The Energy Community Treaty

The Energy Community Treaty creates an internal market in electricity and natural gas bringing together the 28 Member States of the European Union (EU) and 6 European states and territories in the Balkans.

ACT

Council Decision 2006/500/EC of 29 May 2006 on the conclusion by the European Community of the Energy Community Treaty.

SUMMARY

The Energy Community Treaty provides for the creation of an integrated energy market (electricity and gas) between the EU and the contracting parties.

The members of the Energy Community are the EU, Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, Montenegro, Serbia and the United Nations Interim Administration Mission in Kosovo pursuant to United Nations Security Council Resolution 1244 (hereafter, Kosovo). In addition, one or more Member States of the EU may participate in the Energy Community at the request of the Ministerial Council. Third countries may be accepted as observers.

The Treaty applies to the territory of the countries and to Kosovo.

The Treaty entered into force on 1 July 2006. It is concluded for a term of ten years. Its application was extended for a new ten-year period by unanimous decision of the Ministerial Council dated 24 October 2013.

Role of the Energy Community

The objectives of the Energy Community are:

• to create a stable legal and market framework capable of attracting investment in order to ensure a stable and continuous energy supply;
• to create a single regulatory space for trade in network energy;
• to enhance security of supply in this space and develop cross-border relations;
• to improve energy efficiency and the environmental situation related to network energy and develop renewable energy sources;
• to develop network energy market competition.

Activities of the Energy Community

An important part of the Energy Community's activities involves the implementation of a part of Community legislation, or acquis communautaire, in all the States parties to the Treaty, on energy, environment, competition and renewable energies, as well as compliance with certain general European standards relating to technical systems, for example on the subject of cross-border transportation or connection.

In addition, the Treaty establishes a mechanism for operation of regional energy markets which covers the territory of the parties to the Treaty and the EU Member States involved. This system provides a framework of measures relating to long-distance transportation of network energy, security of supply, provision of energy to citizens, harmonisation, promotion of renewable energy sources and energy efficiency, as well as in the event of sudden crisis on the network energy market in the territory of an Energy Community member.

Furthermore, the Treaty creates an energy market without internal frontiers between the parties, in which customs duties and quantitative energy import and export restrictions, and any measures having equivalent effect, are prohibited between the parties, unless exceptional circumstances apply (relating to public order, public safety, protection of human and animal health, preservation of plants, protection of industrial and commercial property). The Treaty also contains provisions on relations with third countries and mutual assistance in case of disturbance.

The Commission acts as coordinator of these activities.

Institutions and decision-making

The Ministerial Council, made up of one representative for each party to the Treaty, provides general policy guidelines, takes measures to meet the Treaty's objectives and adopts procedural acts such as allocation of tasks, powers or obligations. The presidency is held in turn by each party for a term of six months and is assisted by one representative of the EU and one representative of the incoming presidency. The Council submits an annual report to the European Parliament and to the parliaments of the contracting parties.

The key mission of the Permanent High Level Group is to prepare the work of the Ministerial Council. It consists of one representative of each party to the Treaty.

The Regulatory Board's primary role is to advise the other institutions and issue recommendations in the event of cross-border disputes. It is composed of one representative of the energy regulator from each party to the Treaty, with the EU being represented by the European Commission, assisted by one regulator from each participating Member State, and one representative of the European Regulators Group for Electricity and Gas (ERGEG).

Moreover, the Energy Community is advised by two fora composed of representatives of all interested parties.

The permanent Secretariat, based in Vienna, provides, amongst other things, administrative support to the other institutions of the Energy Community and reviews proper fulfilment by the parties of their obligations.

The Energy Community makes decisions (binding) and recommendations (non-binding). These steps are taken, as appropriate, either on proposal from the European Commission (application of the acquis communautaire), or on proposal by a party to the Treaty (other activities), and are adopted either by a simple majority (application of the acquis communautaire), or by a two-thirds majority (mechanism for operation of markets), or by unanimity (internal energy market).

In the event of serious and persistent breach by a party of its obligations, the Ministerial Council may, acting by unanimity, suspend certain rights granted to this party by the Treaty.

Additional information can be consulted on the reference site below:

• Energy Community

Last updated: 22.09.2014