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Debate on the Internal Energy Market: Statement by State Secretary for European Affairs Janez Lenarčič on Behalf of the Council of the EU

Dear President,
Honourable Members of the European Parliament,


During the Slovenian Presidency, energy issues were high on the agenda. Issues such as the security of supply, functioning of energy markets and sustainable environmental management are of strategic importance for the EU and its citizens today. It is becoming increasingly clear that the energy sector is an area which has to offer new knowledge and new services if we wish to safeguard the competitiveness of the European economy.

More than a year ago, Heads of State and Government made a commitment to sustainable goals and enhancing energy market effectiveness. Those goals were also supported by the European Parliament, who drew up proposals that the Council examined with interest.

The Slovenian Presidency considered the third package concerning gas and electricity markets to be a very important legislative dossier. Its main purpose has been to continue the process of liberalising energy markets and to enhance their effectiveness and transparency. As proposed by the Commission, the Council considered the five legislative proposals as one single package throughout its examination of this dossier, and therefore retained mutatis mutandis the same solutions for the electricity and the gas instruments.

At the meeting of the Energy Council on 6 June, the Slovenian Presidency succeeded in reaching broad agreement on the essential elements of the package covering all five legislative proposals. The most important element of this broad consensus is the third option for organising energy companies. Further to the Commission’s two proposals defining full ownership unbundling and independent system operators (ISO), the Member States also agreed on the third option allowing for the introduction of an Independent Transmission Operator (ITO).

Allow me now to summarise some of the more important and possibly most sensitive points of this agreement that will also be discussed by this distinguished assembly.

The ITO option will be available for Member States where the transmission system belongs to a vertically integrated undertaking (VIU) upon the entry into force of the new directive. It can be applied to both the gas and the electricity sector. This option would allow companies to retain ownership of transmission systems on the condition that they are managed by an independent transmission operator.

A number of requirements have been set to guide the organisation of a transmission system and a system operator belonging to a VIU; they define the independence of a transmission system operator, balanced and impartial management, security of the necessary investment and protection of the VIU's interests. They will ensure that:

  • the operator, its management and the supervisory body are effectively independent;
  • conflicts of interest are avoided;
  • fair and non-discriminatory network access is given;
  • there are fair incentives to invest in interconnection infrastructure;
  • there is independent access to resources for TSOs work, and
  • additional powers are granted to the national regulators with respect to ITOs.

Another element of the deal achieved in the Council concerns third country investments in the EU. The Council thinks that the text should ensure that the issue of third country control of networks is addressed in a non-protectionist way. At the same time it should guarantee that third country companies respect the same rules that apply to EU companies. We should also consider the interests of third countries and their companies as they strive to forge partnerships with energy companies in the Member States. In addition, it will be necessary to analyse some existing investments in both the EU and the non-EU energy sectors.

Another important issue concerns investment and network development planning, especially the preparation of a 10-year EU network development plan. This ensures a coherent and effective approach at all levels involving the TSOs in particular, and includes all relevant stakeholders as well as the Agency in an open and transparent consultation process.

Regarding the Agency for the Cooperation of Energy Regulators, the Presidency believes that we have been able to develop a truly independent Agency, with a sound governance model. Its work programme is focussed on issues involving international and regional cooperation, in particular cross-border interconnections.

Another important element of the compromise agreement concerns public ownership, the handling of cross-border cases, enhanced regional cooperation, market functioning and consumer protection, and guidelines to be adopted through comitology procedures.

With these points, I have sought to give a brief overview of the main elements of the agreement reached by the Council. I am convinced that this deal constitutes a good basis for taking work forward with the next trio of Presidencies, and for cooperation with this distinguished assembly.

Thank you for your attention.


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Date: 17.06.2008