CELEX: 51982PC0603
Language: en
Date: 1982-09-29
Title: Draft COUNCIL RECOMMENDATION on the methods of setting natural gas prices and tariffs in the Community (presented from the Commission to the Council)

ARCHIVES HISTORIQUES
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DOCUMENTS "COM"
COM (82) 603
Vol. 1982/0191
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                    COM(82)603 final
                                                    Brussels , 29 September 1982
                                      Draft
                             COUNCIL RECOMMENDATION
 on the methods of setting natural gas prices and tariffs in the Community
                 ( presented from th              Commission to   the Council )
                                                             .
                                         V      -               ■
                                              .
 COM ( 82 ) 603 final
 ---pagebreak---                              Draft
                   COUNCIL RECOMMENDATION
   on the methods of setting natural gas prices and tariffs
   in the Community
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community ,
Having regard to the draft Recommendation submitted by the Commission ,
Having regard to the opinion of    the European Parliament ,
Whereas in its cone lusions of 3 December 1981 and 16 March 1982 the
Council emphasized the need for the Member States to develop a common
approach to energy pricing and laid down general principles to be observed
by the Member States in their energy pricing policies ;
Whereas these principles should be adapted to the conditions of the
market in natural gas so as to ensure greater consistency in energy
pricing within the Community ;
Whereas , in view of the comparative scarcity of natural gas and the
advantages of using it , the best possible use of available supplies
and the optimum allocation of these resources should be ensured by means
of an appropriate pricing policy ;
Whereas natural gas prices should be allowed to adjust rapidly to trends
in the cost of supply and to changes in the competitive situation on the
      - market ;
Whereas pricing policies encouraging certain categories of consumption
which prevent the rational use of natural gas should be avoided;
 ---pagebreak---                          Explanatory Memorandum
 The draft recommendation on the methods of setting natural gas prices and
 tariffs in the Community has been prepared in response to the concern expressed
 by the Council on a number of occasions about the consistency of energy pricing
 policies with the Member States' common energy strategy objectives . ^ ^
 Basically , it seeks to lay down the general principles which should govern the
 methods of setting natural gas prices and tariffs with a view to making them
 consistent with the objectives of diversification of resources , rational use of
 energy and energy conservation within the Community .
 In formulating these principles , account has been taken of the specific features
of natural gas and the particular conditions of competition on the market for gas ,
on which the prices of competing energy sources on the various end-use markets
have a decisive effect .
Particular emphasis has been placed on common tariff structures , since these
will help to make the supply conditions more homogeneous and facilitate more
consistent price formation within the Community .
Mention is also made of the need to ensure that , as far as possible , prices cover
gas supply costs and the amortization of the investment entailed .   The entire
proposal is based on the consideration that as gas is a comparatively scarce
commodity in the Community care should be taken to ensure that it is used
judiciously and its intrinsic advantages warrant making the best possible use of
available supplies and their optimum allocation .
The Commission is aware that certain structures already reflect a common approach ,
and that the efforts to achieve homogeneousness and consistency should be
continued , and reinforced if possible .
The fact that prices affect users' choices has not been forgotten .   The Commission
is proposing that the Member States should ensure that consumer prices and costs
are characterised by the greatest possible degree of transparency and are made
public as far as possible .
(1 )  Conclusions of the Council meetings of 2 December 1981 and 16 March 1982 .
 ---pagebreak--- Whereas natural gas tariff systems should also reflect as accurately as possible
the structure of the supply and distribution costs for the various categories
of supplies ;
Whereas , in view of the quantities supplied, it is appropriate , where large-
scale industry is concerned , to enable economies of scale in relation to
transport to be passed on by means of appropriate decreasing scales of charges ;
Whereas in order to ensure that optimum use is made of the transmission networks
and that deliveries are more regular during the year , provision should be made
for special prices linked to the interruption of supplies ;
Whereas pricing policy plays a decisive role as regards trends on the market for natural
gas and whereas there is a need to monitor consumption trends with a view to
adjusting natural gas prices accordingly ;
Whereas consumers can have freedom of choice only if there is an adequate degree
of market transparency ,
HEREBY RECOMMENDS TO THE MEMBER STATES       :
( a ) that they take appropriate steps , if they have not already done so , to
      ensure that the methods of setting natural gas prices and tariffs in the
      Community are based on the following common principles :
      1 . Methods of setting natural gas prices , whether or not in the context
           of tariffs , should be designed to ensure that the best possible use
           is made of gas supplies and to ensure their optimum allocation .     They
           should be established with due regard for the rational use of energy
           and the competitive situation between natural gas and the other forms
         " of energy .
           Natural gas prices should therefore be as close as possible to market
           value in relation to the price of substitute energies and provide a
           guarantee of sufficient proceeds to cover the cost of supplying consumers
      2 . Natural gas pricing methods should be designed in such a way as to
           enable natural gas prices to adjust rapidly to changes in the competitive
           situation on the market and to trends in costs , particularly
 ---pagebreak---         the cost to gas undertakings of acquiring gas ; changes in such costs
        should be passed on in the sales tariffs without delay .
    3 . Prices which are artificially low in relation to the market situation
        and to costs , having the effect of subsidizing certain classes of con­
        sumption or certain uses and / or of encouraging waste , should not be
        charged .
    4 . The two-part tariff system, consisting of a fixed component to cover
        fixed costs , in particular the cost of permanent connection to the
        network , and a component which varies with the quantity of gas supplied
        is the system which , of the various tariff opitons available , should be
        generally used .
        This should be the case , in particular , for categories of consumers
        which have homogeneous features from the point of view of use , the
        scale of consumption and the regularity of offtakes and to which tariff
        based on these features would be applied .
    5 . For the other categories of consumption subject to tariffs , provision
         should be made for two (or more ) components which decrease as con­
        sumption rises , in order to take account of economies of scale in
        transport which arise as volume increases . The tariffs applied for a
        given location should also vary in relation to the off-take characteris
        tics , such as the load factor , in order better to pass on the costs .
    6 . With the aim of transferring to off-peak periods or to allow load-
        shedding, provision should be made for the application of special
        tariffs or prices linked to arrangements for the interruption of
        supplies ;
<b) that they carefully monitor the trend in the demand for natural gas in
    the various sectors of use and the long-term trend in demand/ in close
    cooperation at Community level with a view to further improving the
    tariff structures ;
 ---pagebreak---                            - L -
( c ) that they ensure that natural gas prices are characterized by the
      greatest possible degree of transparency and that prices and costs
      to the consumer be made public as far as possible .