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Energy in South East Europe -
Regional Policy for a Regional Market
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Bringing
people and power together
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Improving the balance between energy supply and demand is crucial to boost and sustain economic development in South Eastern Europe. This requires a strong commitment by the countries of the region towards market oriented reforms in order to: improve overall energy conservation and efficiency, reduce an excessively high energy intensity of production compared to international standards, strengthen national institutional capacities and adapt legislation and regulation to EU norms and practices. It also means that countries should be prepared to draw fully on the substantial gains which can result from energy trading among themselves and with their neighbors. This implies that the current fragmentation of energy supply is overcome through cooperation among the various entities concerned and through physical connection/reconnection of the network. A regional approach to energy supply, therefore, offers significant advantages both in terms of improved utilization of existing supply and production capacities as well as optimizing future investments. Major steps have already been taken
over the last couple of years towards achieving these objectives in
both the
electricity and natural
gas sectors.
Energy
Community
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Building on the
signed Memoranda of Understanding 2002 and 2003, the
so-called Athens Memoranda, the European Commission – in
conformity with the legal constraints of Article 300 of the
EC Treaty (Treaty of Nice) - obtained a negotiating
directive from the Council on 14 May 2004 to conclude a
legally binding agreement having essentially the same
content to the two Memoranda.
The
Energy Community Treaty
was signed in Athens on
October 25, 2005 and entered into force on July 1,
2006.
The signature
of the Energy Community Treaty means that the European Union
and nine partners of South East Europe - Croatia, Bosnia and
Herzegovina, Serbia, Montenegro, the Former Yugoslav
Republic of Macedonia, Albania, Romania, Bulgaria and UNMIK
on behalf of Kosovo - will create the legal framework for an
integrated energy market. Negotiations with Turkey are
ongoing for joining the treaty at a later stage.
The development of the
Regional Electricity Market is coordinated by the
European Commission and the
Energy Community Secretariat
(ECS). The Secretariat runs the day to day work of
the Energy Community and undertakes analytical work, both
tasks under the co-ordination of the Commission. The
Secretariat is also one of the main institutions of the
Treaty and the only one that is independent of the parties
of the Treaty.
The electricity sector in South East Europe has a medium to long term regional reform plan, which is set out in the
Athens Memorandum of
Understanding (14 pages,
pdf, 80 KB), signed 15 November 2002. Under this MoU,
full members of Energy Community were obliged to implement national legislation creating electricity regulators and transmission system operators by June 2003 and to open the market for all non-domestic consumers by June 2005.
This reform plan was extended to cover the natural gas market under the
Athens 2003 Memorandum of
Understanding (13
pages, pdf, 1.83 MB), which obliges full members of
Energy Community to implement national legislation in accordance with Directives 2003/54/EC (electricity), 2003/55/EC (gas), 85/337/EEC (environmental impact assessment) 1999/32/EC (reduction of sulphur content of fuels) and 2001/80/EC (Large Combustion Plants). Legislation is required to be adopted by 1 July 2005 though the timetables for implementation may be later than those applying to EU Members.
What does it mean?
The major commitments are:
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to create a regionally integrated energy market for electricity and natural gas networks and to integrate that market into the wider EU market;
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to establish common rules
for generation, transmission and distribution of electricity;
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to similarly establish common rules for the transmission, distribution, supply and storage of natural gas;
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to establish state level national energy authorities, regulators and transmission system operators;
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to establish compatible state and regional
electricity and natural gas market action plans;
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embryonic regional level dispute resolution mechanisms;
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to open the markets in line with EU commitments but with a suitable transition period (all non-domestic markets are projected to be open by 2005);
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unbundling of integrated utilities;
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authorization procedures for new infrastructure that are transparent;
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an anti-corruption programme;
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to implement grid codes and other technical and commercial codes that are necessary for the functioning of the market; and,
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regulated third party access, tariff systems that encourage trade, and technical codes necessary for the operation of a trade based regional system.
Benchmarking this process is under way. Action Plans for long term implementation of the (electricity) REM are being drafted at regional level by the Council of European Energy Regulators (CEER) and at national level by EuropeAid contractors on behalf of the European Commission for implementation from 2004.
If you would like further information on this programme, please contact the European Commission:
chrysoula.argyriou@cec.eu.int
See
Briefing
Notes on Energy Community
(5 pages, pdf, 30 KB)
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This initiative was until June 2004 known as "The South Eastern Europe Regional Energy Market"
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