In briefly tracing the long odyssey of the Directive on the internal electricity market Mr Desama (PSE, B) declared that he was satisfied with the very meticulous wording of the compromise that had resulted from the conciliation procedure; while underlining that the common position had taken over no less than 80% of the amendments voted for by Parliament at first reading, the rapporteur pleaded for at least two other important points to be retained in the wording of the Directive undergoing approval: the general introduction of eligibility criteria for distributors, which was currently beset with political difficulties, and the need for harmonisation in the areas of environmental protection, security and social standards. As far as the latter was concerned he called on the Commission to issue a communication setting out the general objectives of future harmonisation directives. Commissioner Papoutsis was in complete agreement with this, but stressed that the common position of the Council, which was the result of a compromise negotiated at the highest political level with most of Parliament’s amendments already having been taken over, could not subsequently be changed without having to wait eight years in order to achieve unanimity within the Council.

The Council held a discussion on the proposal for a directive on the common rules for the internal electricity market, at the close of which the Presidency drew the following conclusions: ‘In accordance with the amended proposals for directives concerning common rules for the internal market in electricity and in gas, having consulted the European Parliament and the Economic and Social Committee and in accordance with the conclusions adopted by the Energy Councils on 30 November 1992, 29 November 1994 and 1 June 1995, the Presidency: 1. stresses the importance of achieving the internal market in electricity in terms of the competitiveness of the industry and economic development; 2. considers that the negotiations on the Directive concerning the internal market in electricity have reached a final stage enabling it to believe that adoption of a common position will be possible at the next meeting of the Energy Council; 3. notes that this progress was made possible by a substantial convergence of the positions of the various Member States and considerable clarification of the operation envisaged for the electricity systems of the Member States and is grounds for viewing the last compromise text of the Spanish Presidency as a valid basis for future proceedings; 4. considers it necessary to give further thought to the consequences of giving distributors rights and obligations similar to those of major consumers, taking account basically of the criteria of market opening, the task of public services, the general economic interest and the possibility of choice for the consumer. In this connection, it is essential that an equivalent and satisfactory degree of opening of the various electricity systems be gradually achieved; 5. notes that work will continue without interruption during the Italian Presidency, which will convene a meeting early in 1996 to discuss the question of the internal market in electricity with a view to achieving a common position’.

‘Following the modified proposals for Directives on setting up common rules for the internal gas and electricity market, after consultation of the European Parliament and of the Economic and Social Committee, and while confirming the conclusions adopted by the Council on 30 November 1992 and 29 November 1994, the Council: 1) reaffirms the 4 points of agreement as identified in the Council conclusions of 29 November 1994, keeping in mind the need for further discussion and clarification with regard to market liberalisation beyond the production sector and other aspects of the Directive, for instance that of harmonisation and taking into account the fact that each of these 5 key topics should represent part of an overall agreed solution; 2) recalls that, in the abovementioned conclusions of 29 November 1994, the Council requested further discussion on how to open the markets beyond the area of electricity production, especially on the question of the possible simultaneous introduction of a negotiated TPA and a so-­called single-­buyer system. In this context it agreed to verify that both approaches, in a spirit of reciprocity, lead to equivalent economic results and, therefore, to a directly comparable level in the opening of markets and to a directly comparable degree of access to electricity markets, and that they conform to the provisions of the Treaty; 3) notes the Commission’s working paper on the organisation of the internal electricity market, following the request expressed by the Energy Council at its meeting on 29 November 1994; 4) confirms, in the light of this working paper, that one of the Directive’s main objectives concerning the internal electricity market is to increase competition in the interests of all consumers, and that, to this end, European electricity systems must progressively take market mechanisms into account, allowing in particular for the situation of independent producers and eligible consumers, in the framework of flexible and pragmatic solutions that will: - permit the performance of public service obligations imposed on electricity undertakings in the general economic interest, including objectives set by each Member State regarding security of supply and environmental protection. The implementation of these obligations, in accordance with the Treaty, and in particular with Article 90(2) thereof taken as a whole, will include, for those Member States that so wish, the implementation of long-­term planning, as cited by the Commission and in line with the Council conclusions of 30 November 1992, as being a means of ensuring these objectives. The development of trade must not be affected to an extent that would be contrary to the interests of the Community; - take into consideration the principle of subsidiarity and the different situations and forms of organisation in the various Member States in this sector as well as endogenous resource utilisation; - take into account the question of transitional arrangements, in accordance with the conclusions of the Council at its meeting on 30 November 1992; 5) considers that the two systems, both within the European Community and within those countries of the European Community that so wish, can co­exist subject to certain conditions, intended to ensure reciprocity between the two systems and equivalent effects, being met as indicated in paragraph 2. There is agreement on the following points without prejudice to the discussions to be continued on these conditions, as indicated in paragraph 6: - the single buyer must purchase electricity under objective conditions that guarantee, in particular, transparent transport prices and a total lack of discrimination; - a system of authorisations granted to independent producers, based on transparent criteria, will be introduced along with competitive bidding procedures in the zone covered by the single buyer, while complying with the provisions of paragraph 4; - within a single-­buyer system, eligible consumers in accordance with the principle of equivalence referred to above, will be able to negotiate supply contracts abroad, while complying with the provisions of paragraph 4; - the appropriate conditions for transparency in transport and distribution will be defined in both systems so as to guarantee that any sort of discrimination or predatory behaviour, in particular in intra-­Community trade, is avoided; - appropriate and effective regulatory and control mechanisms and mechanisms for the settlement of disputes will be introduced in both systems so as to avoid any abuse of a dominant position to the detriment in particular of consumers; - in the single­-buyer system, producers who are not bound by contract with the single buyer should be able to export their electricity via the network of the single buyer, provided that there is sufficient transport capacity on that network and that this is technically feasible; 6) considers that further discussions are necessary on the following points: - the building and use of direct lines; - the question of the definition of independent producers; - the question of the definition of all eligible consumers and of their rights and responsibilities; - the concrete conditions for accepting or rejecting authorisations for independent producers in relation to planning and to the capacity of the system and the conditions under which independent producers may negotiate supply contracts with eligible consumers; - the question of possible quantitative limits on the electricity imported by eligible consumers; - the issue of integrated companies in both systems, as regards production, transport and distribution, so as to avoid discrimination, cross-­subsidisation and unfair competition; - the question of who will be responsible, in both systems, for the organisation of the tender procedures; - the detailed procedures as regards transitional periods and arrangements; - the problem of stranded investments; - the conclusions to be drawn in particular from the working document submitted on 11 May 1995 by the Commission on the specific nature of small systems, notably small highly interconnected systems, in particular as regards the realisation of direct lines; 7) invites the Permanent Representatives Committee to finalise its work on the basis of these conclusions to enable the Council to adopt a common position before the end of the year.’