13 South-East Europe Energy Community
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| Draft Treaty establishing the Energy Community
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| Legal base | Article 300 EC
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| Department | Trade and Industry
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| Basis of consideration | EM of 1 April 2005
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| Previous Committee Report | None
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| To be discussed in Council | June 2005
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but further information awaited
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Background
13.1 Last year, the Council authorised the Commission to open
negotiations on an agreement with specified third countries for
the creation of an integrated energy market in south-east Europe
("the Energy Community"). The negotiations have now
been completed and a final draft of the Treaty has been prepared.
13.2 Article 300 of the Treaty establishing the European
Community (the EC Treaty) provides for the Council to authorise
the Commission to conduct negotiations and for the Council to
sign and conclude agreements in those areas where the EC Treaty
authorises the Community to conclude agreements. Depending on
the terms of the Council Decision to conclude an agreement, the
European Parliament has to be informed or consulted or asked to
assent to the proposal. The voting procedure in the Council —
either qualified majority or unanimity — also depends on
the terms of the Decision. The terms of the Decision on this agreement
have not yet been settled.
The draft Treaty
13.3 The draft Treaty provides for the creation of
an Energy Community comprising:
- an Energy Network for gas and
electricity, covering five Member States (Austria, Greece, Hungary,
Italy and Slovenia) and Albania, Bulgaria, Bosnia and Herzegovina,
Croatia, Macedonia, Romania, Serbia and Montenegro, Turkey and
the UN interim administration mission for Kosovo ("the SEE
States"); and
- a Single Energy Market for gas and electricity,
covering all the Member States and the SEE States.
13.4 The draft Treaty requires all the parties to
the Energy Community to implement specified EC Directives and
Regulations on gas, electricity, renewable sources of energy,
and the environment .
13.5 The draft also provides for the creation of
a uniform regulatory and market framework throughout the Energy
Network. The aim is to improve the environment and to create conditions
favourable to investment in gas networks, power generation and
the infrastructure for transmission and distribution so as to
improve access to and security of energy supplies.
13.6 The provisions of the draft Treaty on the operation
of a Single Energy Market include the prohibition of customs duties
and quantitative restrictions on imports and exports between the
Member States and the SEE States and the removal of any obstacles
to the functioning of open competition within the Market.
13.7 The draft Treaty provides for the establishment
of a Ministerial Council, Permanent High-Level Group, Secretariat
and Regulatory Board on which the parties to the Treaty would
be represented and which would manage the operation of the Energy
Community. An Annex specifies the proportion of the Energy Community's
budget to be contributed by the European Community and each of
the SEE States; the European Community's contribution would be
91.2%.
13.8 The duration of the Treaty would be ten years,
extendable by unanimous decision of the parties. Any party may
withdraw with six months notice. The draft includes provisions
for the extension of the Treaty to other energy products and for
the accession of new parties.
The Government's view
13.9 The Minister of State for Energy and E-Commerce
at the Department of Trade and Industry (Mr Mike O'Brien) tells
us that the Government broadly welcomes the proposed Treaty and
believes that the Energy Community will be of benefit both to
the SEE countries and the European Union's energy market. The
Treaty would not impose any direct costs on (or provide any direct
benefits to) UK businesses, charities or voluntary bodies; and
so the Government has not prepared a Regulatory Impact Assessment.
13.10 The Minister adds that a draft Decision on
the adoption of the Treaty is expected within the next month and
that it should be ready for political agreement at the Energy
Council on 27 June. He says that a subsequent Council Decision,
and the agreement of the European Parliament, will be required
to conclude the Treaty.
Conclusion
13.11 We are grateful to the Minister for giving
us advance warning of this proposal by providing us with the unofficial
text of the draft Treaty. As he says, the creation of the South-East
Europe Energy Community appears to be in the interest of all the
parties to the proposal. Moreover, the draft Treaty appears to
us to be proportionate and consistent with the principle of subsidiarity.
13.12 There is one point, however, on which it
would be helpful if the Minister would comment in the Explanatory
Memorandum he will be submitting on the draft Council Decision.
We note that the draft Treaty cites only Article 300 of the EC
Treaty as the legal base for the agreement. That is a procedural
provision which applies where the EC Treaty provides for the conclusion
of agreements with third countries. We therefore ask the Minister
if reference is also needed to an EC Treaty Article which confers
a specific power on the Community to conclude the agreement.
13.13 We have no other points to put to the Minister
at this stage and we see no need, therefore, to keep the document
under scrutiny.
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