CELEX: 51993PC0685(01)
Language: en
Date: 1993-01-19
Title: Proposal for a EUROPEAN PARLIAMENT AND COUNCIL DECISION laying down a series of guidelines on trans-European energy networks

COMMISSSION OF THE EUROPEAN COMMUNITIES
                                              COM(93)685 final
                                              Brussels, 19.01.1994
                                              94/0009 (COD)
                                              94/0010 (SYN)
             COMMISSION COMMUNICATION TO THE
          EUROPEAN PARLIAMENT AND THE COUNCIL
              on Community guidelines on trans-European
                             energy networks
                               Proposal for a
      EUROPEAN PARLIAMENT AND COUNCIL DECISION                     94/0009 (COD)
          laying down a series of guidelines on trans-European
                              energy networks
                               Proposal for a
                         COUNCIL DECISION                          94/0010 (SYN)
       laying down a series of measures aimed at creating a more
        favourable context for the development of trans-European
                      networks in the energy sector
                     (presented by the Commission)
 ---pagebreak---            COMMUNITY GUIDELINES ON TRANS-EUROPEAN ENERGY NETWORKS
                                                CONTENTS
                                                                                    Page
   COMMISSION COMMUNICATION
     I.  INTRODUCTION                                                                3
    II.  SUBSIDIARITY                                                                6
   III.  COMMUNITY GUIDELINES ON TRANS-EUROPEAN
         ENERGY NETWORKS
         * Community objectives                                                      9
          * The priorities                                                            9
         * Broad lines of action                                                    10
          A.    Identification of projects of common interest                       10
         B.     Creation of a more favourable technical,administrative, legal
                and financial context for the establishment of trans-European
                energy networks                                                     14
          * External aspects                                                         16
     IV. IMPLEMENTATION OF THE GUIDELINES ON
          TRANS-EUROPEAN ENERGY NETWORKS                                            17
      V. CONCLUSIONS                                                                18
                                                    * * *
    PROPOSAL FOR A EUROPEAN PARLIAMENT AND COUNCIL DECISION
    LAYING DOWN A SERIES OF GUIDELINES ON TRANS-EUROPEAN
    ENERGY NETWORKS
                                                     * * *
    PROPOSAL FOR A COUNCIL DECISION LAYING DOWN A SERIES OF
    MEASURES AIMED AT CREATING A MORE FAVOURABLE CONTEXT
    FOR THE DEVELOPMENT OF TRANS-EUROPEAN NETWORKS IN THE
    ENERGY SECTOR
                                                     * * *
    ANNEX
    Maps of the existing trans-European electricity and natural gas networks and of
              the projects of common interest
             COMMUNITY GUIDELINES ON TRANS-EUROPEAN ENERGY NETWORKS
2)
 ---pagebreak---        COMMUNITY GUIDELINES ON TRANS-EUROPEAN ENERGY NETWORKS
COMMISSION COMMUNICATION
I    INTRODUCTION
1.   Over the last two years the Commission has continued its discussion on energy networks,
     based on two landmark documents adopted at the start of that period which were the fruit of
     earlier work on the subject0*. These two documents were:
           The Treaty on European Union
            The agreement reached at Maastricht bears witness to the unanimous political will of the
            governments of the Member States to see the Community involved in developing
            trans-European networks, including energy networks, and in adapting them to the new
            conditions on the internal market. Details of these new activities by the Community are
            given in Article 129c of the new Treaty. They include:
                   the establishment of common guidelines;
                   any measures necessary to ensure interoperability and harmonization of technical
                   standards;
                   the possibility of financial support for projects of common interest, particularly in
                   the form of aid for feasibility studies, loan guarantees or interest-rate subsidies.
            The provisions of the two proposals for Decisions on trans-European energy networks
             which accompany this Communication and which are submitted by the Commission
             comply with these requirements, as requested by the Council(2).
             The Communication submitted to the Council by the Commission in early 1992 on
             electricity and natural gas transmission infrastructures in the Community(3).
 (,)
      See the communication from the Commission entitled "Towards trans-European networks: for
      a Community action programme" (COM(90) 585 final, 10 December 1990).
 (2)
      See the conclusions of the Council meeting on the internal market on 31 March 1992
      concerning trans-European networks.
 (3)
      Communication from the Commission to the Council entitled "Electricity and natural gas
      transmission infrastructures in the Community" (SEC(92) 553 final, 27 March 1992).
 ---pagebreak---             This document analysed the existing networks and the development projects in progress
            or planned and, taking account of likely supply and demand trends for these two forms
            of energy, highlighted the need for:
                   consistent development of the major energy networks in the Community and the
                   rest of Europe;
                   increased energy transmission capacity, including transmission to the peripheral
                   regions of the Community;
                   promotion of technical cooperation between the network operators.
2.  Today's electricity and natural gas transmission networks reflect the significant developments
    in most Member States in recent years. These national developments have been accompanied
    by international cooperation which has led to the interconnection of the national electricity
    grids, for example in the UCPTE network which extends to most Member States, and to the
    construction of trans-frontier gas pipelines, for example from the Netherlands and Russia.
    However, network development is still shaped by the national dimension, with the objective
    of self-sufficiency at national level, which is no longer strictly compatible with the progress
    made towards integration within the Community, particularly with the completion of the
    internal market. Moreover, these developments have not been the same throughout the
    Community. Some Member States and many frontier or peripheral regions and islands have
     little or no access to the major European energy networks. For these less well endowed
    Member States and regions, development of their energy transmission infrastructure and
     connection to the trans-European networks are one of the preconditions for effective
     participation in the internal market and for strengthening economic and social cohesion within
     the Community.
3.   Recent and foreseeable developments in energy supply and demand point to two trends:
             an increase in transfers of electricity between Member States and to and from
             non-Community countries to harness the complementary features of the different
             electricity systems or to cover any shortfalls in production, whether temporary, seasonal
             or permanent;
             a rapid increase in natural gas imports from outside the Community.
     These extra transfers and new imports will not be possible unless energy transmission
      networks designed and operated increasingly on a Community-wide or European scale and
     offering greater transmission capacity become available.
 4.   Completion of the internal market combined with energy supply and demand trends in the
      Community therefore pose a series of challenges to electricity and gas undertakings and to
      some extent to the public authorities, of which the most important, particularly as regards the
      major energy networks, are:
 ---pagebreak---           bridging of the remaining discontinuities at the interfaces between the national networks;
          increase of the capacity of the interconnections between the electricity grids and of the
          natural gas supply lines;
          connection of isolated or underequipped countries and regions;
          the interoperability of the network at European level and maintenance of quality of
          service (continuity of supply, stability of voltage and frequency, etc.);
          utilization of the networks, as they become increasingly complex with the growing
           number of interconnections and the larger geographical areas connected.
5. Given the magnitude of these tasks, national operations alone are not enough.
   It is therefore necessary for the Community to be able to take action by establishing guidelines
   on electricity and natural gas transmission networks with a view to encouraging development
   and full consideration of the Community dimension of these networks and of the challenges
   posed by their growing interdependence. In this context, the Commission proposes two lines
   of action:
           identification of projects of common interest to supplement and strengthen these
           networks;
           technical, administrative, legal and financial measures to contribute towards creating a
           favourable context for completing projects for the networks.
6. This action by the Community on trans-European energy networks fits into the context of a
   system which is moving towards open and competitive markets. It is therefore necessary that
   undertakings should direct their investment decisions according to their own economic
   forecasts and that they should themselves bear the economic risk. Consequently, the list of
   projects of common interest proposed will have no binding force on the economic operators
   concerned. Instead, the objective is for the Community to establish, taking due account of the
    subsidiarity principle, a reference framework enabling the economic circles concerned to take
    fuller account of the Community dimension in developing and operating energy transmission
    networks.
7.  Alongside this reference framework on trans-European energy networks, the Commission has
    already submitted a proposal for a Council Regulation introducing a declaration of European
    interest for selected projects on the transmission of electricity and natural gas
    (COM(92) 15 final), followed by a proposal modifying it (COM(93) 115 final). This
    declaration is intended to help to mobilize the necessary funds and to promote cooperation
    between the public authorities concerned so as to ensure that projects are completed as rapidly
    as possible. It will be granted to clearly defined projects endorsed by feasibility studies and
    will complement the identification of projects of common interest provided for by the
    guidelines.
 ---pagebreak---      In preparing this Communication, the Commission also drew on the opinions given by experts
     from the Member States, by the trade organizations which it consulted, representing energy
     producers, transmitters and distributors^ and by consumers(5). The Commission proposes to
     renew these consultations periodically, as regards the Member States' experts in the framework
     of the committee which it is proposed to set up, and as regards the trade associations and the
     economic operators on the occasion of drawing up the reports provided for in these proposals
     for Decisions.
II.  SUBSIDIARITY
9.   As regards subsidiarity, the reasons for the annexed proposals to the Council and the European
     Parliament for decisions defining the nature and scope of the action bv the Community to
     establish guidelines on trans-European energy networks are explained below.
      (a)  What are the objectives of me proposed action by the Community in relation to the
           obligations incumbent upon the Community?
            In undertaking this action, the Community is fulfilling the obligations incumbent on it
            under Title XII of the Treaty on European Union.
            The proposed action by the Community on trans-European energy networks will
            contribute towards attaining several of the Community's objectives. These include
            general objectives such as economic growth, the internal market and integration within
            the Community, the strengthening of economic and social cohesion and cooperation with
            the non-Community countries in Europe and in the Mediterranean region. More
            specifically, in the energy field, the action proposed will help to consolidate and
            strengthen the Community's security of supply and to set up energy systems more
            compatible with protection of the environment.
 w > 'UCPTE:                 Union for the coordination of the production and transport of electric
                            power.
      EURELECTRIC: Groupement européen des entreprises d'électricité - GEIE.
      EUROGAS:              Union européenne de l'industrie du gaz naturel.
       E&P FORUM:           The oil industry international exploration and production forum.
       CEDEC:               Confédération européenne des distributeurs publics communaux d'énergie.
       GEODE:               Groupement européen des entreprises et organismes de distribution
                            d'énergie -GEIE.
       ELECTRICITY ASSOCIATION (UK).
       ENERGIENED:          Netherlands union of energy distribution undertakings.
 (5)
       CEFIC:               European Council of chemical manufacturers' federations.
       IFIEC:               International federation of industrial energy consumers.
       BEUC:                European bureau of consumers' unions.
       UNICE:               Union of industrial and employer's confederations of Europe.
 ---pagebreak--- (b)  b the Community aloneresponsiblefor the action planned or does it share responsibility
     with the Member States?
     The Community and the Member States share responsibility for the action proposed.
(c)  What is the Community dimension of the problem (for example, how many Member
     States are concerned and which solution has been in force hitherto)?
     Development of these networks is of concern to every Member State:
           in the case of electricity, because of the expected increase in interchanges of
           electricity, as a result of completion of the internal market, of the growing
            interdependence of the Member States' electricity systems and of the objective of
           making increasingly economic use of these systems;
            in the case of natural gas, because of the growing share of energy consumption
            due to be covered by natural gas imported from non-Community countries and the
            sharp increase expected in the volume of gas transit across one or more Member
            States.
            The Community dimension is also extremely important for the Member States and
            regions with energy systems currently isolated from or inadequately connected to
            the Community's main electricity and natural gas transmission networks. These
            are usually in the least developed areas in the Community.
 (d) Which is the most efficient solution, comparing the means available to the Community
     and to the Member States?
     The proposed action by the Community will raise to Community level plans and
     measures which already exist in the Member States but which can now be handled more
     efficiently at Community level, given the growing complexity and interdependence of
     the electricity and natural gas transmission networks in Europe.
     The Community action proposed supplements the similar measures which the Member
     States are taking at their own level, particularly the master plans, guidelines or
     development plans for energy transmission infrastructure already adopted or in
     preparation.
 (e)  Which specific added value will the proposed action by the Community offer and what
     would be the cost of inaction?
     The proposed action by the Community offers the added value of speeding up the
      process of study, preparation and investment regarding electricity and natural gas
      transmission networks by virtue of:
             the consensus reached by the Community and nie Member States on the future
             development of these networks and on the accompanying measures which prove
             necessary;
 ---pagebreak---             the targeting of the interests of undertakings in the industries concerned and of
            investors;
            guidance for the financial support from the Community, whether aid from the
            Structural Funds, specific measures to support trans-European networks or loans
            from, in particular, the EIB (see the new lending facility set up as part of the
            growth initiative).
     The cost of inaction would be the sum total of:
            development of electricity and natural gas transmission networks lagging behind
            future needs and less consistent on a Community-wide scale;
            the adverse impact on operation of the internal market and cohesion.
(f)  Which forms of action are opentothe Community (recommendations, financial support,
     regulations, mutualrecognition,etc.)?
     Two forms of action are proposed:
             the adoption of the proposals for decisions submitted by the Commission to settle
             the nature and scope of the action by the Community with regard to guidelines on
             trans-European energy networks. These decisions would define:
                   the broad guidelines for future development of these networks; and
                   accompanying actions to create a favourable context for preparation and
                   implementation of projects of common interest;
             within the framework of the budget procedures, where appropriate, the granting of
             financial aid from the funds specifically for trans-European networks to projects
             of common interest fitting into the series of guidelines.
 (g) Are uniform rales necessaiy or would a directive setting the general objectives but
     leaving implementation to the Member States suffice?
     At this juncture, uniform legislation, i.e. the Council Decision, is needed to define and
      delimit the action taken by the Community on trans-European energy networks.
      At a later stage, in the light of the accompanying actions provided for, particularly of
     the analyses of the authorization procedures for projects and of the rules on
      environmental and health protection, approximation of certain rules in force in the
      Member States could be useful or necessary, given the transfrontier nature of most of
      the network development work proposed and the overriding need for undertakings to be
      able to complete projects within a manageable timescale commensurate with trends in
      energy supply and in demand on the market.
      In these cases, the action by the Community could take the form of a recommendation
      or, if need be, a directive.
 ---pagebreak---     ffl. COMMUNITY GUIDELINES ON TRANS-EUROPEAN ENERGY NETWORKS
    10.  First, the Community guidelines proposed clearly define the Community objectives to which
         the trans-European energy networks are expected to contribute. Next they set the priorities
         for development of the networks to ensure that they make an effective contribution to attaining
         these objectives. Lastly, they clarify the broad lines of action envisaged for developing these
         networks, including identifying projects of common interest and creating a more favourable
         context for completing the projects for the networks.
         Community objectives
     11. The action taken by the Community to establish guidelines on trans-European energy networks
         by promoting the development, interconnection and interoperability of the networks as well
         as access to such networks will contribute to achieving the following objectives of the
         Community:
                 strengthening the Community's security of energy supply:
                       in the short to medium term, by improving the efficiency and reliability of all the
                       Community's electricity and gas systems;
                       in the long term, by diversifying supply sources and routes and strengthening ties
                       with the non-Community countries supplying energy or transited;
                 allowing effective operation of the internal market in two ways:
                       by providing infrastructure which allows supply to respond to the demand for
                       natural gas and electricity throughout the Community, and thereby to ensure
                       balanced operation of the internal energy market;
                       by allowing the citizens of the Community, economic circles and regional and
                       local authorities to reap the full benefits derived from the establishment of an area
                       without internal borders;
                 promoting economic and social cohesion by reducing the isolation and facilitating the
                 development of the less-favoured and peripheral regions and islands.
          The priorities
     12.  To attain these objectives, the Commission proposes the following priorities for the action
          taken under the Community guidelines on trans-European energy networks:
                 for electricity networks:
                        connection of isolated networks, which are usually located in the less-developed
                        regions of the Community;
13)
 ---pagebreak---                  development (establishment or improvement) of interconnections between Member
                 States and of internal connections in so far as this is indispensable to the operation
                 of these interconnections;
                 development (establishment or strengthening) of interconnections with
                 non-Community countries in Europe and the Mediterranean region which
                 contribute to improving the reliability and security of the Community's electricity
                 supply networks or add to electricity supplies to the Community;
          for natural gas networks;
                  introduction of natural gas to new regions;
                  connection of isolated networks to the trans-European networks, including any
                  improvements needed to the latter for that purpose and connection of the separate
                  networks;
                  increase in transmission (gas delivery pipeline), reception (LNG) and storage
                  capacities needed to satisfy the demand and diversification of supply sources and
                  routes for natural gas.
    The priorities proposed set no chronological order but indicate the political and strategic
    importance of the measures. These priorities are to be set for the period between now and the
    year 2000 but by no means preclude projects planned to start after that date but to which a
    commitment is made by then. This date marks the maximum timescale for which reasonably
    valid forecasts can be made in connection with energy transmission networks.
    Broad lines of action
13. The broad lines of action proposed for the Community guidelines on trans-European energy
    networks are:
           identification of projects of common interest:
           creation of a more favourable context for completion of the projects for trans-European
           energy networks, with the aid of technical, administrative, legal and financial measures.
A.   Identification of projects of common interest
14.  The Commission proposes a three-stage procedure for identification of projects of common
     interest:
           first, technical definition of the types of project which can be taken into consideration
           in this approach to trans-European energy networks;
           second, establishment of the criteria which must be met by all projects of common
            interest;
                                                   10
 ---pagebreak---             third, identification of the currently discernible needs for strengthening of the networks.
     These proposals take account of the information received during the Commission's
     consultations with experts from the Member States and from the industries concerned.
15.   Technical definition
     From the technical point of view, the proposal is to take into consideration, basically, very
     high voltage electricity lines (220 kV or more) and high-pressure gas pipelines. The
     definition will also include the equipment essential for operation of these lines and pipelines,
     including control centres.
16.  Criteria for establishing common interest
     The proposal is that projects will be considered of common interest if they satisfy all three of
     the following criteria:
             correspond to the technical definition;
             fit in with the objectives and priorities set by these Community guidelines;
             display potential economic viability.
      The criterion of the economic viability of a project has regard in the first instance to financial
     profitability. Moreover, it also includes where appropriate other components of cost-benefit
      analyses which are not normally calculated by the markets, for example the benefits (or costs)
      arising from the environmental aspects, security of supply and the contribution to
      strengthening economic and social cohesion.
      List of projects of common interest for trans-European energy networks identified in 1993
 17.  The proposed list of projects of common interest for electricity and gas networks is annexed
      to the proposal for the "guidelines" Decision. It indicates the projects currently regarded as
      satisfying the common interest criteria defined earlier.
      Each project on the list corresponds to a need for capacity identified in the network. To
      simplify the format, the projects have been classified by type of need and, where appropriate,
      by link, region or country. It is possible that one or more projects or parts of specific projects
      could satisfy the same need. The types of needs identified in the list are described in points 18
      and 19.
      According to the second paragraph of Article 129d of the Treaty, guidelines and projects of
      common interest relating to the territory of a Member State require the approval of that
      Member State. Member States have been consulted and have given their agreement, in
      principle, to the projects on the list which concern their territories.
                                                     11
 ---pagebreak---     The list includes a number of less advanced projects of common interest which are presumed
    to be economically viable, although this will have to be confirmed by technical and economic
    feasibility studies.
    In addition to the projects on the list, any project to improve the technical management of the
    trans-European electricity and natural gas networks will also be of common interest (see
    point 20).
18.  In the case of electricity networks, the following types of need are identified on the list:
    (a)    connection of isolated electricity networks
           The twin aims are to connect the national systems to the Community networks, as in the
           case of Greece and Ireland where the electricity networks are still isolated but will be
           connected to the UCPTE network via Italy and the United Kingdom respectively, and
           to extend the national networks in order to integrate areas not yet connected or
           inadequately connected, for example the eastern Lander or territory in the form of
           islands.
     (b)   improvement of the electrical interconnections between the Member States
           The aim is to reinforce the international interconnections in order to increase security
           of supply throughout the interconnected system in Europe and to allow increased
           transfers of electricity on the more integrated internal market. These improvements are
           necessary given the virtual saturation of most of the existing interconnections.
     (c)   improvement of electricity networks witinn the Member States associated with
           improvement of the electrical interconnections between the Member States or with third
            countries
            In grid networks power is transmitted indiscriminately from all generators to all users
            via the network. Bottlenecks can therefore arise both within the network of a single
            Member State and at the interfaces between the Member States. These weak spots can
            impair operation of the system and pose a risk of power cuts. They must therefore be
            removed.
      (d)   establishment or improvement of electrical interconnections with third countries
            The objective is to establish or increase the capacity of interconnections between the
            Member States and their non-Community neighbours, i.e.:
                   with Switzerland and Austria, both of which are on the UCPTE network and
                  occupy a central position in intra-Community transfers;
                   with the Scandinavian countries to harness the complementary features between
                   the UCPTE/United Kingdom system (dominated by thermal power station
                   capacity) and the Nordel network (with its abundant hydroelectricity resources);
                                                   12
 ---pagebreak---                  with the countries of Central and Eastern Europe, which plan interconnection with
                 the UCPTE's synchronous system in the medium term. This will offer the
                  Community the advantages of new opportunities for transfers and, in the long
                 term, improvements to the electricity systems in its frontier regions;
                  with non-Community Mediterranean countries to contribute to the Community's
                  electricity supply (in the case of the Tunisia-Italy and Turkey-Greece links) or to
                  promote integration of regional markets (in the case of the Morocco-Spain link).
19. In the case of gas networks, the following types of need are identified on the list:
    (e)   introduction of natural gas in new regions
          Parts of the Community still have no natural gas network. Introduction of this fuel can
          make a major contribution to their competitiveness and economic development, to
          diversification of their energy supplies and to solving their environmental problems.
    (f)   connection of isolate or separate gas networks
           Some Member States or regions of the Community with gas networks are not yet linked
          to the interconnected gas transmission pipeline system. Also, some neighbouring
           Member States which already have natural gas, or soon will, are not yet interconnected.
    (g)    increasingreceptionand storage capacities for LNG and underground storage capacity
           Increased storage capacity is needed to cope with the growth in consumption and in the
           share of the Community's energy supplies accounted for by natural gas, also taking
           account of the growing dependence on natural gas supplies from outside the Community.
           It is therefore both a question of security of supply and of increased needs for storage
           capacity connected with the increase in volume of the market
           In addition to their storage capacity, the LNG stations forming part of the basic
           infrastructure of the natural gas transmission grids expand the potential supply, even
           from far-away distant sources.
     (h)   new gas delivery pipelines (and improvement of the existing systems)
            To cope with the forecast developments on the market and in natural gas supplies,
            measures must be taken to develop me gas transmission pipeline capacity from the
            current suppliers (Algeria, Norway and Russia) and from potential suppliers (Libya and
            Iran). In addition, the completion of these projects will be in accordance with European
            Union policy towards the third countries concerned.
            For certain gas delivery pipeline projects not yet finalized LNG could be an attractive
            alternative.
                                                    13
 ---pagebreak--- B.  Creation of a more favourable technical, administrative, legal and financial context for the
    establishment of trans-european energy networks
    Technical measures
20. The operators of the trans-European energy networks already cooperate closely on technical
    matters. However, with the steady increase in interconnections and the growing complexity
    of the systems, closer technical cooperation between the operators of trans-European networks
    is necessary to ensure maximum interoperability of the networks on a Community scale.
    Closer technical cooperation could be achieved in particular by means of projects aiming at:
           setting up and making wide use of a system for the presentation and exchange of
           information between the system control centres of the trans-European networks;
           conducting research and development work on more effective, compatible simulation and
           trans-European network management models between the various operators and control
           centres.
    As indicated in point 17, the Commission proposes that these too should be considered
    projects of common interest.
    It is understood that this technical cooperation has to be carried out within the rules of the
    Treaty and in particular the rules relating to competition.
     Administrative and legal measures
21.  Authorization criteria and procedures
     Development of these networks will require completion of a series of new projects. This raises
     two questions about the existing administrative and legal obligations. The first concerns access
     to the activity, specifically the right to construct an electricity line or gas pipeline. At the
     moment in most Member States mis is restricted by de jure or de facto monopolies. The
     second concerns the complexity and, in some cases, slowness of the administrative procedures
     for obtaining building permission. In extreme cases, undertakings have had to wait for as long
     as ten years before being able to start work.
     The proposals for Council directives concerning common rules for the internal market in
     electricity and natural gas (COM(91) 548 final), currently being discussed, introduce the
     principle of granting licences for the construction of electricity and natural gas transmission
     networks, thereby making it possible to harmonize the conditions applicable to investors, on
     the basis of objective and non-discriminatory criteria.
     In addition, a detailed inventory of authorization procedures is being compiled, with a view
     to pinpointing ways of simplifying and speeding up these procedures. The proposal is to
      examine, on the basis of this inventory and in coordination with the Member States, possible
      ways of simplifying and speeding up authorization procedures for projects on trans-European
      networks.
                                                  14
 ---pagebreak--- 22.  Environmental impact of energy networks
     Environmental considerations are often the central concern in debates on the acceptability of
     the siting and impact of projects connected with energy networks. Clarification of the rules
     applied by undertakings in order to mitigate the environmental impact of the projects and of
     the regulations and standards to be observed by the projects themselves should shorten these
     debates and thereby simplify the authorization procedures.
     It will therefore be necessary to collect information on the existing rules and specifications on
     the environmental impact of energy networks (primarily the very high voltage electricity
     networks). Analysis of these data will provide a basis for coordinated action at Community
     level to study and, where appropriate, define a common basis for the technical aspects linked
     to environmental protection, applicable to energy networks, within the framework of existing
     Community rules (in particular Directive 85/337).
23.   Investment in energy transmission infrastructure has to be financed with due regard for the
      rules of the market. Responsibility for the development and financing of energy networks lies
      with the economic circles concerned.
24.   However, in order to speed up completion of the networks, the Community could support the
      efforts made by the Member States to finance projects of common interest identified in the
      Community guidelines on trans-European networks. Such support could take three forms:
             aid for financing feasibility studies;
             loan guarantees;
             interest-rate subsidies.
 25.  In the energy sector, the Community's financial support for specific action on trans-European
      networks should provide incentives for carrying out projects of common interest. It should
      consist principally of promoting the feasibility studies for these projects, where appropriate.
      In appropriate cases, more substantial support in the form of a loan guarantee or interest-rate
       subsidy could be considered. This financial support should also provide a stimulus for
      technical studies and projects covering the development and management of interconnected
       electricity and natural gas transmission systems (see point 20).
 26.   Where necessary, the Community will continue to provide funding for energy projects from
       its aid and loan mechanisms, particularly the Structural Funds (primarily the ERDF), the
       growth initiative (European Investment Fund and new lending facility), the European
       Investment Bank and the financial instruments and programmes set up for the benefit of third
       countries. These funds, instruments and programmes will likewise take account of the
       guidelines laid down for trans-European energy networks in their criteria for selecting the
       measures to receive support, within the terms of their own rules and finalities.
                                                    15
 ---pagebreak---      External aspects
27.  These guidelines have been established primarily from the Community's point of view.
     However, they will have implications beyond the Community, particularly:
           recognition of the interest of a project by the non-Community countries concerned too;
           the possibility of financial support for networks outside the Community;
            extension of the concept of guidelines on energy networks to the non-Community
            countries in Central and Eastern Europe.
28.  Accordingly, completion of a project of common interest - for example, construction of a gas
     delivery pipeline from a source outside the Community - depends on agreement to the work
     by the energy-producing country and any non-Community country or countries crossed.
     Recognition that a project of common interest identified in the Community guidelines is in the
     mutual interest of the Community and of a non-Community country could be settled where
     appropriate by means of bilateral cooperation, association or other agreements between the
     Community and the non-Community country concerned and by the procedures for
     management of such agreements.
29.  Another question is the possibility of allocation of die budget resources specifically for
     trans-European energy networks to parties to projects of common interest identified under the
     Community guidelines but sited outside the Community.
     Given the technical conditions for electricity and natural gas transmission schemes, which
     preclude full use of a line or gas pipeline until completion of the whole link, the Commission
     considers that it should be possible to finance parts of projects of common interest outside the
     Community:
            in every case where the aid takes the form of a contribution towards feasibility studies;
            only if the project is concerned predominantly with supplying the Community, in the
             case of loan guarantees and interest-rate subsidies.
     In addition to these possibilities, the Community could participate in the direct co-financing
     of certain investments for infrastructure networks in the countries of Central and Eastern
      Europe, within the limit of 15% of the overall budget for the PHARE programme (see
      Conclusions of the Presidency of the Copenhagen European Council, 21-22 June 1993).
 30.  As the non-Community countries in Central and Eastern Europe have expressed the wish for
      more effective interconnection with the Community networks and, therefore, need to be
      interconnected to one another more efficiently too, there will be a growing need for guidelines
      on energy networks for this part of Europe too. The Commission will support this action in
      the framework of the Community programmes in favour of those countries.
                                                   16
 ---pagebreak---         Definition of guidelines on trans-European energy networks for Central and Eastern Europe
        will call for the establishment of a cooperation procedure between the non-Community
        countries concerned and of concertation arrangements with the Community. The results of the
        studies conducted under the PHARE programme on electricity and gas interconnections in this
        part of Europe will be able to provide the basis for the establishment of reference guidelines
        for the development of energy networks in Central and Eastern Europe.
    IV. IMPLEMENTATION OF THE GUIDELINES ON TRANS-EUROPEAN ENERGY
        NETWORKS
    31. The proposals for implementation of the Community guidelines on trans-European energy
        networks are as follows:
               the Commission's tasks will be:
                     to monitor implementation of the guidelines and submit a regular report on
                     implementation thereof to the Council and the European Parliament;
                     to update the list of projects of common interest;
                     to formulate proposals so that projects of common interest situated on the territory
                      of third countries may also be considered as of mutual interest by those countries;
                      to coordinate the activities to create a more favourable technical, administrative
                      and legal context;
                      to adopt the measures granting financial support from the Community to projects
                      of common interest, from the financial resources available for the specific
                      measures on trans-European networks.
               the Member States will be called upon to give priority to projects of common interest
                and to take all the measures necessary at national, regional and local level to facilitate
                completion thereof.
    32.  For the purpose of implementing the abovementioned tasks, the Commission is to be assisted
         by an advisory committee consisting of experts on trans-European energy networks from the
         Member States, while the task of updating the list of projects of common interest will be
         entrusted to a management committee.
         This advisory committee will also be the appropriate forum for discussing any matters relating
         to coordination of the Member States' policies with an impact on the development of
         trans-European energy networks.
                                                      17
(4)
 ---pagebreak--- V.  CONCLUSIONS
33. For the foregoing reasons, the Commission hereby submits to the European Parliament and
    the Council the attached two proposals for Decisions:
            the first, on a series of guidelines on trans-European networks in the energy sector, and
            the second, on a series of actions aimed at creating a more favourable context for the
            development of trans-European networks in the energy sector.
    These proposals from the Commission respond, for the energy sector at least, to the request
    by the European Council in Copenhagen, which "invited the Commission and the Council to
    complete by early 1994 the network plans in all the relevant sectors (transport,
    telecommunication and energy)."
34. These proposals are made on the basis of Articles 129b, 129c and 129d of the Treaty.
    Article 129d, in particular, provides for different adoption procedures, as regards the role of
    the European Parliament, according to whether it is a question of guidelines in the sense of
    the Treaty (co-decision procedure under Article 189b) or other measures (procedure under
     Article 189c) concerning trans-European energy networks. It is for this reason mat the material
     covered by this Communication is the subject of two different proposals.
     It is also necessary to recall that Article 129d also stipulates that "guidelines and projects of
     common interest which relate to the territory of a Member State shall require the approval of
     the Member State concerned"; it mus introduces a supplementary condition into the adoption
     procedure for the first proposal.
                                                  * * *
                                                     18
 ---pagebreak---                                            Proposal for a
                    EUROPEAN PARLIAMENT AND COUNCIL DECISION
                       laying down a series of guidelines on trans-European
                                          energy networks
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular the first
paragraph of Article 129d thereof,
Having regard to the proposal from the Commission,
Having regard to the opinion of the Economic and Social Committee(1>,
Having regard to the opinion of the Committee of the Regions*2*,
Whereas the establishment and development of trans-European networks contribute towards attaining
major objectives of the Community, such as completion of the internal market and the strengthening
of economic and social cohesion;
Whereas the establishment and development of trans-European energy networks throughout the
territory of the Community also have the specific objectives of increasing the reliability and security
of the Community's energy supplies and of allowing balanced operation of the internal energy
market within the framework of a system which is moving towards open and competitive markets;
Whereas, in order to contribute towards attaining the said objectives, the development of
interconnections and of electricity and natural gas transmission networks in the Community must
be accelerated, particularly in the regions where improvements to the networks are necessary or in
regions which are still isolated, and with the non-Community countries in Europe and in the
Mediterranean region;
Whereas action by the Community to establish guidelines on trans-European energy networks is
necessary in accordance with the principle of subsidiarity;
 Whereas in order to develop these networks on a Community-wide scale, it is necessary to identify
projects of common interest and to create a more favourable technical, administrative, legal and
 financial context for completion and operation of these networks;
 (i)
 (2)
                                                  19
 ---pagebreak--- Whereas the projects of common interest meet the said objectives and priorities; whereas only those
projects should be considered which display potential economic viability; whereas, in this context,
the concept of viability includes not only the financial profitability of the projects but also other
considerations such as the reliability and security of energy supplies, the strengthening of economic
and social cohesion and protection of the environment in the Community;
Whereas, for the implementation of this Decision, it is necessary to institute a Committee,
HAVE ADOPTED THIS DECISION:
                                                 Article 1
This Decision defines the nature and scope of the action by the Community on guidelines on
trans-European energy networks. It establishes a series of guidelines covering the objectives,
 priorities and broad lines of action by the Community on the subject of trans-European energy
 networks. It identifies the projects of common interest on the trans-European electricity and natural
gas networks.
                                                Article 2
 This Decision applies to:
 1.     in electricity networks:
              all lines of 220 kV or more and submarine links, provided this infrastructure is used for
              interregional or international transmission;
              the systems for operating the abovementioned facilities, i.e. the protection, monitoring
              and control systems, as well as any equipment or installations indispensable for the
              system in question to operate properly;
 2.     in natural gas networks:
              high-pressure gas pipelines making it possible to supply regions of the Community from
              internal or external sources;
              underground storage facilities connected to the abovementioned high-pressure gas
              pipelines;
               the reception, storage and regasification facilities for liquefied natural gas (LNG);
               the systems for operating the abovementioned facilities, i.e. the protection, monitoring
               and control systems, as well as any equipment or installations indispensable for the
               system in question to operate properly.
                                                     20
 ---pagebreak---                                                 Article 3
The Community shall promote the interconnection, interoperability and development of
trans-European energy networks and access to such networks with the objective of:
      allowing effective operation of the internal market in general and of the internal energy market
      in particular;
      facilitating the development and reducing the isolation of the less favoured regions of the
      Community, thereby contributing to strengthening economic and social cohesion;
      strengthening the security of the Community's energy supplies, including closer relations with
      non-Community countries in the energy field.
                                                Article 4
The priorities for the action by the Community on trans-European energy networks shall be as
follows:
 1.   for electricity networks:
             the connection of isolated electricity networks;
             the development of interconnections between Member States and of internal connections
              in so far as necessary in order to harness these interconnections;
             the development of interconnections with non-Community countries in Europe and the
              Mediterranean region which contribute to improving the reliability and security of the
              Community's electricity supply networks or to adding to electricity supplies to the
              Community;
 2.    for natural gas networks:
              the introduction of natural gas to new regions;
              the connection of isolated natural gas networks, including the improvements needed to
              the existing networks for this purpose and the connection of the separate natural gas
              networks;
               increasing the transmission (gas delivery pipeline), reception (LNG) and storage
              capacities needed to satisfy the demand and diversification of supply sources and routes
               for natural gas.
                                                    21
 ---pagebreak---                                               Article S
The broad lines of action by the Community on trans-European energy networks shall be:
     the identification of projects of common interest;
     the creation of a more favourable technical, administrative, legal and financial context for
     development of the networks.
                                              Article 6
1.   Any energy network project which satisfies all the following criteria may be of common
     interest:
            it falls within the scope of Article 2;
            it corresponds to the objectives and priorities set out in Articles 3 and 4 respectively;
            it responds to a need and displays potential economic viability to be confirmed.
2.    The projects of common interest are those listed in the Annex.
3.    Any application by a Member State or the Commission for amending the list of projects of
      common interest set out in the Annex shall be decided in accordance with the procedure laid
      down in Article 7. The criteria set out in paragraph 1 shall apply in deciding the application.
      A project may not be included in the list unless each Member State to whose territory the
      project relates has approved its inclusion.
4.    Member States shall take all relevant measures at national, regional and local level to facilitate
      completion of projects of common interest. In particular the national authorisation procedures
      shall be completed as rapidly as possible.
 5.   Where parts of projects of common interest are situated on the territory of third countries, the
      Commission is to put forward adequate proposals, where appropriate, within the framework
      of the management of the agreements between the Community and those third countries, for
      the projects also to be recognized as of common interest reciprocally by the third countries
      concerned.
 6.   The evaluation of economic viability referred to in the third indent of paragraph 1 shall be
      based upon an overall cost-benefit analysis, which shall take account of all benefits such as
      environmental aspects, security of supply and the contribution to economic and social
      cohesion.
                                                Article 7
 1.   A committee composed of the representatives of the Member States and chaired by the
      representative of the Commission is hereby instituted.
                                                    22
 ---pagebreak---       Any application for amendment of the list of projects of common interest made by the
      Commission or a Member State shall be submitted by the Commission to this Committee in
      accordance with the procedure laid down in paragraph 2.
2.    The representative of the Commission shall submit to the committee a draft of the measures
      to be taken. The committee shall deliver its opinion on the draft within a time limit which the
      chairman may lay down according to the urgency of the matter. The opinion shall be delivered
      by the majority laid down in Article 148(2) of the Treaty in the case of decisions which the
      Council is required to adopt on a proposal from the Commission. The votes of the
      representatives of the Member States within the committee shall be weighted in the manner
      set out in that Article. The chairman shall not vote.
      The Commission shall adopt measures which shall apply immediately. However, if these
      measures are not in accordance with the opinion of the committee, they shall be communicated
      by the Commission to the Council forthwith. In that event, the Commission may defer
      application of the measures which it has decided for a period of not more than one month
      from the date of such communication.
      The Council, acting by a qualified majority, may take a different decision within the time limit
      referred to in the previous paragraph.
                                              Article 8
Every two years the Commission shall submit a report on the implementation of this Decision to
the European Parliament, the Council, the Economic and Social Committee and the Committee of
the Regions.
                                              Article 9
This Decision shall enter into force on the third day following that of its publication in the Official
Journal of the European Communities.
                                              Article 10
 This Decision is addressed to the Member States.
 Done at Brussels,
       For the European Parliament                          For the Council
       The President                                        The President
                                                  23
 ---pagebreak---                                                                                    ANNEX
                       TOANS-EUROPEAN ENERGY NETWORKS
                             List of projects of common interest
ELECTRICITY NETWORKS
a.  Connection of isolated electricity networks:
    al   Northern Ireland - Scotland
    a2   Ireland - United Kingdom
    a3   Germany: connections to the eastern Lander
    a4   Greece - Italy
    a5    Greece: connection of Crete
    a6    Spain: connection of the Balearic Islands
b.  Improvement of the electrical interconnections between the Member States:
    bl    Germany - Denmark
    b2    Germany - The Netherlands
    b3    Germany - Belgium
    b4    France - Belgium
    b5    France - Germany
    b6    France - Italy
    b7    France - Spain
    b8    Belgium - The Netherlands
    b9    Belgium - Luxembourg
    blO:  Spain - Portugal
c.  Improvement of electricity networks within the Member States associated with improvement
    of the interconnections between the Member States or with mini countries:
    cl:   United Kingdom: Wales
     c2:  Denmark: East-West link
    c3:   The Netherlands: North-East zone
     c4:  France: North-East zone
     c5:  Italy: North-South and East-West routes
     c6:  Spain: North-South route and along the coasts of the Mediterranean and the Bay of
          Biscay
     c7: Portugal: improvements to the interconnection with Spain
     c8: Greece: East-West route
                                               24
 ---pagebreak--- d.  Establishment or improvement of electrical interconnections with third countries:
    dl:   Germany - Sweden
    d2:   Germany - Poland
    d3:   Germany - Norway
    d4:   Germany - Austria
    d5:   Italy - Switzerland
    d6:   Italy - Austria
    d7:   Italy - Tunisia
    d8:   Greece - Balkan countries
    d9:   Greece - Turkey
    dlO:  U.K. -Norway
    dl 1: The Netherlands - Norway
    dl2:  France - Switzerland
    dl3:  Spain - Morocco
GAS NETWORKS
e.  Introduction of natural gas in new regions:
    el    Northern Ireland
    e2     Germany: eastern Lander
    e3     Corsica and Sardinia
    e4     Spain: new regions
    e5     Portugal: whole country
    e6     Greece: whole country, including Crete
f.  Connection of isolated or separate gas networks:
    fl     Ireland - Northern Ireland
     f2    Great Britain - the Continent
     f3    Germany - Luxembourg - Belgium: connection of networks to the system of gas
           pipelines from Zeebrugge
     f4    Germany: connections to the eastern Lander
     f5    Spain - France
     f6    Portugal - Spain
                                              25
 ---pagebreak--- g.    Increasing reception and storage capacities for LNG underground storage capacity
      gl    Ireland: construction of an LNG station
      g2    Germany: construction of an LNG station
      g3    France: extension of LNG stations
      g4    Italy: extension and construction of LNG stations
      g5    Spain: extension of LNG stations
      g6    Germany: creation of underground storage facilities
      g7    France: creation of underground storage facilities
      g«    Spain: creation of underground storage facilities
      g9    Portugal: creation of underground storage facilities
h.    New gas delivery pipelines
      hi    Norway - Belgium or Netherlands: new project considered
      h2    Norway - Germany (Emden): EUROPIPE project
      h3    Norway - Denmark - Sweden: SCANPIPE project
      h4    Algeria - Morocco - Spain - France (Toulouse/Fos)
      h5    Algeria - Tunisia - Italy: increase in capacity
      h6    Russia - Ukraine - EC: upgrading of the existing system of gas pipelines
      h7    Russia - Belarus - Poland - EC
      h8    Russia - Scandinavian countries - EC
      h9    Libya - Italy
      hlO   Iran - Turkey - EC
       hll   Bulgaria - Greece
N.B.:        For certain gas delivery pipeline projects not yet finalized LNG could be an attractive
             alternative.
 TECHNICAL COOPERATION
 i.    Projects to improve technical cooperation on operation of the trans-European electricity
       networks and of the interconnected natural gas networks are also considered projects of
       common interest.
                                                 * * #
                                                   26
 ---pagebreak---                                            Proposal for a
                                       COUNCIL DECISION
           laying down a series of measures aimed at creating a more favourable context
                 for the development of trans-European networks in the energy sector
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular the third
paragraph of Article 129d thereof,
Having regard to the proposal from the Commission,
In cooperation with the European Parliament0*,
Having regard to the opinion of the Economic and Social Committee*2*,
Having regard to the opinion of the Committee of the Regions(3),
Whereas the creation of a more favourable context at the technical, administrative, legal and
financial levels for the development of trans-European energy networks is part of the lines of action
within the meaning of Article 129c(l) of the Treaty and provided for in European Parliament and
Council Decision ... of        1994 [laying down a series of guidelines on trans-European energy
            (4)
networks] ;
Whereas the creation of a more favourable context at the technical, administrative and legal levels
must be aimed mainly at providing a stimulus for technical cooperation between the operators of
the networks, at simplifying and speeding up the existing authorization procedures for projects on
the networks in the Member States in order to reduce delays and at seeking a common approach for
technical aspects applicable to these projects;
Whereas, in order to speed up completion of projects of common interest identified by Decision ...
 [guidelines on trans-European energy networks], it is necessary to provide the Community with the
possibility of supporting, from the financial resources allocated specifically to trans-European
networks, the financial efforts made by the Member States in favour of such projects, particularly
 in the form of aid for feasibility studies and, where appropriate, loan guarantees or interest-rate
 subsidies;
 0)
 (2)
 (3)
 (4)
       OJ No L
                                                  27
 ---pagebreak--- Whereas the other financial instruments at the disposal of the Community, such as the structural
Funds, the European Investment Fund and the support from the European Investment Bank and
programmes in favour of third countries could make a contribution, in some cases decisive, to the
realization of projects of common interest identified by Decision ... [guidelines on trans-European
energy networks],
HAS ADOPTED THIS DECISION:
                                               Article 1
This Decision lays down the action to be taken with a view to creating a more favourable technical,
administrative, legal and financial context for completion of the projects of common interest in
connection with trans-European energy networks and for operation of such networks on a
Community-wide scale.
                                               Article 2
 1.    In order to contribute to creating a more favourable technical, administrative and legal context
       for the development of trans-European networks, the Community shall promote:
             technical cooperation projects between die operators responsible for the management,
              monitoring and control of the trans-European networks;
              cooperation between Member States with a view to simplifying and speeding up
              authorization procedures for projects on trans-European energy networks in order to
              reduce delays;
              the definition of a common approach for technical aspects applicable to trans-European
              energy networks.
 2.    The Commission shall, in close collaboration with die Member States, take all useful
       initiatives for promoting the coordination of the activities referred to in paragraph 1.
                                                Article 3
 In order to contribute to creating a more favourable financial context for trans-European energy
 networks, the Community:
                                                    28
 ---pagebreak--- 1.   may, within the framework of its specific action on trans-European energy networks, provide
     financial support for projects of common interest financed by Member States:
            for feasibility studies on projects of common interest identified by Decision ...
            [guidelines on trans-European energy networks] and for the implementation stage of
            these projects, in the form of interest-rate subsidies or loan guarantees;
            for studies and projects aimed at improving technical cooperation on the operation of
            trans-European networks referred to in die first indent of point 1 of Article 2.
     The financial support measures taken as part of the specific action on trans-European energy
     networks shall be adopted by the Commission in accordance with the procedure provided for
     by Article 4(2) and in accordance with the provisions of the Council Regulation [defining
     general rules for the financing of trans-European networks](5>.
2.    shall take account of the projects of common interest identified in Decision ... [guidelines on
     trans-European energy networks] in interventions by its Funds, instruments and financial
      programmes applicable to these networks, within the terms of their own rules and finalities.
                                               Article 4
1.    In the implementation of the actions referred to in Article 2, the Commission shall be assisted
      by the committee established by Article 7(1) of Decision 94/.../E [guidelines on trans-European
      energy networks].
      The representative of the Commission shall submit to the committee a draft of the measures
      to be taken. The committee shall deliver its opinion on the draft, within a time limit which the
      chairman may lay down according to the urgency of the matter, if necessary by taking a vote.
      The opinion shall be recorded in the minutes; in addition, each Member State shall have the
      right to ask to have its position recorded in the minutes.
      The Commission shall take the utmost account of the opinion delivered by the committee.
      It shall inform the committee of the manner in which its opinion has been taken into account.
 2.   In the implementation of the actions referred to in point 1 of Article 3, the Commission shall
      be assisted by the committee established by Article 7(1) of Decision 94/.../E [guidelines on
      trans-European energy networks] in accordance with the procedure laid down in Article 7(2)
      of that Decision.
 (5)
       OJ No L
                                                   29
 ---pagebreak---                                             Article 5
The amounts to be granted pursuant to this Decision shall be entered annually in the general budget
of the European Communities. They shall cover the financial support referred to in point 1 of
Article 3.
                                            Article 6
Every two years the Commission shall submit a report on the implementation of this Decision to
the European Parliament, the Council, the Economic and Social Committee and the Committee of
the Regions.
                                            Article 7
This Decision is addressed to the Member States.
Done at Brussels,                                         For the Council
                                                          The President
                                                30
 ---pagebreak---                TRANS-EUROPEAN ELECTRICITY
                            NETWORKS
                    - PROJECTS OF COMMON INTEREST -
As at 15-10-93              31
 ---pagebreak--- MAIN NETWORK FOR ELECTRICITY
TRANSMISSION OF THE EUROPEAN
         COUNTRIES
               ^      \>
                     c=c
 ---pagebreak---                TRANS-EUROPEAN GAS
                        NETWORKS
                 - PROJECTS OF COMMON INTEREST -
As at 15.10.93
                           33
 ---pagebreak--- MAIN NETW3RK FOR THE TRANSMISSION OF NATURAL
  GAS OF THE EUROPEAN COMMUNITY AND NEIGH-
      BOURING COUNTRIES OF EUROPE AND
          THE MEDITERRANEAN B A S I N
                  1 9 9 3
                                             34
 ---pagebreak---                                 FINANCIAL STATEMENT
1. TITLE OF OPERATION: Financial support for trans-European networks
2. BUDGET HEADING INVOLVED: B5-710 - Energy networks
3. LEGAL BASK:
       Articles 129b, 129c and 129d of the Treaty establishing the European Community.
       Proposal for a European Parliament and Council Decision, presented by the Commission
       on ..., laying down a series of guidelines on trans-European energy networks.
       Proposal for a Council Decision, presented by the Commission on ..., laying down a
       series of measures aimed at creating a more favourable context for the development of
       trans-European networks in the energy sector.
       Council Directive No 90/547/EEC of 29 October 1990 on the transit of electricity
        through transmission grids (OJ No L 313/30, 13.11.1990).
        Council Directive No 91/296VEEC of 31 May 1991 on the transit of natural gas through
        grids (OJ No L 147/37, 12.6.1991).
        Council Resolution of 22 January 1990 concerning trans-European networks
        (OJ No C 27/8, 6.2.1990).
        Proposal for a Council Directive concerning common rules for the internal market in
        electricity and in natural gas (COM(91) 548 final, 21 February 1992 - OJ No C 65/4,
         14.3.1992).
        Proposal for a Council Regulation introducing a declaration of European interest
        (COM(92) 15, 24 February 1992, as amended by COM(93) 115, 19 .4.1993).
                                             35
 ---pagebreak--- 4.  DESCRIPTION OF OPERATION
    4.1   Objectives of operation
          To contribute to the establishment and development of trans-European energy networks
          by promoting the interconnection and interoperability of the national networks as well
           as access to such networks.
           The aim is to facilitate the emergence, development and optimum operation of the
          natural gas and electricity transmission projects of common interest identified in the
           guidelines on trans-European energy networks.
           The operation consists of promoting projects on electricity and gas interconnections not
           only in the Community, particularly in areas where improvements to the networks are
           needed or which are still isolated, but also with non-Community countries in Europe and
           the Mediterranean region in order to contribute to attaining the objectives of completing
           the internal market, strengthening economic and social cohesion and improving the
           security and reliability of the Community's energy supplies.
           The financial support from the Community will be granted primarily for defining and
           starting projects of common interest, by promoting feasibility studies on such projects,
           and, where appropriate, offering interest-rate subsidies during me implementation phase.
           Financial support could also be granted to promote studies to improve technical
           cooperation on operation of the interconnected trans-European electricity and natural gas
           networks.
    4.2     Period covered by the operation and method provided for itsrenewalor continuation.
            Duration: 1994-1998. The advisability of continuing the operation beyond mis period
            will be considered on the basis of the results of the evaluation.
 5.  CLASSIFICATION OF EXPENDITURE OR REVENUE
     5.1 - Non-compulsory expenditure.
     52 - Differentiated appropriations.
     53 - Type ofrevenueprovided - nil.
 6.  TYPE OF EXPENDITURE
            Financial contribution (grants) to feasibility studies on projects of common interest.
                                                   36
 ---pagebreak---        Financial contribution to studies and projects on technical cooperation, in the form of
       grants covering up to 50% of the total cost.
       Interest-rate subsidies for projects of common interest which have demonstrated potential
       economic viability and possibly the granting of loan guarantees.
7. FINANCIAL IMPACT
   7.1 Method of calculating total cost of operation (definition of unit costs)
       The total investment needed throughout the Community between 1994 and 1999 on the
       trans-European electricity and natural gas transmission network projects of common
       interest identified so far will be in the order of ECU 13 billion. Some 70 projects are
       concerned.
       One half of these projects could qualify for support for feasibility studies in the period
        1994-1998. These normally cost between ECU 2 and 4 million, depending on the
       project. Assuming an average Community contribution of 50%, the total budget for part-
       funding these studies would be in the order of ECU 50 million.
        Approximately ECU 10 million would be allocated to promoting technical cooperation
       between the networks.
        In the order of ECU 30 million would be earmarked for interest-rate subsidies, which
        will be granted only to projects with a favourable cost/benefit analysis and for which the
        subsidy would be a decisive factor in proceeding with the investment considered. By
        way of illustration, a 1% reduction (for example, from 10% to 9%) in the interest rate
        on a loan of ECU 1 000 million repayable over 10 years is worth in the order of
        ECU 7 million a year. The estimated budget of ECU 30 million would allow interest-
        rate cuts of 1% on loans totalling ECU 1 000 million over 4 years.
        Consequently, the total cost of the operation would be ECU 90 million, which is
        considered the minimum for credible, effective action by the Community. A bigger
        budget could prove necessaiy from 1999, which would be the subject of evaluation by
        the Commission in the reports provided for in the draft decisions accompanying this
        communication.
                                                37
 ---pagebreak---            In 1994, the first year of the operation, the entire amount requested will be used
           exclusively to promote feasibility studies. In 1995 feasibility studies will still be the
           priority, but a start will also be made on technical cooperation projects. In 1996 interest-
           rate subsidies will be introduced, in addition to the support for feasibility studies and for
           technical cooperation.
            Based on the closest estimates available at the moment, around 40% of the aid should
           go to the electricity sector and the other 60% to the gas industry. However, the cost-
            benefit analyses and the accelerator effect of the contributions by the Community will
            decide the final breakdown of the aid between these two sectors.
 7.2  Itemized breakdown of cost of opération
                               1993        1994         INDICATIVE PLAN
     BREAKDOWN                BUDGET DRAFT                                             TOTAL
                                         BUDGET   1995     1996     1997     1998
Feasibility studies                          7      12      12       12         7       50
Promotion technical                                  3        3       2         2       10
      cooperation
Interest rate                                                 5      10        15       30
       subsidies
 TOTAL                        p.m.          7       15      20       24       24        90
        73    Indicative schedule of appropriations
                                                                                      million ECU
                          1994                  INDICATIVE PLAN                            T
             1993         Draft                                                            0
           Budget       budget                                                             T
                                        1995        1996         1997       1998           A
                                                                                           L
             p.m.            7            15         20           24         24           90
                                                   38
 ---pagebreak--- 8. FRAUD PREVENTION               MEASURES        PLANNED       (AND     RESULTS       OF    THEIR
   IMPLEMENTATION)
   Fraud prevention measures (inspections, reporting, etc.) are included in all the agreements or
   contracts between the Commission and the parties which it pays.
   The Commission departments concerned verify the subsidies or receipt of the services,
   feasibility studies or assessments ordered before payment, taking account of the contractual
   obligations and the principles of economy and sound financial or general management.
9. ELEMENTS OF œST-EFTHECTIVENESS ANALYSIS
   9.1   Specific and quantifiable objectives, target population
         Closer integration of natural gas and electricity transmission infrastructure is one of the
         chief ways of implementing the internal energy market, by improving the flexibility and
         security of the Community's energy supplies and, in the long term, strengthening
         economic and social cohesion in the Community.
         In particular, adjustment of electricity and natural gas transmission infrastructure to the
          Community dimension is essential for effective implementation of the Council Directive
         of 29 October 1990 on the transit of electricity (OJ No L 313, 13.11.1990) and of the
          Council Directive of 31 May 1991 on the transit of natural gas ( OJNoL 147,
          12.6.1991).
          The greater competition foreshadowed by the proposals for Council Directive concerning
          common rules for the internal market in electricity and in natural gas (COM(91) 548
          final, 21 February 1992) will in turn demand an extra effort in the energy infrastructure
          field to allow these markets to operate properly.
          Further Community-wide integration of electricity and natural gas transmission
          infrastructure is also needed to support the growth in transfers of energy to and from
          non-Community countries. This, in turn, is one of the mainstays of the Community's
          security of supply. It is hard to quantify these factors in a cost-effectiveness analysis.
          Nevertheless, simply taking account of the Community dimension when managing the
          electricity system, based on interconnected networks, should allow further savings in
          addition to those already made principally as a result of the transfers provided for by
          bilateral supply contracts. Based on the current configuration of the electricity
          transmission networks, including the ongoing projects, experts from the electricity
          industry estimate that these further savings could be worm in the order of ECU 1 billion
          per year, or approximately 3% of electricity generating costs, attributable primarily to the
          reduction in the cost of the primary energy sources burned in power stations. Similar
          savings could be expected for natural gas.
          The target population for the operation is the whole of the Community and neighbouring
          countries involved in interconnection projects.
                                                 39
 ---pagebreak--- 9.2  Grounds for the operation
     To provide energy networks tailored to the internal energy market and to the needs of
     European industry, encouragement is needed at Community level, together with
     coordination of the measures taken by the Member States and the private sector. These
     objectives could not be attained at any alternative level.
     The Community dimension of the issue makes action by the Community essential to
     promote implementation of projects offering benefits extending beyond the State or
     Member States in which they are carried out.
     The main spin-offs, beyond completion of the internal energy market, concern the
     security of the Community's supplies in this strategic field and the strengthening of
     economic and social cohesion, plus the benefits for the Community's external relations
     policy, particularly vis-à-vis the countries of Eastern Europe and in the Mediterranean
     region.
     The multiplier effects, particularly the ability to mobilize other sources of funding, are
     being assessed. However, it is already clear that projects of this type mobilize substantial
     public and private capital, as proved by the financial mechanisms for the Structural
     Funds, where energy projects have attracted four to five times the Community
     contribution.
93   Monitoring and evaluation of the operation
            The proposal for a Council Decision on a series of actions aimed at creating a
            more favourable context for die development of trans-European energy networks
            provides for the establishment of a committee of representatives of the Member
            States to assist the Commission with monitoring and assessing those actions.
            The proposal also provides for the preparation of a report which the Commission
             is to submit to the European Parliament, the Council, the Economic and Social
             Committee and the Committee for the Regions every two years.
 9.4  Coherence with financial programming
      This operation is incorporated in the DCs financial programming for the relevant years.
      The objective of the proposed operation fits in with the broader objective of establishing
      trans-European energy networks.
                                          *  *  *
                                            40
 ---pagebreak---                                                                     ISSN 0254-1475
                                                              COM(93) 685 final
                                                     DOCUMENTS
EN                                                                             12
                                Catalogue number : CB-CO-93-751-EN-C
                                                     ' t     ISBN 92-77-63150-3
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