obstacles to trade in electricity between
Member States will nevertheless remain in  Member States will nevertheless remain in
place; whereas, therefore, it will be      place; whereas, therefore, it will be
necessary to provide for further market    necessary to provide for further market
liberalization including in particular a   liberalization including in particular a
reduction in the barriers to the supply of reduction in the barriers to the supply of
electricity by producers to customers;     electricity by producers to customers;
whereas the precise details of this third  whereas the precise details of this third
phase, which should complete the internal  phase, which should complete the internal
electricity market, can only be defined in electricity market, can only be defined in
the light of experience during the second  the light of experience during the second
phase; whereas a three-year period is      phase; whereas the Commission must
sufficiently long to gather the experience therefore report to the Council and the
on which to base the definition of the     European Parliament on the application of
third and final phase;                     this Directive before the end of this
                                           second phase;
Whereas the present Directive does not Whereas this Directive does not affect the
prejudice the application of the rules of application of the rules of the Treaty,
the Treaty,
                                           18
 ---pagebreak--- HAS ADOPTED THIS DIRECTIVE:                   HAVE ADOPTED THIS DIRECTIVE:
                  Chapter I                                     Chapter I
                    Scope                                Scope and definitions
ARTICLE 1                                     ARTICLE 1
This Directive establishes common rules       This Directive establishes common rules
for the access to the market and for the      for the production, transmission and
criteria and procedures to be used when       distribution of electricity. It lays down
licensing the generation, transmission and    the rules relating to the organisation and
distribution of electricity and for the       functioning of the electricity sector,
operation of the interconnected system.       access to the market, the criteria and
                                              procedures applicable to calls for tender
                                              and the granting of licences, together
                                              with the operation of systems.
ARTICLE 2                                     ARTICLE 2
For the purposes of this Directive:           For the purposes of this Directive:
1.   "Generation" shall mean             the  1.   "generation" means the production of
     production of electricity.                    electricity;
2.   "Producer" shall mean a legal or 2.           "producer" means a legal or natural
     natural person generating electricity         person generating electricity for his
     for his own use or for sale.                  own use or for sale;
3.   "Transmission" shall mean the 3.              "transmission" means the transport
     transport of electricity on the               of electricity on the highvoltage
     highvoltage interconnected system in          interconnected system in view of its
     view of its delivery to customers.            delivery to final customers or to
                                                   distributors;
4.   "Distribution" shall mean the transport 4.    "distribution" means the transport of
     of electricity on lowervoltage                electricity     on     lowervoltage
     distribution systems in view of its           distribution systems in view of its
     delivery to cstomers.                         delivery to customers;
5.   "Customers" shall mean wholesale or      5.   "customers" means wholesale or
     final purchasers of electricity.              final purchasers of electricity;
                                             19
 ---pagebreak--- 6.   "Interconnectors" shall mean 6.            "final customer" means the customer
    equipment used to link electricity         buying electricity for his own use;
    systems.
7.  "interconnected system" shall mean a        "large industrial consumer" means a
    number of transmission and                 final customer whose consumption
    distribution systems linked together       exceeds 100 GWh per year or a
    by means of one or more                    lower quantity as may be specified
    interconnectors.                           by the Member State;
8.  "Direct line" shall mean a line             "interconnectors" means equipment
    linkingone or more customers with a        used to link electricity systems;
    point of supply without using the
    interconnected system.
9.  "Economic precedence" shall mean       9.  "interconnected system" means a
    the ranking of sources of electricity      number of transmission and
    supply in accordance with economic         distribution systems linked together
    criteria.                                  by means of one or more
                                               interconnectors;
10. "European specification" shall mean    10. "direct line" means a line linking
    acommon technical specification, or a      one or more customers with a point
    European standard, or a national           of supply without using the
    standard implementing a European           interconnected system;
    standard.
11. "European standard" shall mean a       11. "economic precedence" means the
    standard approved by the European          ranking of sources of electricity
    Committee for Standardization (CEN)        supply in accordance with economic
    or by the European Committee for           criteria;
    Electrotechnical      Standardization
    (CENELEC) as a "European Standard
    (EN)" or "Harmonization Document
    (HD)", according to the common rules
    of those organisations.
                                          20
 ---pagebreak--- 12. "Common technical specification"         12. "European specification" means a
    shall mean a technical requirement           common technical specification, or a
    drawn up in accordance with a                European standard, or a national
    procedure recognized by the Member           standard implementing a European
    States with a view to uniform                standard;
    application in all Member States and
    published in the Official Journal of
    the European Communities.
13. "Ancillary services" shall mean all      13. "European standard" means a
    services necessary for the operation of      standard approved by the European
    a transmission or distribution system        Committee for Standardization
    such as meeting load characteristics,        (CEN) or by the European
    frequency control, voltage control,          Committee for Electrotechnical
    reserve power etc..                          Standardization (CENELEC) as a
                                                 "European Standard (EN)" or
                                                 "Harmonization Document (HD)",
                                                 according to the common rules of
                                                 those organisations;
14. "System user" shall mean any legal or    14. "common technical specification"
    natural person supplying to or being         means a technical requirement drawn
    supplied by a transmission or                up in accordance with a procedure
    distribution system.        This shall       recognized by the Member States
    include producers, system operators,         with a view to uniform application
    owners of independent transmission           in all Member States and published
    and distribution lines, distribution         in the Official Journal of the
    companies and other customers.               European Communities;
15. "Supplier" shall mean a legal or         15. "ancillary services" means all
    natural person supplying electricity to      services necessary for the operation
    customers.                                   of a transmission or distribution
                                                 system such as         meeting load
                                                 characteristics, frequency control,
                                                 voltage control, reserve power etc.;
16. "Supply" shall mean the delivery or      16. "system user" means any legal or
    sale of electricity to customers.            natural person supplying to or being
                                                 supplied by a transmission or
                                                 distribution system;
                                            21
 ---pagebreak--- 17. "Vertically integrated electricity      17. "supplier" means a legal or natural
    undertaking" shall mean an electricity      person supplying electricity to
    undertaking performing two or more          customers;
    of the tasks of generation,
    transmission and distribution of
    electricity.
                                            18. "supply" means the delivery or sale
                                                of electricity to customers;
                                            19. "vertically integrated electricity
                                                undertaking" means an electricity
                                                undertaking performing two or more
                                                of the tasks of production,
                                                transmission and distribution of
                                                electricity:
                                            20. "independent producer" means a
                                                producer who does not carry out
                                                electricity      transmission        or
                                                distribution functions on the territory
                                                covered by the system where he is
                                                established;
                                            21. "autoproducer"          means        an
                                                independent producer who produces
                                                electricity essentially for his own
                                                use.
                                           22
 ---pagebreak---                  Chapter II                                    Chapter II
            Access to the market               General rules for the organisation of the
                                                                  sector
ARTICLE 3                                      ARTICLE 3
1. Member States shall ensure that             1. Member States shall ensure that,
   electricity undertakings are operated on       without prejudice to paragraph 2,
   commercial principles and shall not            electricity undertakings are operated
   discriminate         between        these      on commercial principles and shall not
   undertakings as regards either rights or       discriminate between               these
   obligations.                                   undertakings as regards either rights
                                                  or obligations.
2. Electricity undertakings shall in
   particular be free to adjust the nature of
   their business to the market and to
   establish within the Community
   activities in fields associated with the
   electricity business.
3. Without prejudice to Article 16(2),
   Member States shall not establish,
   approve, influence or regulate tariffs or
   prices to customers in respect of the
   volume for which these customers
   exercise their right to purchase and to
   be supplied or to contract to purchase
   and to be supplied through the
   transmission and distribution system in
   accordance with Articles 6 and 7.
                                               2. Member States may, in accordance
                                                  with Community law, impose public
                                                  service obligations on undertakings
                                                  operating in the electricity sector as
                                                  regards the security, regularity, quality
                                                  and price of supplies.
                                              23
 ---pagebreak---     ARTICLE 4
    1. Member States shall                 allow
         undertakings established in the
         Community to build, operate, purchase
         or sell generating installations which
         are located on their territory and
        which are intended for the generation
         of electricity destined for own use or
        for sale subject only to criteria and
        procedures for authorization to be
        established in accordance with
        paragraphs 2 to 6.
    2. Member States shall lay down the
         criteria which shall be met by an
        undertaking applying for a licence to
        build or operate a generating
        installation. The criteria shall be
        objective and nondiscriminatory.
        They shall be published not later than
        six months after the date laid down in
        Article 28.
        The criteria shall relate exclusively to:
        - security and safety of the
            installation;
        - environmental             protection
            requirements;
        - land use and siting;
       - the technical and financial capacity
            of the applicant undertaking.
      However, Member States may, for
      reasons of environmental policy or of
      security of supply, supplement these
      criteria by criteria restricting the nature
      of the primary energy source that may
      be used for the generation of electricity.
                                                  24
(4)
 ---pagebreak--- 3. Member States shall lay down and
    publish, not later than six months
    after the date laid down in Article 28,
    the procedures to be followed by an
    undertaking applying for a licence to
   build and operate generating
    installations. The procedures shall be
   non-discriminatory.
   The procedures may vary according to
   the nature of the primary energy
   source to be used and the technical
   type of the generating installations. In
   the case of major installations, a
   licence may be granted for each
   successive phase of construction.
4. Member States shall ensure that the
   criteria and procedures are applied in a
   manner which is non-discriminatory
   and that all applications are handled in
   a timely manner.
   Any change to the criteria and
   procedures made during the course of
   an application shall be applied in a
   non discriminatory manner to all
   applicants whose applications are
   under consideration.
5. Member States may attach conditions
   and requirements to the licence
   provided that such conditions and
   requirements are non-discriminatory
   and are no more restrictive than is
   necessary to ensure that the criteria are
   respected.
6. Member States shall ensure that the
   reasons for any refusal to grant a
   licence are given to the applicant and
   shall establish a procedure enabling
   the applicant to appeal against such
   refusals.
                                             25
 ---pagebreak--- ARTICLE 5
 1. Member States shall grant licences to
    build or operate             electricity
    transmission or distribution lines and
    associated equipment on their territory
    in accordance with the provisions of
    paragraphs 2 to 8.
2. Member States shall lay down the
    criteria which shall be met by an
    undertaking applying for a licence to
    build or operate a transmission or
    distribution line. The criteria shall be
    objective      and non-discriminatory.
    They shall be published not later than
    six months after the date laid down in
    Article 28.
    The criteria shall relate exclusively to:
    - security and safety of lines and
        associated equipment;
     - environmental           protection
       requirements;
    - land use and siting;
    - public ground use;
    - technical and financial capacity of
       the applicant undertaking.
3. Member States may refuse or defer the
    grant of a licence, if the transmission
    or distribution requirements concerned
    can be satisfied by the existing
    transmission and distribution capacities
    available in the interconnected system
    at a reasonable and equitable price.
4. Member States shall lay down and
    publish not later than six months after
    the date laid down in Article 28, the
    procedures to be followed by an
    undertaking applying for a licence to
    build or operate transmission and
    distribution lines.     The procedures
    shall be non-discriminatory.
                                              26
 ---pagebreak---  5. Member States shall ensure that the
      criteria and procedures are applied in a
     manner which is non-discriminatory
     and that all applications are handled
     without delay.
     Any change to the criteria and
     procedures made during the course of
     an application shall be applied in a
     non-discriminatory manner to all
     applicants whose applications are
     under consideration.
6. Any right to expropriate private
     property or any right to use public
     ground shall be granted in a non-
     discriminatory manner.
     In so far as the public interest is taken
     into consideration when granting a
     right of expropriation or a right to use
     public ground, a line shall be deemed
     of public interest if:
(i) the line is necessary to meet
     transmission        or     distribution
     requirements which cannot be met by
     the existing systems; or
(ii) a substantial part of the capacity of the
     line is either open for use by third
     parties, or made available to the
     public, at a reasonable and equitable
     price.
7. Member States may attach conditions
     and requirements to the licence,
     provided that such conditions and
     requirements are non-discriminatory
     and are no more restrictive than is
     necessary to ensure that the criteria are
     respected.
                                               27
 ---pagebreak--- 8. Member States shall ensure that the
     reasons for any refusal to grant a
     licence are given to the applicant and
     shall establish a procedure enabling
    the applicant to appeal against such
     refusals.
ARTICLE 6
 1. Subject to Article 5(1), Member States
     shall ensure that electricity producers
     and suppliers established in their
    territory are able to supply their own
    premises, subsidiaries and affiliate
    companies and customers through a
    direct line.
2. Subj ect to Article 5( 1 ), Member States
    shall ensure that any customer
    established in their territory is able to
    purchase and to be supplied with
    electricity from a producer or supplier
    through a direct line.
ARTICLE 7
1. Member States shall ensure that
    electricity producers and suppliers
    established in their territory are able:
(i) to supply their own premises,
    subsidiaries and affiliate companies in
    the same Member State or in another
    Member State through the use of the
    interconnected system, subject to the
    conclusion of agreements with the
    relevant transmission and distribution
    system operators pursuant to Articles
    14 and 21 respectively;
                                              28
 ---pagebreak--- (ii) to supply or to contract to supply
     customers in the same Member State
     or in another Member State, through
     the use of the interconnected system,
     subject to the conclusion of
     agreements with the relevant
     transmission and distribution system
     operators pursuant to Articles 14 and
     21 respectively.
2. Member States shall ensure that any
     customer established in their territory
     is able to purchase and to be supplied
     or to contract to purchase and to be
     supplied with electricity to be
     delivered from a producer or suppliers
     in the same Member State or in
     another Member State, through the use
     of the interconnected system, subject
     to the conclusion of agreements with
     the relevant transmission and
     distribution system operators pursuant
     to Articles 14 and 21 respectively. A
     Member State may limit such use of
     the interconnected system:
 - to companies for the supply of sites
     the overall individual consumption of
     which exceeds 100 GWh per year or
     such lower figure as may be specified
     by the Member State;
 - to distribution companies, individually
     or in association, whose individual or
     aggregated sales represent at least 3%
     of overall consumption in the Member
     State concerned or such lower figure
     as may be specified by the Member
     State.
                                             29
 ---pagebreak---          Chapter m                             Chapter m
Transmission system operation         Production and transmission
                               ARTigg 4
                               Member States shall determine, in
                               accordance with Community law, the
                               public service obligations referred to in
                               Article 3(2) assigned to production and
                               transmission companies.
                               ARTICLE 5
                               1. Member States must authorize the
                                  construction on their territory of
                                  production and transmission capacity
                                  on the basis of objective, transparent
                                  and non-discriminatory criteria and
                                  procedures laid down in Article 7.
                               2. Member States which do not wish to
                                  use the authorization procedure
                                  referred to in paragraph 1 shall draw
                                  up an inventory of the new means of
                                  production and transmission including
                                  replacement capacity, in accordance
                                  with the annual estimate referred to in
                                  Article 11. The inventory shall take
                                  account of the needs of systems for
                                  interconnection.
                                  The requisite capacity shall be
                                  allocated by means of a tender
                                  procedure organized in accordance
                                  with the procedure laid down in
                                  Article 6.
                              30
 ---pagebreak---  3. However,        autoproducers       and
    independent producers must be
    authorised, also in Member States
    which have opted for the tender
    procedure provided in paragraph 2, to
    construct production capacity and
    electricity lines on the basis of
    objective, transparent and non-
    discriminatory criteria laid down in
    Article 7.
 ARTICLE 6
 1. The invitation to tender designed to
    allocate production capacity shall
    cover the making available of new or
    existing production capacity, making
    use, if necessary, of interconnected
    systems.
 2. Details of the tender procedure for
    means of production and transmission
    shall be published in the Official
    Journal of the European Communities
    at least six months prior to the date on
    which the contract is to be awarded.
    The tender specifications shall be
    made available to any interested
    undertaking established on the
    territory of a Member State so that it
    has sufficient time in which to submit
    a tender.
 3. The tender specifications shall contain
    a description of the procedure to be
    followed by all tenderers and an
    exhaustive list of the criteria
    governing the selection of tenderers
    and the award of the contract. These
    criteria shall be objective and non-
    discriminatory.
31
 ---pagebreak---         The tender procedure shall be
        organised by the public authorities or
        by an independent entity appointed for
        this purpose.
     ARTICLE 7
     The criteria for granting the
     authorizations referred to in Article 5(1)
     and (3) relate to :
     -   the safety and security of installations
         and associated equipment;
     -   protection of the environment;
     -   land occupation and the selection of
         sites;
     -   use of public ground;
     -   the technical        and     financial
         capabilities of the enterprises.
     These criteria may be supplemented by
     the taking into account of the nature of
     the primary sources to be used for the
     authorization of the construction of
     production capacities.
     The detailed criteria and the procedures
     shall be made public.
     Applicants shall be informed of the
     reasons, which must be objective and
     non-discriminatory, for any refusal to
     grant an authorization; a reason for
     refusal may be an infringement by the
     applicant of public service obligations.
     Appeal procedures must be made
     available to the applicant.
    32
(5)
 ---pagebreak--- ARTICLE 8                                     ARTICLE 8
1. Member States shall designate or shall     1. Member States shall designate or shall
   require the undertakings which own            require the undertakings which own
   transmission systems (including               transmission systems to designate, for a
   electrical lines forming part thereof) or     period of a least fifteen years, a system
   are responsible for system control or         operator, charged with operating and
   for dispatch to designate a system            ensuring the maintenance and
   operator, which has the obligation to         development of the transmission system
   operate and to ensure the maintenance         in a given area and its interconnectors
   and development of the transmission           with other systems.
   system in a given area and its
   interconnectors with other systems.
2. Member States shall lay down
   provisions requiring the transmission
   system to be operated separately from
   the generation and distribution divisions
   of any integrated            electricity
   undertakings and from any generation
   and distribution undertakings.
                                              2. Unless the transmission system is
                                                 already indépendant from production
                                                 and distribution activities, the system
                                                 operator      shall     be at least
                                                 administratively independent from the
                                                 other activities relating to the
                                                 transmission system. The fees for the
                                                 use of the lines and installations needed
                                                 for transit shall be paid to their
                                                 proprietors.
3. Member States shall ensure that the 3. Member States shall ensure that the
   transmission system operator acts in          transmission system operator acts in
   accordance with Articles 9 to 15.             accordance with the provisions of
                                                 Articles 9 to 14.
                                             33
 ---pagebreak--- ARTICLE 9                                       ARTICLE 9
1. The transmission system operator shall       1. The system operator shall be
   maintain a secure, reliable and efficient       responsible for managing energy flows
   electricity system in its area.                 on the system, taking into account
                                                   exchanges with interconnected systems.
                                                   It shall maintain a secure, reliable and
                                                   efficient electricity system in its area.
2. The transmission system operator shall
   refrain from buying or selling
   electricity, except in cases where such
   transactions are related to:
 - ancillary services referred         to   in
   paragraph 4 of this Article;
 - electricity produced by generating
   installations referred to in Article 13(4).
3. The transmission system operator shall
   use its best endeavours to develop the
   transmission system and to achieve the
   expeditious construction of such new
   transmission capacity as may be needed
   to enable the transmission capacity to
   adjust to the demand for the use of that
   capacity.
4. The transmission system operator shall 2. The system operator shall take all
   take all necessary steps to ensure the          necessary steps to ensure the
   availability of all ancillary services          availability of all ancillary services
   necessary to maintain a high level of           necessary to maintain a high level of
   reliability and security of the electricity     reliability and security of the electricity
   system.                                         system.
                                                3. Without prejudice to the provisions of
                                                   paragraphs 1 and 2, Member States
                                                   may grant the system operator any
                                                   powers they regard as essential to the
                                                   proper functioning of the system.
                                               34
 ---pagebreak--- 5. The transmission system operator shall          The system operator shall ensure the
   ensure the availability of metered              availability of metered operational data
   operational data and provide interested         and provide interested parties with all
   parties with all information necessary          information necessary for settlement
   for settlement and payment.                     and payment.
6. The transmission system operator shall          The system operator shall not
   not discriminate between users or               discriminate between users or classes
   classes of users of the system or               of users of the system and any of the
   between users of the system and any of          system operator's affiliates or
   the system operator's other businesses,         shareholders.
   any businesses affiliated to it, or any of
   its shareholders.
ARTICLE 10                                      ARTICLE 10
1. The transmission system operator shall       1. The system operator shall provide to
   provide to the operator of any other            the operator of any other system with
   system with which its system             is     which its system is interconnected
   interconnected sufficient information to        sufficient information to ensure the
   ensure the secure and efficient                 secure and efficient operation and the
   operation and the coordinated                   coordinated development of the
   development of the interconnected               interconnected system.
   system.
2. The transmission system operator shall 2. The system operator shall facilitate
   facilitate transfers of electricity to and      transfers of electricity to and from
   from connected systems. To that end             connected systems. To that end the
   the transmission system operator shall          system operator shall conclude all
   conclude all agreements necessary with          necessary agreements with other
   other relevant transmission or                  relevant, transmission or distribution
   distribution system operators to enable         system operators to enable a user
   a user connected to its system to use           connected to its system to use the
   the interconnected system.                      interconnected system.
   The transmission system operator shall          The system operator shall fix terms for
   fix terms for the use of interconnectors        the use of interconnectors after
   after consultation with the system              consultation with the system operator
   operator of the connected system.               of the connected system.
                                               35
 ---pagebreak--- ARTICLE 11                                     ARTICLE 11
The transmission system operator shall         The system operator shall draw up and
prepare and publish an annual estimate on      publish an annual estimate on the
the generation capacity which is likely to     generation and transmission capacity
be connected to the system, and on the         which is likely to be connected to the
demand for electricity. The estimate shall     system, on the need for interconnections
cover a period of at least 10 years,           with other systems, on the potential
beginning from the year in which it is         transmission capacity, and on the demand
prepared.                                      for electricity. The estimate shall cover a
                                               period of at least 10 years, beginning
                                               from the year in which it is prepared.
ARTICLE 12                                     ARTICLE 12
1. Within a period not exceeding one year      1. Within a period not exceeding one year
   from the date laid down in Article 28,         from the date laid down in Article 28,
   the transmission system operator shall         the system operator shall develop and
   develop and publish Technical Rules,           publish technical rules, which shall
   which shall establish the minimum              establish the minimum technical design
   technical design and operational               and operational requirements for the
   requirements for the connection to the         connection to the system of generating
   system of generating installations, final      installations, final customers' electrical
   customers' electrical installations, other     installations, other transmission or
   transmission or distribution systems,          distribution systems, and direct
   and direct transmission and distribution       transmission and distribution lines.
   lines. These requirements shall be             These requirements shall ensure the
   objective and non-discriminatory and           interoperatibility of systems, shall be
   not disturb the functioning of the             objective and non-discriminatory and
   internal market for electricity.               shall not disturb the functioning of the
                                                  internal market for electricity. The
                                                  system operator shall consult the
                                                  parties        concerned         before
                                                  implementation of the technical rules.
                                              36
 ---pagebreak---  2.   The Technical rules shall be approved 2.     The technical rules shall be approved
      by the Member States concerned,              by the Member States concerned,
      which shall, in accordance with              which shall, in accordance with
      Article 8 of Council Directive               Article 8 of Council Directive
      83/189/EEC (3) , notify to the               83/189/EEC (4) , notify to the
      Commission the rules in respect of           Commission the rules in respect of
      performance      requirements and            performance requirements and
      connections.                                 connections.
 3. The Technical Rules shall address at 3. The technical rules shall address at
    least the following:                         least the following:
 (a) voltage and frequency performance (a) voltage and frequency performance
     requirements;                                requirements;
 (b) conditions for connection to the (b) conditions for connection to the
     transmission system including tariff         transmission system including tariff
     metering;                                    metering;
(c) operating procedures and requirements. (c) o p e r a t i n g   procedures          and
                                                  requirements.
     The Technical Rules shall be defined 4. The technical rules shall be defined by
     by reference to European                     reference to European specifications
     specifications where these exist.            where these exist.
     In the absence of European                   In the absence of European
     specifications, the Technical Rules          specifications, the technical rules shall
     shall as far as possible be defined by       be defined as far as possible by
     reference to other standards having          reference to other standards having
     currency within the Community.               currency within the Community.
     Technical Rules shall be complied 5. The technical rules shall be complied
     with, implemented and enforced by the        with, implemented and enforced by
     transmission system operator. In             the system operator. In instances
     instances where a user is subject to         where a user is subject to differing
     differing Technical Rules which are          technical rules which are applied by
     applied by two or more transmission          two or more            transmission or
     or distribution system operators, the        distribution system operator^, the
     system operators concerned shall use         system operators concerned shall use
     their best endeavours to resolve the         their best endeavours to resolve the
     differences.                                 differences.
(3)                                          (4)
     OJNoL 109,26.4.1983, p. 8.                   OJNoL 109, 26.4.1983, p. 8.
                                            37
 ---pagebreak--- 6. In the preparation, implementation and 6. In the preparation, implementation and
   enforcement of the Technical Rules,          enforcement of the technical rules,
   there shall be no discrimination             there shall be no discrimination
   between users or classes of users of a       between users or classes of users of a
   system except as necessary to ensure         system except as necessary to ensure
   security and quality of supply. The          security and quality of supply. The
   Rules shall not impose unreasonable          rules shall not impose unreasonable
   requirements or unduly inhibit access        requirements or unduly inhibit access
   to the system.                               to the system.
ARTICLE 13                                   ARTICLE 13
1. The transmission system operator shall    1. The system operator shall be
   be responsible for dispatching the           responsible for dispatching the
   generating installations in its area and     generating installations in its area and
   for determining          the use of          for determining            the use of
   interconnectors with other systems.          interconnectors with other systems.
2. The dispatch of the generating 2. Without prejudice to the supply to
   installations and the use of                 distribution companies of electricity
   interconnectors shall be determined by       from their own generating plants
   the transmission system operator             directly connected to their distribution
   according to the actual needs of the         system, the dispatch of the generating
   system on the basis of criteria which        installations     and the use of
   are approved by the Member State             interconnectors shall be determined by
   concerned. The criteria shall be             the    system operator, as far as
   objective, transparent and applied in a      contractual obligations            allow,
   non discriminatory manner and not            according   to  the  actual  needs of the
   disturb the functioning of the internal      system on the basis of criteria which
   market for electricity.                      are approved by the Member State
                                                concerned. The criteria shall be
                                                objective, transparent and applied in a
                                                non discriminatory manner and shall
                                                not disturb the functioning of the
                                                internal market for electricity.
   The criteria for dispatch and for use of 3. The criteria for dispatch of the
   interconnectors shall take into account      generating installations and for the use
   the economic precedence of electricity       of interconnectors shall take into
   from available generating installations      account the economic precedence of
   or interconnector transfers, the             electricity from available generating
   technical constraints arising on the         installations or interconnector transfers
   system and any measure taken by a            and the technical constraints arising on
   Member State pursuant to paragraph 5.        the system.
                                            38
 ---pagebreak---    When dispatching            generating         When dispatching generating
   installations in its area the                  installations the system operator may
   transmission system operator shall             give priority to generating installations
   give priority to generating installations      using reneweble energy sources or
   whose capacity does not exceed 25              waste or producing combined heat and
   Megawatts provided that these                  power.      The electricity sold or
   installations use renewable energy             purchased by these installations shall
   sources or waste or produce combined           be priced in accordance with the
   heat and power and are offered at              guidelines         laid down           in
   reasonable prices.                             recommendation 3(c) of Council
                                                  Recommendation 88/611/EEC(5).
5. A Member State may, for reasons of
   security of supply, direct that priority
   be given to the dispatch of generating
   installations using indigenous primary
   fuel sources, to an extent not
   exceeding in any calendar year 20% of
   the overall primary energy necessary
   to produce the electricity consumed in
   the Member State concerned. This
   figure shall be progressively reduced
   to 15% by 31 December 2000.
ARTICLE 14
1. System users and prospective system
   users may apply to the transmission
   system operator to enter into an
   agreement for connection to and/or use
   of the interconnected system.
                                              (5)
                                                  OJNoL 335, 7.12.1988, p. 29.
                                             39
 ---pagebreak---     2. In response to such an application, the
         transmission system operator shall
         propose an agreement for connection
         to and/or use of the interconnected
          system.     The transmission system
          operator may, however, refuse to make
          a proposal for an agreement for use of
         the system if such use would prejudice
         the transmission of electricity in
         fulfilment of any statutory obligation
         or of contractual commitments. The
         reasons for any refusal shall be given
         to the applicant.
         All applications shall be handled in a
         timely manner and a response shall, in
         any event, be given within three
         months following receipt of the
         application.
    3. The proposal for an agreement shall
         include terms relating to an obligation
         on the part of the transmission system
         operator:
    (i) to accept into the relevant system at
         such entry point or points such
         quantities of electricity as may be
         specified in the application; and/or
    (ii) to enable the delivery to be made of
         such quantities of electricity as are
         referred to in (i) above (less any
         transmission losses) at such exit point
         or points on the relevant system as
         may be specified in the application.
    4. The transmission system operator
         shall, on request and at a reasonable
         charge, make available to a potential
         user, a statement of opportunities for
         electricity transactions involving the
         use of the system and of its
         interconnectors.
                                                 40
(6)
 ---pagebreak---     This statement of opportunities shall
    contain sufficient information to
    enable a potential user to make a
   reasonable assessment of those
   opportunities.
5. The transmission system operator shall
   publish the basis upon which the terms
    for connection to and use of the
    system and its interconnectors will be
    set. The publication shall contain
    sufficient information to enable a
   potential user to make a reasonable
   assessment of the charges that would
   be payable for electricity transactions
   involving the use of the system and of
   its interconnectors.
6. The basis upon which the transmission
   system operator's terms are set shall be
   such that the charges that would be
   payable are reasonably related to the
   long term costs incurred in the
   provision of the relevant service,
   together with a reasonable rate of
   return on capital employed in the
   provision of that service.
7. The transmission system operator shall
   not discriminate between any persons
   or classes of persons in the terms for a
   connection to its system or for the use
   of its system and interconnectors.
8. The contractual right of use of the
   interconnected system shall be lost if
   the transmission capacity is not used .
   If capacities are partly unused the
   same shall apply to the unused part of
   the capacity.
                                            41
 ---pagebreak--- ARTICLE 15                                  ARTICLE 14
The transmission system operator shall      The transmission system operator shall
preserve the confidentiality of             preserve the confidentiality of
commercially sensitive information          commercially sensitive information
obtained in the course of carrying out its  obtained in the course of carrying out its
business.                                   business.
                                           42
 ---pagebreak---                  Chapter IV                                     Chapter IV
       Distribution system operation                 Distribution system operation
ARTICLE 16                                     ARTICLE 15
1. Member States shall define the rights       1. Member States shall determine, in
   and the public service obligations of          accordance with Community law, the
   distribution companies and the rights          rights and the public service
   and obligations of their customers.            obligations referred to in Article 3(2),
                                                  of distribution companies and the
                                                  rights and obligations of their
                                                  customers.
2. Member States may lay upon 2. Member States may impose, on
   distribution companies an obligation to        distribution companies, an obligation
   supply the customers located in a given        to supply the customers located in a
   area, with respect to the volume for           given   area.    The tariff for such
   which they do not exercise their right,        supplies may be regulated, for
   or do not have the right to be supplied        instance  to ensure equal treatment of
   by other suppliers in accordance with          the customers concerned.
   Articles 6 and 7. Without prejudice to
   Article 3(3), the tariff for such supplies
   may be regulated, for instance to ensure
   equal treatment of the customers
   concerned.
3. Member States shall establish rules:
- on the procedure to be followed by
   customers who wish to terminate
   supply by the distribution company, in
   particular as regards the minimum
   notice period for termination, which
   shall not exceed three months;
- on the procedure to be followed by
   customers who wish to resume supply
   from the distribution company, in
   particular on the minimum notice
   period for resumption, which shall not
   exceed six months.
                                              43
 ---pagebreak--- 4. Member States shall designate or shall 3. Member States shall designate or shall
   require undertakings which own or are         require undertakings which own or are
   responsible for distribution systems          responsible for distribution systems
   (including electrical lines forming part      (including electrical lines forming part
   thereof) to designate a distribution          thereof)      to designate a system
    system operator, which has the               operator, charged with operating and
   obligation to operate and to ensure the       ensuring the maintenance and
   maintenance and development of the            development of the distribution system
   distribution system in a given area and       in a given area and its interconnectors
   its interconnectors with other systems.       with other systems.
5. Member States shall ensure that the 4. Member States shall ensure that the
   distribution system operator acts in          distribution system operator acts in
   accordance with Articles 17 to 22.            accordance with Articles 16, 17 and
                                                  18.
ARTICLE 17                                    ARTICLE 16
1. The distribution system operator shall     1. The system operator shall maintain a
   maintain a secure, reliable and efficient     secure, reliable and efficient electricity
   electricity distribution system in its        distribution system in its area, while
   area.                                         respecting people's health and the
                                                 environment.
   The distribution system operator shall 2. The system operator shall be required
   use its best endeavours to develop the        to fulfil the public service obligations
   distribution system and to achieve the        assigned to it.
   expeditious construction of such new
   distribution capacity as may be needed
   to enable the distribution capacity to
   adjust to the demand for the use of that
   capacity.
                                             44
 ---pagebreak---                                                3. The system operator shall use its best
                                                  endeavours to encourage the optimum
                                                  use of existing capacity and to ensure
                                                  the expeditious construction of such
                                                  new distribution capacity as may be
                                                  needed to enable capacity to adjust to
                                                  demand.
3. The distribution system operator shall
   ensure the availability of metered
   operational data and provide interested
   parties with all information necessary
   for settlement and payment.
4. The distribution system operator shall         The system operator shall not
   not discriminate between users or              discriminate between users or classes
   classes of users of the system or              of users of the system and any of the
   between users of the system and any of         system operator's affiliates or
   the system operator's other businesses,        shareholders.
   any businesses affiliated to it, or any of
   its shareholders.
ARTICLE 18
1. The distribution system operator shall
   provide to the operator of any system
   with which its system                   is
   interconnected sufficient information to
   ensure the secure and efficient
   operation and the coordinated
   development of the interconnected
   electricity system.
2. The distribution system operator shall
   cooperate with other relevant system
   operators to define all the necessary
   agreements for the use of the
   interconnected system applied for by a
   user connected to its system.
                                              45
 ---pagebreak---  The distribution system operator shall in
 particular determine the terms for the use
 of the interconnectors after consultation
with the system operator of the connected
 system.
ARTICLE 19                                    ARTICLE 17
 1. The distribution system operator shall    1. The system operator shall draw up
    prepare annually a report on the quality     and publish an annual report on the
    of supply and the quality of service.        quality of supply and the quality of
    The report shall be brought to the           service.
    attention of the authority competent for
    the distribution area concerned, and
    those competent for the neighbouring
    areas, and shall be made available to
    the Member State and the SOEC upon
    request.
2. The Commission shall establish the 2. The Commission shall establish the
    appropriate criteria for the content of      appropriate criteria for the content of
    the reports in order to ensure their         the reports in order to ensure their
    comparability on Community level.            comparability at Community level.
ARTICLE 20
 1. Within a period not exceeding one year
from the date laid down in Article 28, the
distribution system operator shall develop
and publish Technical Rules, which shall
establish the minimum design and
operational technical requirements for the
connection to the system of generating
installations, customers electrical
installations, transmission and other
distribution systems and direct
transmission and distribution lines. These
requirements shall be objective and non-
discriminatory and not disturb the
functioning of the internal market for
electricity.
                                             46
 ---pagebreak--- 2. The Technical Rules shall be approved
     by the Member State concerned which
     shall, in accordance with Article 8 of
     Directive 83/189/EEC notify to the
     Commission the rules in respect of
     performance requirements and
     connections.
3. The Technical Rules shall address at
     least the following:
(a) voltage and frequency performance
    requirements;
(b) conditions for connection to and
    operation of the distribution system
    including tariff metering;
(c) operating procedures and requirements.
4. The Technical Rules shall be defined
    by reference to European
    specifications where these exist.
    In the absence of European
    specifications, the Technical Rules
    shall as far as possible be defined by
    reference to other standards having
    currency within the Community.
5. Technical Rules shall be complied
    with, implemented and enforced by the
    distribution system operator. In
    instances where a user is subject to
    differing Technical Rules which are
    applied by two or more transmission
    or distribution system operators, the
    system operators concerned shall use
    their best endeavours to resolve the
    differences.
                                            47
 ---pagebreak---     6. In the preparation, implementation and
         enforcement of the Technical Rules,
         there shall be no discrimination
         between users or classes of users of a
         system except as necessary to ensure
         security and quality of supply. The
         Rules shall not impose unreasonable
         requirements or unduly inhibit access
         to the system.
    ARTICLE 21
    1. System users and prospective system
       users may apply to the distribution
       system operator to enter into an
       agreement for connection to and/or use
       of the interconnected system.
    2. In response to such an application, the
       distribution system operator shall
       propose an agreement, for connection
       to and/or use of the interconnected
       system. The distribution system
       operator may, however, refuse to make
       a proposal for an agreement for use of
       the system if such use would prejudice
       the distribution of electricity in
       fulfilment of any statutory obligation or
       of contractual commitments. The
       reasons for any refusal shall be given
       to the applicant.
       All applications shall be handled in a
       timely manner and a response shall, in
       any event, be given within three
       months following receipt of the
       application.
    3. The proposal for an agreement shall
       include terms relating to an obligation
       on the part of the distribution system
       operator:
                                                 48
(7)
 ---pagebreak--- (i) to accept into the relevant system at
      such entry point or points such
      quantities of electricity as may be
      specified in the application; and/or
(ii) to enable the delivery to be made of
      such quantities of electricity as are
      referred to in (i) (less any distribution
      losses) at such exit point or points on
      the relevant system as may be
      specified in the application.
4. The distribution system operator shall,
     on request and at a reasonable charge,
     make available to a potential user, a
     statement of opportunities for
     electricity transactions involving the
     use of the system and of its
     interconnectors.
     This statement of opportunities shall
     contain sufficient information to
     enable a potential user to make a
     reasonable assessment of those
     opportunities.
5. The distribution system operator shall
     publish the basis upon which the terms
     for connection to and/or use of the
     system and its interconnectors will be
     set. The publication shall contain
     sufficient information to enable a
     potential user to make a reasonable
     assessment of the charges that would
     be payable for electricity transactions
     involving the use of its system and of
     its interconnectors.
                                                49
 ---pagebreak--- 6. The basis upon which the distribution
    system operator's terms are set shall be
    such that the charges that would be
    payable are reasonably related to the
    long term costs incurred in the
    provision of the relevant service,
    together with a reasonable rate of
    return on the capital employed in the
    provision of that service.
7. The distribution system operator shall
    not discriminate between any persons
    or classes of persons in the terms of a
    connection to its system or for the use
    of the system and interconnectors.
8. The contractual right of use of the
    interconnected system shall be lost if
    the distribution capacity is not used.
    If capacities are partly unused, the
    same shall apply to the unused part of
    the capacity.
ARTICLE 12                                    ARTICLE 18
The distribution system operator shall        The distribution system operator shall
preserve the confidentiality              of  preserve the confidentiality           of
commercially       sensitive   information    commercially     sensitive    information
obtained in the course of carrying out its    obtained in the course of carrying out its
business.                                     business.
                                             50
 ---pagebreak---                   Chapter V                                   Chapter V
Unbundling and transparency of accounts            Unbundling and transparency of
                                                               accounts
ARTICLE 23
Member States shall make the necessary
arrangements for ensuring that vertically
integrated electricity undertakings organize
their electricity generation, transmission
and distribution activities - as the case
may be - in as many separate divisions as
there are activities. Any State aid granted
to one division may not benefit another
division.
                                              ARTICLE 19
                                              Member States or any competent
                                              authority they designate shall have right
                                              of access to the accounting documents of
                                              production, transmission or distribution
                                              companies which they must consult in
                                              carrying out their checks.
ARTICLE 24                                    ARTICLE 20
1. Member States shall take the necessary     1. Member States           shall take the
   steps to ensure that the accounts of          necessary steps to ensure that the
   electricity undertakings are drawn up in      accounts of electricity undertakings
   accordance with paragraphs 2 to 7.            are drawn up in accordance with
                                                 paragraphs 2 to 6.
2. Vertically integrated undertakings shall, 2. Vertically integrated undertakings
   in their internal accounting, keep            shall, in their internal accounting,
   separate accounts for each division           keep separate accounts for their
   established in accordance with Article        production, transmission and
   23, as they would be required to do if        distribution activities, as they would
   the activities in question were carried       be required to do if the activities in
   out by separate companies, and shall          question were carried out by separate
   publish a balance sheet and a profit and      companies, and         shall publish a
   loss account for each division in their       balance sheet and a profit and loss
   annual management report.                     account for each activity in their
                                                 annual management report.
                                             51
 ---pagebreak---  3. Electricity undertakings, whatever thier        Electricity undertakings, whatever
      system of ownership or legal form,            thier system of ownership or legal
      shall draw up, publish and submit to         form, shall draw up, publish and
     audit their annual accounts in                 submit to audit their annual accounts
     accordance with the rules of national          in accordance with the rules of
     legislation concerning the annual             national law concerning the annual
     accounts of limited liability companies        accounts of limited liability
     adopted to implement Council                  companies adopted to implement
     Directive 78/660/EEC(4). Undertakings         Council Directive 78/660/EEC(6).
     which are not legally obliged to              Undertakings which are not legally
     publish their annual accounts shall           obliged to publish their annual
     hold a copy of these at the disposition       accounts shall hold a copy of these at
     of the public in their head office.           the disposition of the public in their
                                                   head office.
 4. In addition, the accounts of electricity
     distribution undertakings and the
     accounts of the distribution division of
     vertically integrated undertakings shall
     distinguish between:
 (a) electricity     supply costs from
     distribution costs and other charges;
 (b) sales of electricity for industrial
     purposes from sales for other
     purposes.
 5. Undertakings shall specify in notes to 4. Undertakings shall specify in notes to
     the annual accounts the rules for the         the annual accounts the rules for the
     allocation of charges which they              allocation of charges which they
     follow in drawing up the separate             follow in drawing up the separate
     accounts pursuant to paragraph 2.             accounts pursuant to paragraph 2.
     These rules may be amended only in            These rules may be amended only in
     exceptional cases. Such amendments            exceptional cases. Such amendments
     must be mentioned in the annual               must be mentioned in the annual
     report and must be duly substantiated.        management report must be duly
                                                   substantiated.
6. The depreciation rules applied to the 5. The depreciation rules applied to the
     different categories of fixed assets          different categories of fixed assets
     shall appear separately in the notes          shall appear separately in the notes
     among the rules of valuation.                 among the rules of valuation.
(4)                                            (6)
     OJNoL 222, 14.8.1978, p. 11.                  OJNoL 222, 14.8.1978, p. 11.
                                              52
 ---pagebreak---  7. The annual accounts shall indicate in      The annual accounts shall indicate in
    notes     any important transaction        notes any important transaction
    conducted       with    associated         conducted with associated
    undertakings within the meaning of         undertakings within the meaning of
    Article 33 of Council Directive            Article 33 of Council Directive
    83/349/EEC (5) , or affiliated             83/349/EEC (7) , or affiliated
    undertakings or undertakings which         undertakings or undertakings which
    belong to the same owner.                  belong to the same owner.
(5)                                        (7)
    OJNoL 193, 18.7.1983, p. 1.                OJNoL 193, 18.7.1983, p. 1.
                                          53
 ---pagebreak---                   Chapter VI
             Access to the system
 ARTICLE 21
 1. Member States shall           take   the
      necessary measures for:
 i)   electricity producers and transmitters
      either inside or outside the territory
      covered by the system to be able to
      negotiate access to the system so as
      to conclude supply contracts with
      final customers who are large
      industrial consumers and with
      distributors on the basis of voluntary
      commercial agreement;
 ii) electricity producers to be able to
      negotiate access to the system so as
      to supply their own premises,
      subsidiaries and affiliate companies
      in the same Member State or in
      another Member State, by means of
      the interconnected system;
 iii) producers outside the territory
      covered by the system to be able to
      conclude a supply contract following
      a call for tender for new production
      capacities, and to have access to the
       system to perform the contract.
 2.   Where the industrial consumer is
      connected to the distribution system,
      access to the system must be the
      subject of negotiation with the
      distribution company managing the
      system to which the consumer is
      connected. Similarly access to the
      transmission system must be
      negotiated with the system operator
      concerned.
54
 ---pagebreak---               3. Member States shall ensure that the
                   parties negotiate in good faith and
                   that none of them abuses its
                   negotiating position by preventing the
                   successful outcome of those
                   negotiations. The system operator
                   may refuse access where the contract
                   in question would prevent him from
                   carrying out the public service
                   obligations referred to in Article 3(2)
                   which are assigned to him.
              4. Member States shall designate a
                   competent authority, which must be
                   independent of the parties, to settle
                   disputes relating to the contracts and
                   negotiations in question. Recourse to
                   this authority shall be had without
                   prejudice to the exercise of rights of
                   appeal under Community law.
(See Art. 6)  ARTICLE 22
              1. Member States shall ensure that all
                   the producers and suppliers of
                   electricity established in their
                   territory are able, subject to Article
                   7, to supply their own premises,
                   subsidiaries and customers through a
                   direct line.
              2. Member States shall ensure that any
                 customer established in their territory
                 is able to purchase and to be supplied
                 with electricity by a producer or
                 supplier through a direct line, subject
                 to Article 7.
             55
 ---pagebreak---                  Chapter VI                                  Chapter VII
              Final provisions                             Final provisions
ARTICLE 25                                   ARTICLE 23
In the event of a sudden crisis in the       In the event of a sudden crisis in the
energy market and where physical safety      energy market and where the physical
or security of persons, apparatus or         safety or security of persons, apparatus or
installations or system integrity is         installations or system integrity is
threatened, a Member State may take the      threatened, a Member State may take the
necessary protection measures.               necessary protection measures.
Such measures must cause the least           Such measures must cause the least
possible disturbance in the functioning of   possible disturbance in the functioning of
the internal market and must not be wider    the internal market and must not be wider
in scope than is strictly necessary to       in scope than is strictly necessary to
remedy the sudden difficulties which have    remedy the sudden difficulties which
arisen.                                      have arisen.
The Member State concerned            shall  The Member State concerned            shall
without delay notify these measures to       without delay notify these measures to
the other Member States and to the           the other Member States and to the
Commission, which may decide that the        Commission, which may decide that the
Member State concerned shall amend or        Member State concerned shall amend or
abolish such measures, in so far as they     abolish such measures, in so far as they
distort competition and adversely affect     distort competition and adversely affect
trade to an extent contrary to the common    trade to an extent contrary to the common
interest.                                    interest.
ARTICLE 26                                   ARTICLE 24
Member States shall establish a dispute      Member States shall establish a dispute
resolution procedure by which the parties    resolution procedure by which the parties
can settle disputes on matters covered by    can settle disputes on matters covered by
this Directive.                              this Directive in accordance with
                                             Community rules.
                                            56
 ---pagebreak---      ARTICLE 27                              ARTICLE 25
Each Member State shall establish a          Each Member State shall establish a
consultative procedure enabling system       procedure enabling system users in its
users including domestic consumers in its    territory, including domestic consumers,
temtory to be consulted, at least once a     auto-producers or independent producers,
year,    on matters arising under this       the social partners and organisations for
Directive, and in particular on the          the protection of the environment, to be
transmission and distribution system         consulted, at least once a year, on matters
reports established pursuant to Articles 11  arising from the implementation of this
and 19.                                      Directive, and in particular on the annual
                                             estimate and the transmission and
                                             distribution system reports drawn up
                                             pursuant to Articles 11 and 17
                                             respectively.
ARTICLE 28
Member States shall bring into force the
laws, regulations and administrative
provisions necessary to comply with this
Directive by 31 December 1992. They
shall forthwith inform the Commission
thereof.
When Member States adopt these
measures, these shall contain a reference
to this Directive or shall be accompanied
by such reference on the occasion of their
official publication.    The methods of
making such reference shall be laid down
by Member States.
                                            57
 ---pagebreak---                                          ARTICLE 26
                                         1.   The Commission will present a report
                                              to the Council and the European
                                              Parliament before 31 December 1995
                                              and will attach to that report any
                                              harmonization proposals necessary to
                                              the effective operation of the internal
                                              electricity market.
                                         2.   The Council and the European
                                              Parliament will give their views on
                                              such proposals before 12 December
                                              1997.
ARTICLE 29                               ARTICLE 27
The Commission shall review the          The Commission shall review the
application of this Directive and make   application of this Directive and make
appropriate proposals with a view to     appropriate proposals with a view to
establishing the internal market for     establishing the internal market for
electricity.  On the basis of these      electricity.     On the basis of these
proposals the Council shall make the     proposals the Council shall make the
necessary amendments to this Directive,  necessary amendments to this Directive,
for implementation by 1 January 1996.    for implementation on 1 January 1999.
                                         ARTICLE 28
                                         Member States shall bring into force the
                                         laws, regulations and administrative
                                         provisions necessary to comply with this
                                         Directive by 1 July 1994. They shall
                                         immediately inform the Commission
                                         thereof.
                                        58
 ---pagebreak---                                            When Member States adopt these
                                           provisions, these shall contain a reference
                                           to this Directive or shall be accompanied
                                           by such reference at the time of their
                                           official publication. The procedure for
                                           such reference shall be adopted by
                                           Member States.
                                           ARTICLE 29
                                           This Directive shall enter into force on
                                           the twentieth day following that of its
                                           publication in the Official Journal of the
                                           European Communities.
ARTICLE 3Q                                 ARTICLE 30
This Directive is addressed to the Member This Directive        is addressed to the
States.                                    Member States.
Done at Brussels,                          Done at Brussels,
                        For the Council    For the European Parliament   For the Council
                        The President      The President                 The President
                                          59
 ---pagebreak---                                    Amended proposal for a
               EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE
              concerning common rules for the internal market in natural gas
THE COUNCIL OF THE EUROPEAN                     THE EUROPEAN PARLIAMENT AND
COMMUNITIES,                                    THE COUNCIL OF THE EUROPEAN
                                                UNION,
Having regard to the Treaty establishing the    Having regard to the Treaty establishing
European Economic Community, and in             the European Community, and in particular
particular Article 57(2), Article 66 and        Article 57(2), Article 66 and Article 100a
Article 100a thereof,                           thereof,
Having regard to the proposal from the Having regard to the proposal from the
Commission,                                     Commission,
In cooperation with the European Parliament,
Having regard to the opinion of the Having regard to the opinion of the
Economic and Social Committee,                  Economic and Social Committee,
Whereas it is important to adopt measures       Whereas it is important to adopt measures
with the aim of establishing the internal       with the aim of establishing the internal
market as provided for in Article 8a of the     market as provided for in Article 7a of the
Treaty; whereas the internal market is to       Treaty; whereas the internal market is to
comprise an area without internal frontiers in  comprise an area without internal frontiers
which the free movement of goods, persons,      in which the free movement of goods,
services and capital is ensured;                persons, services and capital is ensured;
Whereas the establishing of the internal        Whereas the establishing of the internal
market in natural gas is particularly           market in natural gas is particularly
important both in order to increase the         important in order to increase efficiency in
efficiency of the natural gas industry, while   the industry of this sector, while
reinforcing the Community's security of         reinforcing the Community's security of
suppply, and in order to ensure that all users  supply;
are able to purchase natural gas on an equal
basis, thus avoiding distortion of competition
in user industries;
                                             60
 ---pagebreak---  Whereas the establishing of the internal        Whereas, irrespective of the need to
 market, more particularly in the natural gas    establish a common energy policy, the
 sector, contributes to the achievement of the   establishing of the internal market in the
 objectives of the Community's energy            natural gas sector contributes to the
 strategy by improving environmental             achievement of the objectives of the
 protection and reinforcing security of supply   Community's energy strategy by improving
 through the diversification of energy sources;  environmental protection and reinforcing
                                                 security of supply through the
                                                 diversification of energy sources;
Whereas the establishing of the internal        Whereas the establishing of the internal
natural gas market needs to be progressive      natural gas market needs to be progressive
and to be implemented in phases in order to      and to be implemented in phases in order
enable industry to adjust in a flexible and     to enable industry to adjust in a flexible
ordered manner to its new environment;           and ordered manner to its new
                                                 environment;
                                                Whereas the establishing of the internal
                                                market in the natural gas sector should
                                                favour the interconnection               and
                                                interoperability of systems;
Whereas Council Directives 91/296/EEC of        Whereas Council Directives 91/296/EEC of
31 May 1991 on the transit of natural gas       31 May 1991 on the transit of natural gas
through grids(1) and 90/377/EEC of 29 June      through grids(1) and 90/377/EEC of 29 June
 1991 concerning a Community procedure to        1991 concerning a Community procedure
improve the transparency of gas and             to improve the transparency of gas and
electricity prices charged to industrial end    electricity prices charged to industrial end
users(2), provide for a first phase for the     users(2), as amended by Commission
establishing of the internal natural gas        Directive 93/87/EEC(3), provide for a first
market;                                         phase for the establishing of the internal
                                                natural gas market;
Whereas it is now necessary to take further Whereas it is now necessary to take further
measures with a view to the establishment of measures with a view to the establishment
the internal market for gas;                    of the internal market for gas;
(1)                                             (1)
    OJ No L 147, 12.6.1991, p. 37.                  OJNoL 147, 12.6.1991, p. 37.
(2)                                             (2)
    OJ No L 185, 17.7.1990, p. 16.                  OJ No L 185, 17.7.1990, p. 16.
                                                (3)
                                                    OJ No L 277, 10.11.1993, p. 32.
                                             61
 ---pagebreak---                                               Whereas security of supply and consumer
                                              protection entail a number of public service
                                              obligations of general economic interest
                                              which free competition, left to itself,
                                              cannot be relied upon to fulfil;
                                              Whereas, however, given the continuing
                                              lack of a common energy policy, and in
                                              the light of the need to ensure security of
                                              supply and consumer protection, the natural
                                              gas sector warrants special treatment;
Whereas it is therefore necessary to          Whereas it is therefore necessary to
establish common rules for the licensing      establish common rules for the licensing by
by Member States of the construction and      Member States of the construction and
operation of liquified natural gas (LNG)      operation of liquified natural gas (LNG)
terminals, transmission and distribution      terminals, transmission and distribution
lines and storage facilities and to take such lines and storage facilities and to take such
other steps as are required in order to       other steps as are required in order to
ensure the effective functioning of the       ensure the effective functioning of the
common market;                                common market;
Whereas the establishing of the internal      Whereas the establishing of the internal
market for energy, more particularly in the   market for energy, more particularly in the
natural gas sector, will take into account    natural gas sector, will take into account
the objective of economic and social          the objective of economic and social
cohesion;                                     cohesion, especially in such areas as that
                                              of infrastructure for natural gas
                                              transmission;
Whereas natural gas companies must, in Whereas natural gas undertakings must, in
the internal market, be able to operate on the internal market, be able to operate,
normal commercial principles;                 without prejudice to constraints connected
                                              with public service obligations, on normal
                                              commercial principles;
                                               62
 ---pagebreak---  Whereas provision should be made for           Whereas provision should be made for
 customers and producers of natural gas to      customers and producers of natural gas to
have access to the transmission and             have access to the transmission and
 distribution systems, LNG facilities and       distribution systems, LNG facilities and
 storage facilities, without discrimination     storage facilities, without discrimination
and subject to die availability of capacity     and subject to the availability of capacity
and in return for reasonable remuneration;      and in return for reasonable remuneration;
whereas this provision may be limited          whereas this provision may be limited,
during the next phase by Member States to       during the next phase, by Member States,
large industrial companies and with regard     to large industrial companies and to
to distribution companies under certain         distribution companies;
conditions;
Whereas the transmission grid system is        Whereas the transmission grid system is
controlled by transmission companies each       controlled by transmission undertakings
of which ensures the security and              each of which ensures the security and
 reliability of its part of the system in the  reliability of its part of the system;
interest of producers,         importers and
customers; whereas each transmission
company must behave in an objective,
transparent and non-discriminatory manner
in all aspects of its operation, including the
approval of connections to the system and
charges paid for services provided;
                                               Whereas gas undertakings responsible for
                                               natural gas transmission must adjust
                                               storage and transmission capacity to
                                               demand;
Whereas each distribution system must be       Whereas each distribution system must be
subject to central management and control      subject to central management and control
in order to ensure the security and            in order to ensure the security and
reliability of the system in the interest of   reliability of the system in the interest of
suppliers and of customers; whereas a          suppliers and of customers; whereas a
distribution system operator should            distribution system operator should
therefore be designated and entrusted with     therefore be designated and entrusted with
the management and the development of          the management and the development of
the system; whereas the distribution system    the system; whereas the distribution system
operator must behave in an objective,          operator must behave in an objective,
transparent and non-discriminatory manner      transparent and non-discriminatory manner;
in all aspects of his operation, including
the approval of connections to the system,
and charges paid for services provided;
                                                63
 ---pagebreak---                                              Whereas at the level of distribution,
                                             concessionary rights of local and regional
                                             authorities or the State may be granted;
Whereas the conditions for connection to
the transmission and distribution systems,
LNG facilities and storage facilities, must
be defined by reference to European
specifications where possible or other
international standards and specifications;
Whereas principles of charging should be
clearly laid down in order to ensure fair
and transparent conditions for the use of
LNG terminals, storage facilities,
transmission and distribution systems;
Whereas in order to ensure transparency      Whereas in order to ensure transparency
and non-discrimination the transmission,     and non-discrimination, separate accounts
distribution and storage functions of        need to be kept for the transmission,
vertically integrated undertakings should be distribution and storage functions of
operated as separate divisions with separate vertically integrated undertakings; whereas
accounts; whereas the accounts of all        the accounts of all natural gas undertakings
natural gas undertakings should provide for  should provide for maximum transparency,
maximum transparency, in particular to       in particular to identify possible abuses of
identify possible abuses of dominant         a dominant position, consisting for example
position, consisting for example m           in abnormally high or low tariffs or in
abnormally high or low tariffs or in         discriminatory practices relating to
discriminatory practices relating to         equivalent transactions;
equivalent transactions;
                                             Whereas it is also necessary to provide for
                                             access by the competent authorities to the
                                             internal accounting documents of
                                             undertakings         without       thereby
                                             compromising commercial confidentiality;
Whereas provision must be made for Whereas provision must be made for
safeguards and dispute resolution safeguards and dispute resolution
procedures;                                  procedures;
                                              64
 ---pagebreak--- Whereas specific provision must be made       Whereas specific provision must be made
for safeguards in case of a natural gas       for safeguards in the case of a natural gas
undertaking being in economic difficulties    undertaking being in economic difficulties
because of the impossibility to respect       because of the impossibility to respect
take-off volumes which are part of Take or    take-off volumes which are part of take or
Pay obligations;                              pay obligations;
Whereas, in accordance with the principle     Whereas, in accordance with the principle
of subsidiarity, general principles providing of subsidiarity, general principles providing
for a framework must be established at        for a framework must be established at
Community level, but their detailed           Community level, but their detailed
implementation should be left to the          implementation should be left to the
Member States, thus allowing each             Member States, thus allowing each
Member State to choose the regime which       Member State to choose the regime which
corresponds best to its particular situation; corresponds best to its particular situation;
whereas therefore Member States should,       whereas therefore Member States should,
subject to the provisions of the Treaty and   subject to the Treaty provisions and those
made under the Treaty, remain free to         made thereunder, remain free to determine
determine the detailed criteria for licensing the detailed criteria for licensing
distribution lines and storage and LNG        distribution lines and storage and LNG
facilities; whereas, moreover, Member         facilities; whereas, moreover, Member
States should be able to determine the        States should be able to determine the
extent and the nature of distribution         extent and the nature of distribution
companies' rights (including the grant of     companies' rights (including the grant of
exclusive distribution concessions in         exclusive distribution concessions in
respect of all customers below the            respect of all customers below the
eligibility thresholds for access to the      eligibility thresholds for access to the
transmission and distribution system) and     transmission and distribution system) and
of their public service obligations,          of their public service obligations,
including the obligation to supply, the       including the obligation to supply, the
maintenance of system security and the        maintenance of system security and the
development of the system capability to       development of the system capability to
meet demand; whereas Member States also       meet demand; whereas Member States also
retain the power to regulate all aspects of   retain the power to regulate all aspects of
gas tariffs for final customers who are not   gas tariffs for final customers who are not
eligible for access to the transmission and   eligible for access to the transmission and
distribution system, for instance to ensure   distribution system, for instance to ensure
equal treatment of these customers;           equal treatment of these customers;
                                              65
 ---pagebreak--- Whereas these measures constitute a           Whereas these measures constitute a
second phase of liberalisation; whereas       second phase of liberalisation; whereas
once they have been put into effect some      once they have been put into effect some
obstacles to trade in natural gas between     obstacles to trade in natural gas between
Member States will nevertheless remain in     Member States will nevertheless remain in
place; whereas, therefore, it will be         place; whereas, therefore, it will be
necessary to provide for further market       necessary to provide for further market
liberalisation including in particular a      liberalisation including in particular a
reduction in the barriers to the supply of    reduction in the barriers to the supply of
natural gas by producers to customers;        natural gas by producers to customers;
whereas the precise details of this third     whereas the precise details of this third
phase, which should complete the internal     phase, which should complete the internal
natural gas market, can only be defined in    natural gas market, can only be defined in
the light of experience during the second     the light of experience during the second
phase; whereas a three year period is         phase; whereas the Commission must
sufficiently long to gather the experience    therefore report to the Council and the
on which to base the definition of the third  European Parliament on the application of
and final phase;                              this Directive before the end of this second
                                              phase;
Whereas the present Directive does not Whereas this Directive does not affect the
prejudice the application of the rules of the application of the rules of the Treaty,
Treaty,
                                              66
 ---pagebreak--- HAS ADOPTED THIS DIRECTIVE:                J HAVE ADOPTED THIS DIRECTIVE:
                  Chapter I                                   Chapter I
                    Scope                               Scope and definitions
ARTICLE 1                                   ARTICLE 1
This Directive establishes common rules     This Directive establishes common rules
for the access to the market and for the    for the storage, transmission and
criteria and procedures to be used when     distribution of natural gas. It lays down
licensing the transmission, storage and     the rules relating to the organisation and
distribution of natural gas and for the     functioning of the natural gas sector,
operation of the interconnected system.     access to the market, the criteria and
                                            procedures applicable to the granting of
                                            licences for transmission, storage,
                                            distribution and supply of natural gas,
                                            together with the operation of systems.
ARTICLE 2                                   ARTICLE 2
For the purposes of this Directive:         For the purposes of this Directive:
1.   "Transmission" shall mean the          1.    "transmission" means the transport of
     transport of natural gas through a          natural gas through a high pressure
     high pressure pipeline in view of its       pipeline in view of its delivery to
     delivery to customers.                      final customers or to gas companies
                                                 responsible for distribution or to other
                                                 transmission companies;
     "Transmission company" shall mean 2.         "gas company" means any
     any company that owns or operates a         undertaking carrying out all or some
     high pressure pipeline.                     of the following functions: the
                                                 purchase, storage, transmission,
                                                 distribution or sale of natural gas, and
                                                 which is responsible for the technical
                                                 or maintenance tasks related to those
                                                 functions;
3.   "Distribution" shall mean the 3.            "distribution" means the transport of
     transport of natural gas on local or        natural gas on local or regional
     regional pipeline systems in view of        pipeline systems in view of its
     its delivery to customers.                  delivery to customers;
                                              67
 ---pagebreak--- 4. "Customers" shall mean wholesale 4.         "customers" means gas companies or
   and final purchasers of natural gas.        final customers who purchase natural
                                               gas;
                                           5.  "final customer" means a consumer
                                               purchasing natural gas for his own
                                               consumption.
                                           6.  "large-scale industrial consumer"
                                               means an individual consumer whose
                                               consumption exceeds 25 million m3
                                               per year or such lower figure as may
                                               be specified by the Member State;
5. "LNG facility" shall mean a terminal    7.  "LNG facility" means a terminal
   which is used for the handling of           which is used for the offloading,
   liquified natural gas (LNG).                storage and regasification of liquified
                                               natural gas (LNG);
   "Storage facility" shall mean a 8.          "storage facility" means a facility
   facility owned or operated by a             owned or operated by a producer or a
   producer or a gas company for the           gas company for the storage of gas in
   storage of gas in order to balance          order to balance seasonal, daily and
   supply and demand.                          hourly variations in supply and
                                               demand;
7. "Interconnected System" shall mean a 9.     "interconnected system" means a
   number of transmission and                  number of transmission and/or
   distribution systems which are linked       distribution systems which are linked
   with each other.                            with each other;
8. "Direct line" shall mean a line linking 10. "direct line" means a line linking one
   one or more customers with a point          or more customers with a point of
   of supply without using the                 supply without using               the
   interconnected system.                      interconnected system;
9. "Distribution system operator" shall    11. "distribution system operator" means
   mean an undertaking having the              an undertaking having the
   responsibility of operating and             responsibility of operating and
   developing a natural gas distribution       developing a natural gas distribution
   system.                                     system;
                                            68
 ---pagebreak--- 10. "European specification" shall mean     12. "European specification" means a
     a common technical specification or a      common technical specification or a
    European standard, or a national            European standard, or a national
    standard implementing a European            standard implementing a European
    standard.                                   standard;
11. "European standard" shall mean a        13. "European standard" means a standard
    standard approved by the European           approved by the European Committee
    Committee for Standardization (CEN)         for Standardization (CEN) or by the
    or by the European Committee for            European Committee                  for
    Electrotechnical      Standardization       Electrotechnical       Standardization
    (CENELEC) as a "European Standard           (CENELEC) as a "European Standard
    (EN)" or "Harmonization Document            (EN)" or "Harmonization Document
    (HD)", according to the common              (HD)", according to the common rules
    rules of those organizations.               of those organisations;
12. "Common technical specification"        14. "common technical specification"
    shall mean a technical requirement          means a technical requirement drawn
    drawn up in accordance with a               up in accordance with a procedure
    procedure recognized by the Member          recognized by the Member States
    States with a view to uniform               with a view to uniform application in
    application in all Member States and        all Member States and published in
    published in the Official Journal of        the Official Journal of the European
    the European Communities.                   Communnities;
13. "Ancillary services" shall mean all
    services necessary for the operation
    of transmission or distribution
    systems including in particular
    storage, load balancing, blending,
    reserve gas supply etc..
14. "System user" shall mean any legal      15. "system user" means any legal or
    or natural person supplying to or           natural person supplying to or being
    being supplied by a transmission or         supplied by a transmission or
    distribution system. This shall include     distribution system. This shall include
    in particular producers, importers,         in particular producers, importers,
    transmission companies, distribution        transmission companies, distribution
    system operators, owners of                 system operators, owners of
    independent transmission and                independent transmission and
    distribution lines, suppliers and other     distribution lines, suppliers and other
    customers.                                  customers;
15. "Supplier" shall mean a legal or        16. "supplier" means a legal or natural
    natural person supplying natural gas        person supplying natural gas to
    to customers.                               customers;
                                             69
 ---pagebreak--- 16, "Supply" shall mean the delivery and   17. "supply" means the delivery and sale
    sale of natural gas to customers.          of natural gas to customers or to the
                                               system;
17. "Vertically integrated natural gas     18. "vertically integrated natural gas
    company" shall mean a natural gas          company" means a natural gas
    company performing two or more of          company performing two or more of
    the tasks of production, import,           the tasks of production, import,
    storage, transmission and distribution     storage, transmission and distribution
    of natural gas.                            of natural gas.
                                            70
 ---pagebreak---                  Chapter II                                    Chapter II
            Access to the market               General rules for the organisation of the
                                                                 sector
ARTICLE 3                                     ARTICLE 3
1. Member States shall ensure that natural    1. Member States shall ensure that without
   gas companies are operated on                 prejudice to paragraph 2, natural gas
   commercial principles and shall not           undertakings are operated on
   discriminate         between        these     commercial principles and shall not
   undertakings as regards either rights or      discriminate between these undertakings
   obligations.                                  as regards either rights or obligations.
2. Natural gas companies shall in
   particular be free to adjust the nature of
   their business to the market and to
   establish within the Community
   activities in fields associated with the
   natural gas business.
3. Without prejudice to Article 14(2),
   Member States shall not establish,
   approve, influence or regulate tariffs or
   prices to customers in respect of the
   volume for which these customers
   exercise their right to purchase and to
   be supplied or to contract to purchase
   and to be supplied through the
   transmission and distribution system in
   accordance with Articles 5 and 6.
                                                 Member States may, in accordance with
                                                 Community law, impose public service
                                                 obligations on undertakings operating in
                                                 the natural gas sector as regards the
                                                 security, regularity, quality and price of
                                                 supplies.
                                               71
 ---pagebreak--- ARTICLE 4                                     ARTICLE 4
1. Member States shall grant licences to      1. Member States shall grant licences to
   build or operate LNG facilities, storage      build or operate LNG facilities, storage
   facilities, transmission and distribution     facilities, transmission and distribution
   lines and associated equipment on their       lines and associated equipment on their
   territory, in accordance with paragraphs      territory, in accordance with paragraphs
   2 to 8.                                       2 to 8.
2. Member States shall lay down the 2. Member States shall lay down the
   criteria which shall be met by an             criteria which shall be met by an
   undertaking applying for a licence to         undertaking applying for a licence to
   build or operate LNG facilities, storage      build or operate LNG facilities, storage
   facilities and         transmission and       facilities and        transmission and
   distribution lines. The criteria shall be     distribution lines. The criteria shall be
   objective and non-discriminatory. They        objective   and non-discriminatory and
   shall be published not later than six         relate to:
   months after the date laid down in
   Article 27.
   The criteria shall relate exclusively to :
   - security and safety of lines and            - safety and security of lines and
      associated equipment;                         associated equipment;
   - environmental             protection        - protection of the environment;
      requirements;
   - land use and siting;                        - land occupation and the selection of
                                                    sites;
   - public ground use;                          - use of public ground;
   - technical and financial capacity of         - the technical and financial
      the applicant undertaking.                    capabilities of the applicant
                                                    undertaking.
                                                 The detailed criteria shall be published
                                                 at the latest six months after the date
                                                 given in Article 25.
                                               72
 ---pagebreak--- 4. Member States shall lay down and               Member States shall lay down and
    publish not later than six months after       publish not later than six months after
    the date laid down in Article 27, the         the date laid down in Article 23, the
    procedures to be followed by an               procedures to be followed by an
    undertaking applying for a licence to         undertaking applying for a licence to
    build or operate LNG facilities,              build or operate LNG facilities,
    storage facilities and transmission and       storage facilities and transmission and
    distribution lines. The procedures            distribution lines. The procedures
    shall be non-discriminatory.                  shall be non-discriminatory.
5. Member States shall ensure that the            Member States shall ensure that the
    criteria and procedures are applied in        criteria and procedures are applied in
    a manner which is non-discriminatory          a manner which is non-discriminatory
    and that all applications are handled         and that all applications are handled
    without delay.                                without delay.
    Any change to the criteria and                Any change to the criteria and
    procedures made during the course of          procedures made during the course of
    an application shall be applied in a          an application shall be applied in a
    non-discriminatory manner to all              non-discriminatory manner to all
    applicants whose applications are             applicants whose applications are
    under consideration.                          under consideration.
6. Any right to expropriate private           5. Any right to expropriate private
    property or any right to use public           property or any right to use public
    ground shall be granted in a non-             ground shall be granted in a non-
    discriminatory manner.                        discriminatory manner.
    In so far as the public interest is taken     In so far as the public interest is taken
    into consideration when granting a            into consideration when granting a
    right of expropriation or a right to use      right of expropriation or a right to use
    public ground, a line, an LNG facility        public ground, a line, an LNG facility
    or a storage facility shall be deemed         or a storage facility shall be deemed
    of public interest if:                        of public interest if:
(i) the line or the LNG facility or the (i) the line or the LNG facility or the
    storage facility is necessary to meet         storage facility is necessary to meet
    supply, transmission or distribution          supply, transmission or distribution
    requirements which cannot be                  requirements which cannot be satisfied
    satisfied by the existing systems; or         by the existing systems; or
                                               73
 ---pagebreak--- (ii) a substantial part of the capacity of (ii) a substantial part of the capacity of
     the line, of the LNG facility or of the       the line, of the LNG facility or of the
     storage facility is either open for use       storage facility is either open for use
     by third parties, or made available to        by third parties, or made available to
     the public at a reasonable and                the public at a reasonable and
     equitable price.                              equitable price.
7. Member States may attach conditions 6. Member States may attach conditions
     and requirements to the licence,              and requirements to the licence,
     provided that such conditions and             provided that such conditions and
     requirements are non-discriminatory           requirements are non-discriminatory
     and are no more restrictive than is           and are no more restrictive than is
     necessary to ensure that the criteria         necessary to ensure that the criteria
     are respected.                                are respected.
8. Member States shall ensure that the 7. Member States shall ensure that the
     reasons for any refusal to grant a            reasons for any refusal to grant a
     licence are given to the applicant and        licence are objective and non-
     shall establish a procedure enabling          discriminatory and are given to the
     the applicant to appeal against such          applicant. They shall establish a
     refusals.                                     procedure enabling the applicant to
                                                   appeal against such refusals.
ARTICLE 5                                      ARTICLE 5
1. Subj ect to Article 4(1), Member States (becomes Article 18)
     shall ensure that gas producers and
     suppliers established in their territory
     are able to supply their own premises,
     subsidiaries and affiliate companies
     and customers through a direct line.
2. Subject to Article 4(1), Member States
     shall ensure that any customer
     established in their territory is able to
     purchase and to be supplied with gas
     from a producer or suppliers through a
     direct line.
ARTICLE 6                                      ARTICLE 6
1. Member states shall ensure that gas becomes Article 17(1) (ii)
     producers and suppliers established in
     their territory are able:
                                                74
 ---pagebreak--- (i) to supply their own premises,
      subsidiaries and affiliate companies
      in the same Member State or in
      another Member State through the use
      of the interconnected system, subject
      to the conclusion of agreements with
      the relevant transmission companies
      and distribution system operators
      pursuant to Articles 12 or 19
      respectively.
(ii) to supply or to contract to supply
      customers in the same Member State
     or in another Member State, through
     the use of the interconnected system,
     subject to the conclusion of
     agreements with the relevant
     transmission companies and
     distribution system operators pursuant
     to Articles 12 or 19 respectively.
2. Member States shall ensure that any
     customer established in their territory
     is able to purchase and to be supplied
     or to contract to purchase and to be
     supplied with gas to be delivered from
     a producer or producers through the
     use of the interconnected system,
     subject to the conclusion of
     agreemments with the relevant
     transmission companies             and
     distribution system operators pursuant
     to Articles 12 or 19 respectively. A
     Member State may limit such use of
     the interconnected system:
     - to companies for the supply of sites
        whose       overall     individual
        consumption exceeds 25 mio m3
        per year or such lower figure as
        may be specified by the Member
        State;
                                             75
 ---pagebreak--- to distribution companies, indivually
or in association, whose individual
or aggregated sales represent at
least 1% of overall consumption in
the Member State concerned or
such lower figure as may be
specified by the Member State.
                                      76
 ---pagebreak---                   Chapter III                                  Chapter III
                                                          Storage and transport
      Transmission system operation
ARTICLE 7                                    ARTICLE 5
Member States shall take the measures        Member States shall take the measures
necessary to ensure that transmission        necessary to ensure that transmission
companies act in accordance with Articles    companies act in accordance with Articles
8 to 13.                                     6 to 10.
ARTICLE 8                                    ARTICLE 6
1. The task of operating the integrated      1. The task of operating the integrated
   grid system shall be assured                 grid system shall be assured
   individually by each transmission            individually by each transmission
   company which shall maintain a secure,       company which shall maintain a secure,
   reliable and efficient natural gas system    reliable and efficient natural gas system
   in its part of the interconnected system.    in its part of the interconnected system.
2. Each transmission company shall use 2. Each transmission company shall use
   its best endeavours to develop the           its best endeavours to develop the
   transmission system and to achieve the       transmission system and to achieve the
   expeditious construction of such new         expeditious construction of such new
   transmission capacity as may be needed       transmission capacity as may be needed
   to enable the transmission capacity to       to enable its supply capacity to adjust
   adjust to the demand for the use of that     to demand.
   capacity.
3. Each transmission company shall take         Each transmission company shall take
   all necessary steps to ensure the            all necessary steps to ensure the
   availability of all ancillary services       availability of all ancillary services
   necessary to maintain a high level of        necessary to maintain a high level of
   reliability and security of its system.      reliability and security of its system.
4. Each transmission company shall
   ensure the availability of metered
   operational data and provide interested
   parties with all information necessary
   for settlement and payment.
                                              77
 ---pagebreak--- 5. Each transmission company shall not 4. Each transmission company shall not
   discriminate between users or classes         discriminate between users or classes of
   of users of the system or between users       users of the system and any of its
   of the system and any of the                  affiliates or shareholders.
   transmission        company's        other
   businesses, any businesses affiliated to
   it, or any of its shareholders.
ARTICLE 9                                     ARTICLE 7
1. Each transmission company shall            1. Each transmission company shall
   provide to any other transmission             provide to any other transmission
   company or distribution system                company or distribution system
   operator with which its system is             operator with which its system is
   connected sufficient information to           interconnected sufficient information to
   ensure the secure and efficient               ensure the secure and efficient
   operation and the coordinated                 operation and the coordinated
   development of the interconnected             development of the interconnected
   system.                                       system.
2. Each transmission company shall 2. Each transmission company shall
   facilitate transfers of natural gas to and    facilitate transfers of natural gas to and
   from connected systems. To that end           from connected systems. To that end
   the transmission company shall                the transmission company shall
   conclude all agreements necessary with        conclude all necessary agreements with
   other relevant transmission companies         other relevant transmission companies
   or distribution system operators to           or distribution system operators to
   enable a user connected to its system to      enable a user connected to its system to
   use the interconnected system.                use the interconnected system.
ARTICLE 10                                    ARTICLE 8
Each transmission.company shall prepare       Each transmission company shall draw up
and publish an annual estimate on the         and publish an annual estimate on the
demand for gas in its area and on the         demand for gas in its area and on the
system transmission capability including      transmission system's capacity, including
transfer capabilities to and from             transfer capacity to and from neighbouring
neighbouring systems. The estimate shall      systems.     The estimate shall cover a
cover a period of at least 10 years           period of at least 10 years beginning from
beginning from the year in which it is        the year in which it is drawn up.
prepared.
                                                78
 ---pagebreak---  ARTICLE 11                                  ARTICLE 9
 1. Within a period not exceeding one year   1. Within a period not exceeding one year
    from the date laid down in Article 27,      from the date laid down in Article 23,
    each transmission company shall             each transmission company shall
    develop and publish Technical Rules,        develop and publish technical rules,
    which shall establish the minimum           which shall establish the minimum
    technical design and operational            technical design and operational
    requirements for the connection to its      requirements for the connection to its
    system of LNG facilities, storage           system of LNG facilities, storage
    facilities, customers' natural gas          facilities, customers' natural gas
    installations, other transmission or        installations, other transmission or
    distribution systems, and direct            distribution systems, and direct
    transmission and distribution lines.        transmission and distribution lines.
    These requirements shall be objective       These requirements shall ensure the
    and non-discriminatory and not disturb      interoperability of systems, shall be
    the functioning of the internal market      objective and non-discriminatory and
    for gas.                                    shall not disturb the functioning of the
                                                internal market for gas.
 2. The Technical rules shall be approved 2. The technical rules shall be approved
    by the Member State concerned, which        by the Member State concerned, which
    shall, in accordance with Article 8 of      shall, in accordance with Article 8 of
    Council Directive 83/189/EEC(3), notify     Council Directive 83/189/EEC(4), notify
    to the Commission the rules in respect      to the Commission the rules in respect
    of performance requirements and             of performance requirements and
    connections.                                connections.
3. The Technical Rules shall address at 3. The technical rules shall address at
    least the following:                        least the following:
(a)     pressure requirements;              (a)    pressure requirements;
(b)    conditions for connection to and (b)        conditions for connection to and
       operation of the transmissionsystem,        operation of the transmission system,
       including tariff metering.                  including tariff metering.
(3)                                         (4)
    OJ No L 109, 26.4.1983, p. 8.               OJ No L 109, 26.4.1983, p. 8.
                                              79
 ---pagebreak--- 4. The Technical Rules shall be defined 4. The technical rules shall be defined by
   by reference to European specifications   reference to European specifications
   where these exist.                        where these exist.
   In the absence of European                In the absence of European
   specifications, the Technical Rules       specifications, the technical rules shall
   shall as far as possible be defined by    be defined as far as possible by
   reference to other standards having       reference to other standards having
   currency within the Community.            currency within the Community.
5. The Technical Rules shall be 5. The technical rules shall be
   implemented by the transmission           implemented by the transmission
   company which shall ensure                company which shall              ensure
   compliance by all system users. In        compliance by all system users. In
   instances where a user is subject to      instances where a user is subject to
   differing Technical Rules which are       differing technical rules which are
   applied by two or more transmission       applied by two or more transmission
   companies or distribution system          companies or distribution system
   operators, the transmission company       operators, the transmission company
   shall use its best endeavours to resolve  shall use its best endeavours to resolve
   the differences in cooperation with the   the differences in cooperation with the
   other transmission companies and with     other transmission companies and with
   the distribution system operators         the distribution system operators
   concerned.                                concerned.
6. In the preparation, implementation and 6. In the preparation, implementation and
   enforcement of the Technical Rules,       enforcement of the technical rules,
   there shall be no discrimination          there shall be no discrimination
   between users or classes of users of a    between users or classes of users of a
   system except as necessary to ensure      system except as necessary to ensure
   security and quality of supply. The       security and quality of supply. The
   Rules shall not impose unreasonable       rules shall not impose unreasonable
   requirements or unduly inhibit access     requirements or unduly inhibit access to
   to the system.                            the system.
ARTICLE 12
1. System users and prospective systems
   users may apply to a transmission
   company to enter into an agreement for
   connection to and/or use of its system
   or of an LNG facility or any storage
   facility owned or operated by the
   transmission company.
                                            80
 ---pagebreak--- 2.    In response to such an application,
      the transmission company shall
      propose an agreement for connection
      to and/or use of the interconnected
      system or of the LNG facilities or the
      storage facilities. The transmission
      company may, however, refuse to
      make a proposal for an agreement for
      use of the system including the
      abovementioned facilities, if such use
      would prejudice the transmission or
      storage of natural gas or the import
      or the export of LNG in fulfilment of
      any statutory obligation or contractual
      commitments. The reasons for any
      refusal shall be given to the
      applicants.
      All applications shall be handled in a
      timely manner and a response shall,
      in any event, be given within three
      months following receipt of the
      application.
3.    The proposal for an agreement shall
      include terms relating to an obligation
      on the part of the transmission
      company:
(i) to accept into the relevant system at
      such entry point or points such
      quantities of natural gas as may be
      specified in the application, and/or
(ii) to accept into the relevant LNG
      facilityor storage facility such
      quantities of natural gas as may be
      specified in the application, and/or
(iii) to enable the delivery to be made of
      such quantities of natural gas as are
      referred to in (i) and (ii) (less any
      transmission losses) at such exit point
      or points on the relevant system as
      may be specified in the application.
                                              81
 ---pagebreak--- 4. A transmission company shall, on
   request and at a reasonable charge,
   make available to a potential user, a
   statement of opportunities for
   transactions involving the use of its
   system including any LNG facilities
   and storage facilities which form part
   of the system.
   This statement of opportunities shall
   contain sufficient information to enable
   a potential user to make a reasonable
   assessment of those opportunities.
5. Each transmission company shall
   publish the basis upon which the terms
   for connection to and use of the system
   will be set. The publication shall
   contain sufficient information to enable
   a potential user to make a reasonable
   assessment of the charges that would
   be payable for natural gas transactions
   involving the use of the system,
   including LNG facilities and storage
   facilities which form part of the
   system.
6. The basis upon which the transmission
   company's terms are set shall be such
   that the charges that would be payable
   are reasonably related to the long-term
   costs incurred in the provision of the
   relevant service, together with a
   reasonable rate of return on capital
   employed in the provision of that
   service.
7. The transmission company shall not
   discriminate between any persons or
   classes of persons in the terms for a
   connection to its system or for the use
   of its system.                           i
                                              82
 ---pagebreak--- 8. The contractual right of usage of LNG
   facilities, storage or transmission
   capacities shall be lost if these
   capacities are not used. If capacities are
   partly unused the same shall apply to
   the unused part of the capacity.
ARTICLE 13                                    ARTICLE 10
Each transmission company shall preserve      Each transmission company shall preserve
the confidentiality of commercially-          the confidentiality of commercially
sensitive information obtained in the         sensitive information obtained in the
course of carrying out its business.          course of carrying out its business.
                                               83
 ---pagebreak---                  Chapter IV                                 Chapter IV
                                                  Distribution system operation
       Distribution system operation
ARTICLE 14                                 ARTICLE 11
1. Member States shall define the rights   1. Member States shall determine, in
   and the public service obligations of      accordance with Community law, the
   distribution companies and the rights      rights and the public service obligations
   and obligations of their customers.        referred to Article 3(2) assigned to
                                              distribution companies, together with
                                              the rights and obligations of their
                                              customers.
   Member States may lay upon 2. Member States may impose on
   distribution companies an obligation to    distribution companies, an obligation to
   supply the customers located in a given    supply the customers located in a given
   area, with respect to the volume for       area.  The tariff for such supplies may
   which they do not exercise their right,    be regulated, for instance to ensure
   or do not have the right to be supplied    equal treatment of the customers
   by other suppliers, in accordance with     concerned.
   Articles 5 and 6. Without prejudice to
   Article 3(3), the tariff for such
   supplies may be regulated, for instance
   to ensure equal treatment of the
   customers concerned.
    Member States shall, establish rules:
   - on the procedure to be followed by
      customers who wish to terminate
      supply by the distribution company,
      in particular as regards the minimum
      notice period for termination, which
      shall not exceed three months;
   - on the procedure to be followed by
      customers who wish to resume
      supply from the distribution
      company, in particular on the
      minimum notice period for
      resumption, which shall not exceed
      six months.
                                            84
 ---pagebreak--- 4. Member States shall designate or shall 3. Member States shall designate or shall
    require the undertakings which own or        require undertakings which own or are
    are responsible for distribution systems     responsible for distribution systems
    (including natural gas lines forming         (including natural gas lines forming
    part thereof) to designate a distribution    part thereof) to designate a system
    system operator, which has the               operator, charged with operating and
    obligation to operate and to ensure the      ensuring the maintenance and
    maintenance and development of the           development of the distribution system
    distribution system in a given area.         in a given area.
5. Member States shall ensure that the 4. Member States shall ensure that the
   distribution system operator acts in          distribution system operator acts in
   accordance with the provisions in             accordance with the provisions in
   Articles 15 to 20.                            Articles 12, 13 and 14.
ARTICLE 15                                    ARTICLE 12
1. The distribution system operator shall     1. The system operator shall maintain a
   maintain a secure, reliable and efficient     secure, reliable and efficient natural gas
   natural gas distribution system in its        distribution system in its area.
   area.
2. The distribution system operator shall 2. The system operator shall ensure that
   use its best endeavours to develop the        new distribution capacity is constructed
   distribution system and to achieve the        as may be needed to enable capacity to
   expeditious construction of such new          adjust to demand.
   distribution capacity as may be needed
   to enable the distribution capacity to
   adjust to the demand for the use of that
   capacity.
3. The distribution system operator shall
   ensure the availability of metered
   operational data and provide interested
   parties with all information necessary
   for settlement and payment.
4. The distribution system operator shall
   not discriminate between users or
   classes of users of the system or
   between users of the system and any of
   the undertaking's other businesses, any
   businesses affiliated to it, or any of its
   shareholders.
                                               85
 ---pagebreak--- ARTICLE 16
1. The distribution system operator shall
   provide to any transmission company
   or to the distribution system operator
   of any system with which its system
   is     interconnected       sufficient
   information to ensure the secure and
   efficient operation and the coordinated
   development of the interconnected
   natural gas system.
2. The distribution system operator shall
   cooperate with relevant transmission
   companies and distribution system
   operators to define all the agreements
   necessary for the use of the
   interconnected system by a user
   connected to its system.
ARTICLE 17                                 ARTICLE 13
1. The distribution system operator shall  1. The system operator shall draw up and
   prepare annually a report on the            publish an annual report on the quality
   quality of supply and the quality of        of supply and the quality of service.
   service. The report shall be brought
   to the attention of die authority
   competent for the neighbouring areas,
   and shall be made available to the
   Member State and the SOEC upon
   request.
2. The Commission shall establish the 2. The Commission shall establish the
   appropriate criteria for the content of     appropriate criteria for the content of
   the reports in order to ensure their        the reports in order to ensure their
   comparability on Community level.           comparability at Community level.
                                            86
 ---pagebreak--- ARTICLE 18
 1. Within a period not exceeding one
    year from the date laid down in
     Article 27, the distribution system
     operator shall develop and publish
     Technical Rules,         which shall
     establish the minimum technical
     design and operational requirements
     for the connection to its system of
     storage facilities, customers' natural
    gas installations, transmission and
    other distribution systems and direct
    transmission and distribution lines.
    These requirements shall be objective
    and non-discriminatory and not
    disturb the functioning of the internal
    market for gas.
2. The Technical rules shall be approved
    by the Member State concerned,
    which shall, in accordance with
    Article 8 of Directive 83/189/EEC,
    notify to the Commission the rules in
    respect of performance requirements
    and connections.
3. The Technical Rules shall address at
    least the following:
(a) pressure requirements;
(b) conditions for connection to and
    operation of the distribution system
    including tariff metering.
4. The Technical Rules shall be defined
    by reference          to    European
    specifications where these exist.
    In the absence of European
    specifications, the Technical Rules
    shall as far as possible be defined by
    reference to other standards having
    currency within die Community.
                                            87
 ---pagebreak--- 5. Technical rules shall be complied
   with, implemented and enforced by
   the distribution system operator. In
   instances where a user is subject to
   differing Technical Rules which are
   applied by two or more transmission
   companies or distribution system
   operators, the distribution system
   operator shall use its best endeavours
   to resolve the differences in
   cooperation with the other system
   operator or with the transmission
   companies concerned.
6. In the preparation, implementation and
   enforcement of the Technical Rules,
   there shall be no discrimination
   between users or classes of users of a
   system except as necessary to ensure
   security and quality of supply. The
   Rules shall not impose unreasonable
   requirements or unduly inhibit access
   to the system.
ARTICLE 19
1. System users and prospective system
   users may apply to the distribution
   system operator to enter into an
   agreement for connection to and/or
   use of the interconnected system or of
   a storage facility owned or operated
   by the distribution system operator.
                                          88
 ---pagebreak--- 2.    In response to such an application,
      the distribution system operator
      shall propose an agreement, for
      connection to and/or use of the
      interconnected system or of the
      storage facility. The distribution
      system operator may, however,
      refuse to make a proposal for an
      agreement if such use would
      prejudice the distribution of natural
      gas in fulfilment of any statutory
      obligation       or     contractual
      commitments. The reasons for any
      refusal shall be given to the
      applicant.
      All applications shall be handled in
      a timely manner and, a response
      shall, in any event, be given within
      three months following receipt of
      the application.
3.    The proposal for an agreement shall
      include terms relating to an
      obligation on the part of the
      distribution system operator:
(i) to accept into the relevant system at
      such entry point or points such
      quantities of natural gas as may be
      specified in the application; and/or
(ii) to accept into the relevant storage
      facility such quantities of natural gas
      as may be specified in the
      application; and/or
(iii) to enable the delivery to be made of
      such quantities of natural gas as are
      referred to in (i) and (ii) (less any
      transmission losses) at such exit
      point or points on the relevant
      system as may be specified in the
      application.
                                              89
 ---pagebreak--- 4.  The distribution system operator
    shall, on request and at a reasonable
    charge, make available to a potential
   user a statement of opportunities for
   natural gas transactions involving
   the use of the distribution system,
    including any storage facilities
   which form part of the system.
   This statement of opportunities shall
    contain sufficient information to
    enable a potential user to make a
   reasonable assessment of those
   opportunities.
5. The distribution system operator
   shall publish the basis upon which
   the terms for connection to and/or
   use of the system will be set. The
   publication shall contain sufficient
   information to enable a potential
   user to make a reasonable
   assessment of the charges that
   would be payable for natural gas
   transactions involving the use of the
   system including any storage
   facilities which form part of the
   system.
6. The basis upon which the
   distribution system operator's terms
   are set shall be such that the charges
   that would be payable are
   reasonably related to the long-term
   costs incurred in the provision of the
   relevant service, together with a
   reasonable rate of return on the
   capital employed in the provision of
   that service.
7. The distribution system operator
   shall not discriminate between any
   persons or classes of persons in the
   terms for a connection to its system
   or for the use of its system.
                                          90
 ---pagebreak---       The contractual right of usage of
      distribution capacities shall be lost if
      these capacities are not used. If
      capacities are partly unused the
      same shall apply to the unused part
      of the capacity.
ARTICLE 20                                     ARTICLE 14
The distribution system operator shall         The distribution system operator shall
preserve the confidentiality               of  preserve the confidentiality           of
commercially      sensitive     information    commercially     sensitive    information
obtained in the course of carrying out its     obtained in the course of carrying out its
business.                                      business.
                                                91
 ---pagebreak---                  Chapter V                                   Chapter V
Unbundling and transparency of accounts       Unbundling and transparency of accounts
                                             ARTICLE 15
                                             Member States or any competent authority
                                             they designate shall have right of access to
                                             the accounting documents of production,
                                             transmission or distribution companies
                                             which they must consult in carrying out
                                             their checks.
ARTICLE 21
Member States shall make the necessary
arrangements for ensuring that vertically
integrated natural gas companies organize
their natural gas production, transmission,
storage and distribution activities - as the
case may be - in as many separate
divisions as there are activities. Any State
aid granted to one division may not
benefit another division.
ARTICLE 22                                   ARTICLE 16
1. Member States shall take the necessary    1. Member States shall take the necessary
   steps to ensure that the accounts of         steps to ensure that the accounts of
   natural gas companies are drawn up in        natural gas companies are drawn up in
   accordance with paragraphs 2 to 9.           accordance with paragraphs 2 to 8.
                                               92
 ---pagebreak---  2.   Vertically integrated companies shall,        Vertically integrated companies shall,
     in their internal accounting, keep             in their internal accounting, keep
      separate accounts for each division           separate accounts for their natural gas
     established in accordance with Article        production, transmission, storage and
     21, as they would be required to do if         distribution activities, as they would
     the activities in question were carried       be required to do if the activities in
      out by separate companies, and shall          question were carried out by separate
      publish a separate balance sheet and a        companies, and shall publish a
      profit and loss account for each              separate balance sheet and a profit
      division in their annual management           and loss account for each activity in
      report.                                      their annual management report.
 3.  Natural gas companies, whatever their         Natural gas companies, whatever their
     system of ownership or legal form,            system of ownership or legal form,
     shall draw up, publish and submit to          shall draw up, publish and submit to
     audit, their annual accounts in               audit, their annual accounts in
     accordance with the rules of national         accordance with the rules of national
     legislation concerning the annual             law concerning the annual accounts
     accounts of limited liability                 of limited liability companies adopted
     companies adopted to implement                to implement Council Directive
     Council Directive 78/660/EEC(4).              78/660/EEC(5). Undertakings which
     Undertakings which are not legally            are not legally obliged to publish
     obliged to publish their annual               their annual accounts shall hold a
     accounts shall hold a copy of these at        copy of these at the disposition of the
     the disposition of the public in their        public in their head office.
     head office.
4.   In addition, the profit and loss 4.          In addition, the profit and loss
     accounts of natural gas transmission          accounts of natural gas transmission
     companies and the accounts of the             companies and the accounts of the
     transmission division of vertically           "transmission" activity of vertically
     integrated companies shall distinguish        integrated companies shall distinguish
     natural gas supply costs from                natural gas supply costs from
     transmission costs and other charges.        transmission costs and other charges.
5.   The accounts of natural gas storage     5.   The accounts of natural gas storage
     companies and the accounts of the            companies and the accounts of the
     storage division of vertically                "storage" activity of vertically
     integrated companies shall distinguish       integrated companies shall distinguish
     natural gas supply costs from cushion        natural gas supply costs from cushion
     gas costs and other charges.                 gas costs and other charges.
(4)                                          (5)
    OJNoL 222, 14.8.1978, p. 11                  OJ No L 222, 14.8.1978, p. 11,
                                               93
 ---pagebreak--- 6.  The accounts of natural gas
    distribution companies and the
     accounts of the distribution division
    of vertically integrated companies
    shall distinguish:
(a) natural gas supply costs from
     distribution costs and other charges;
(b) sales of natural gas for industrial
     purposes from sales for other
    purposes.
7.  Companies shall specify in notes to         Companies shall specify in notes to
    die annual accounts the rules for the       the annual accounts the rules for the
    allocation of charges which they            allocation of charges which they
    follow in drawing up the separate           follow in drawing up the separate
    accounts pursuant to paragraph 2.           accounts pursuant to paragraph 2.
    These rules may be amended only in          These rules may be amended only in
    exceptional cases. Such amendments          exceptional cases. Such amendments
    must be mentioned in the annual             must be mentioned in the annual
    management report and must be duly          management report and must be duly
    substantiated.                              substantiated.
8.  The depreciation rules applied to the       The depreciation rules applied to the
    different categories of fixed asset         different categories of fixed asset
     shall appear separately in the notes       shall appear separately in the notes
     among the rules of valuation.              among the rules of valuation.
9.   The annual accounts shall indicate in      The annual accounts shall indicate in
    die notes any important transaction         the notes any important transaction
     conducted with associated or               conducted with associated companies
    affiliated companies within the             within the meaning of Article 33 of
    meaning of Article 33 of Directive          Directive 83/349/EEC(6> or affiliated
    83/349/EEC(5) or with companies             companies or companies which
    which belong to the same                    belong to the same shareholders.
    shareholders.
                                           (6)
(5) OJNoL 193, 18.7.1983, p. 1.                OJNoL 193, 18.7.1983, p. 1.
                                             94
 ---pagebreak---   Chapter VI                      Chapter VI
Final provisions             Access to the system
                 ARTICLE 17
                 1.   Member States shall         take    the
                      necessary measures for:
                 (i)  natural gas undertakings to be able to
                      conclude supply contracts with final
                      customers who are large industrial
                      consumers and with distribution
                      companies on the basis of voluntary
                      commercial agreement;
                 (ii) producers and suppliers of natural gas
                      to be able to supply their own
                      premises, subsidiaries and affiliate
                      companies in the same Member State
                      or in another Member State, by
                      means of the interconnected system,
                      subject to the conclusion of
                      agreements with the relevant
                      transmission       companies       and
                      distribution systems operators;
                 2.   The contracts must be negotiated with
                      the natural gas companies which are
                      the systems operators concerned.
                 3.   Member States shall ensure that the
                      parties negotiate in good faith and
                      that none of them abuses its
                      negotiating position by preventing the
                      successful outcome of those
                      negotiations. The system operator
                      may refuse access where the contract
                      in question would prevent him from
                      carrying out the public service
                      obligations referred to in Article 3(2)
                      which are assigned to him.
                   95
 ---pagebreak--- 4. Member States shall designate a
   competent authority, which must be
   independent of the parties, to settle
   disputes relating to the contracts and
   negotiations in question. Recourse to
   this authority shall be had without
   prejudice to the exercise of rights of
   appeal under Community law.
ARTICLE 18
1. Subject to Article 4, Member States
   shall ensure that all the producers and
   suppliers of natural gas established in
   their territory are able to supply their
   own establishments, affiliates and
   customers by means of a direct line.
2. Subject to Article 4, Member States
   shall ensure that any customer
   established in their territory is able to
   purchase and to be supplied with
   natural gas by a producer or supplier by
   means of a direct line.
 96
 ---pagebreak---                 Chapter VI                                  Chapter VII
              Final provisions                            Final provisions
ARTICLE 23                                  ARTICLE 19
In the event of a sudden crisis in the      In the event of a sudden crisis in the
energy market and where physical safety     energy market and where the physical
or security of persons, apparatus or        safety or security of persons, apparatus or
installations or system integrity is        installations or system integrity is
threatened, a Member State may take the     threatened, a Member State may take the
necessary protection measures.              necessary protection measures.
Such measures must cause the least          Such measures must cause the least
possible disturbance in the functioning of  possible disturbance in the functioning of
the internal market and must no be wider    the internal market and must not be wider
in scope than is strictly necessary to      in scope than is strictly necessary to
remedy the sudden difficulties which have   remedy the sudden difficulties which have
arisen.                                     arisen.
The Member State concerned            shall The Member State concerned            shall
without delay notify these measures to the  without delay notify these measures to the
other Member States and to the              other Member States and to the
Commission, which may decide that the       Commission, which may decide that the
Member State concerned shall amend or       Member State concerned shall amend or
abolish such measures in so far as they     abolish such measures, in so far as they
distort competition and adversely affect    distort competition and adversely affect
trade to an extent contrary to the common   trade to an extent contrary to the common
interest.                                   interest.
                                             97
 ---pagebreak--- ARTICLE 24                                  ARTICLE 20
1. If one or more companies within a            If one or more companies within a
   Member State's territory comes into          Member State's territory comes into
   major economic difficulties because          major economic difficulties because
   their sales of natural gas have fallen       their sales of natural gas have fallen
   below the level of the minimum               below the level of the minimum
   offtake guarantees contained in gas          offtake guarantees contained in gas
   purchase contracts entered into before       purchase contracts entered into before
    1 July 1991, the Member State               1 July 1991, the Member State
   concerned shall notify               the     concerned shall notify the Commission
   Commission of any plan to take               of any plan to take measures to
   measures to alleviate these economic         alleviate these economic difficulties.
   difficulties. Such notification shall be     Such notification shall be made in
   made in advance and shall contain all        advance and shall contain all relevant
   relevant information on the nature and       information on the nature and extent
   extent of the difficulties and on their      of the difficulties and on their causes.
   causes.      The measures must be            The measures must be temporary and
   temporary and limited to those which         limited to those which are necessary
   are necessary to alleviate the               to alleviate the difficulties in question,
   difficulties in question, and must not       and must not adversely affect trade
   adversely affect trade between               between Member States to an extent
   Member States to an extent contrary          contrary to the common interest. The
   to the common interest. The plan shall       plan cannot be put into effect by the
   only be put into effect by the Member        Member State unless it has been
   State with the approval of the               approved by the Commission, which
   Commission, which shall give its             shall give its decision within three
   decision within three months of the          months of the notification.
   notification.
2. The Commission shall make a report           The Commission shall make a report
   to the European Parliament and the           to the European Parliament and the
   Council        on the operation of           Council on the operation of paragraph
   paragraph 1 by 31 December 1994,             1 by 31 December 1996, and shall
   and shall propose any appropriate            propose any appropriate measures in
   measures in relation to the provisions       relation to the provisions of this
   of this Directive.                           Directive.
                                             98
 ---pagebreak--- ARTICLE 25                                   ARTICLE 21
Member States shall establish a dispute      Member States shall establish a dispute
resolution procedure by which the parties    resolution procedure by which the parties
can settle disputes on matters covered by    can settle disputes on matters covered by
this Directive.                              this Directive, in accordance with
                                             Community rules.
ARTICLE 26                                   ARTICLE 22
Each Member State shall establish a          Each Member State shall establish a
consultative procedure enabling system       consultative procedure enabling system
users including domestic consumers in its    users including domestic consumers in its
territory , at least once a year, on matters territory, at least once a year, on matters
arising under this Directive, and in         arising from the implementation of this
particular on the transmission and           Directive, and in particular on the
distribution system reports established      transmission and distribution system
pursuant to Articles 10 and 17.              reports drawn up pursuant to Articles 8
                                             and 13 respectively.
ARTICLE 27
Member States shall bring into force the
laws, regulations and administrative
provisions necessary to comply with this
Directive by 31 December 1992. They
shall forthwith inform the Commission
thereof.
When Member States adopt these
measures, these shall contain a reference
to this Directive or shall be accompanied
by such reference on the occasion of their
official publication.     The methods of
making such reference shall be laid down
by Member States.
                                              99
 ---pagebreak---                                              ARTICLE 23
                                             1. The Commission will present a report
                                                to the Council and the European
                                                Parliament before 31 December 1995
                                                and will attach to that report any
                                                harmonization proposals necessary to
                                                the effective operation of the internal
                                                natural gas market.
                                             2. T h e     Council           and     the
                                                European Parliament will give their
                                                views       on     such      proposals
                                                before 12 December 1997.
ARTICLE 28                                   ARTICLE 24
The Commission shall review the              The Commission shall review the application of
application of this Directive and make       this Directive and make appropriate proposals
appropriate proposals with a view to         with a view to establishing the internal market
establishing the internal market for natural for natural gas. On the basis of these proposals
gas. On the basis of these proposals the     the Council shall make the necessary
Council shall make the necessary             amendments to this Directive,                  for
amendments to this Directive, for            implementation on 1 January 1999.
implementation by 1 January 1996.
                                             ARTICLE 25
                                             Member States shall bring into force the laws,
                                             regulations and administrative          provisions
                                             necessary to comply with this Directive by 1
                                             July 1994. They shall immediately inform the
                                             Commission thereof.
                                             When Member States adopt these measures,
                                             these shall contain a reference to this Directive
                                             or shall be accompanied by such reference at the
                                             time of their official publication. The procedure
                                             for such reference shall be adopted by Member
                                             States.
                                              100
 ---pagebreak--- ARTICLE 29                                ARTICLE 26
This Directive is addressed to the Member This Directive shall enter into force on the
States.                                   twentieth day following that of its publication in
                                          the Official Journal of the European
                                          Communities.
                                          ARTICLE 27
                                          This Directive is addressed to the Member
                                          States.
Done at Brussels,        For the Council  Done at Brussels,
                         The President
                                          For the European Parliament      For the Council
                                          The President                     The President
                                           101
 ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM(93) 643 final
                                                      DOCUMENTS
EN                                                                         10 12
                                 Catalogue number : CB-CO-93-699-EN-C
                                                             ISBN 92-77-62653-4
Office for Official Publications of the European Communities
L-2985 Luxembourg