(1)

On 17 January 2012, the Greek Ministry of Environment, Energy and Climate Change (‘YPEKA’) submitted an application (the ‘application’) to the Commission, pursuant to Article 44(1) of Directive 2009/72/EC for a derogation from Chapters III and VIII of Directive 2009/72/EC for certain Greek islands that are not interconnected to the electricity system of mainland Greece (the non-interconnected islands or ‘NIIs’).

(2)

On 12 September 2012, the Commission requested the Greek Regulatory Authority for Energy (‘RAE’) to comment on the application. RAE responded to this request on 16 November 2012 (the ‘RAE opinion’).

(3)

RAE made further submissions to substantiate the application on 17 December 2013, 23 December 2013, 4 February 2014, 28 February 2014 and 17 March 2014.

(4)

On 14 March 2014 (with an addendum sent on 20 March 2014), the Commission informed the Member States of the application in accordance with Article 44(1) of Directive 2009/72/EC, with a request to submit observations, if necessary, by 25 March 2014. No observations were submitted.

(5)

With its application YPEKA renewed the request submitted by the Ministry of Development on 5 December 2003 in accordance with Article 26(1) of Directive 2003/54/EC of the European Parliament and of the Council (2) (the ‘initial application’) for a derogation from certain provisions of Directive 2003/54/EC. Although preliminary steps were taken to investigate the initial application, the derogation pursuant to Article 26(1) of Directive 2003/54/EC was neither granted nor refused.

(6)

The application requests derogation from Chapters III and VIII of Directive 2009/72/EC.

(7)

Chapter III of Directive 2009/72/EC refers to the authorisation procedure and tendering for new capacity. Chapter VIII refers to third party access, market opening and direct lines.

(8)

The Greek energy markets are primarily governed by Greek Law 4001/2011 which transposes Directive 2009/72/EC. Law 4001/2011 has entered into force on 22 August 2011.

(9)

DEDDIE SA (‘DEDDIE’) is the Greek distribution system operator, which is 100 % owned by, but legally and functionally unbundled from, the Public Power Corporation (‘PPC’), the incumbent Greek electricity producer and supplier. The network assets operated by DEDDIE are owned by PPC.

(10)

Pursuant to Article 127 of Law 4001/2011, DEDDIE is responsible for developing, operating and maintaining the Greek electricity distribution system, which includes the electricity distribution system on the NIIs.

(11)

In addition, DEDDIE is responsible for operating the electricity systems on the NIIs. These tasks include: (i) the preparation of a generation development plan for micro isolated systems, including a programme to interconnect them with other NIIs (ii) ensuring that the necessary sites are available to install new production capacity, to extend existing capacity or delivery components and to expand the Greek electricity distribution system to non-interconnected islands and micro isolated systems (iii) entering into contracts with licence holders governing deliveries of electricity to and from the system, the provision of ancillary services to the distribution systems of NIIs and the remuneration of the producers of electricity, of charges to customers and suppliers for the electricity delivered to them and of other credits and debits on the special accounts, such as those for remunerating public service obligations.

(12)

Article 137(1) of Law 4001/2011 stipulates that all electricity consumers shall be classified as eligible customers, with the exception of consumers established in micro isolated networks, subject to Article 139 of the same law.

(13)

Pursuant to Article 133(3) of Law 4001/2011:

‘With the exception of cases in which electricity is produced using renewable energy sources or by high-efficiency cogeneration or hybrid plants and in the case of auto producers, if a derogation has been granted in accordance with the provisions of Article 139, a generation licence shall only be granted to PPC SA in accordance with certain licensing regulations. PPC SA shall be responsible for the uninterrupted supply to micro isolated systems for which it obtains a licence and for safeguarding the long-term financial operation of the electricity systems on those islands.’

(14)

Pursuant to Article 134 Law 4001/2011:

‘Without prejudice to the provisions of Article 139 of the present law, supply licences for micro isolated networks shall be granted solely to PPC SA in accordance with the requirements of the Licensing Regulations. PPC SA must supply non-eligible customers with electricity on request.’

(15)

According to Article 139 of Law 4001/2011 derogations from the provisions of Law 4001/2011 may be granted in accordance with the provisions of Article 44 of Directive 2009/72/EC.

(16)

The Ministerial Decision no PD5/EL/B/F IB/12924 adopted pursuant to Article 28 of Greek Law 3426/2005, establishes that the supply of electricity to consumers in NIIs by any electricity producer constitutes a public service obligation (‘the NII PSO’) in the general economic interest. On the grounds of social cohesion, electricity suppliers in the NII must supply electricity at a price equal, per category of consumer, to those on the Greek interconnected system.

(17)

Article 52 of Greek Law 4001/2011 stipulates that customers on non-interconnected islands are entitled to special services both in terms of price and in terms of quality and security of supply as well as transparency of contractual terms and conditions. Providers of the NII PSO receive, in return for discharging the PSO, a financial compensation calculated on the basis of a methodology established by RAE Decision 24/2014/EC (3). This methodology is based on the difference between the full production costs on the non-interconnected islands (variable and fixed) and the full market price suppliers are facing in the interconnected system (system marginal costs plus all other mechanisms in the Greek interconnected system). The NII PSO compensation is calculated on a monthly basis and per autonomous island system, and is subject to control by RAE. The NII PSO compensation is raised through a levy on all customers, including those on the NIIs (4). The NII PSO mechanism is administered by LAGIE, the Greek state-owned market operator. Ministerial Decision D5-EL/B/F1/oik.27547 of December 2011 (5), based on the provisions of Article 55(3) of Law 4001/2011, established that the NII PSO is to be offered by all suppliers, therefore all suppliers are eligible for NII PSO compensation.

(18)

Secondary legislation regulates more in detail the supply and production of electricity on the NII. In particular, by its decision No 39/2014 of 28 January 2014, RAE adopted the Code of Management of Electric Power Systems on the Non-Interconnected Islands (the ‘NII Code’) which regulates many issues with respect to the operation of the isolated systems on the NIIs, including market opening, market settlement and electricity production. The NII Code entered into force on the day of its publication, i.e. 17 February 2014.

(19)

The application highlights the following problems for the operation of the Greek isolated electricity systems:

(20)

The application highlights the following problems for the development of conventional generation on the Greek small isolated electricity systems:

(21)

As a result, resort has to be taken on a regular basis to emergency solutions, such as the rental of mobile diesel-fuelled power generators or gas turbines. The need for case-by-case authorisation for emergency generation needs is undesirable as it gives rise to the uneconomical renting of equipment instead of purchasing. The application provides several examples where unforeseen events gave rise to the longer term use of mobile power generators.

(22)

The application highlights the following problems for the market opening on the isolated electricity systems on the NIIs:

(23)

Consequently, YPEKA takes the view that developing the necessary infrastructure for the operation and supervision of the electricity market in conjunction with market opening on the isolated systems on the NIIs entails costs that outweigh the benefits that may accrue to consumers from market opening.

(24)

The application does not contain a date by which the requested derogation would expire.

(25)

RAE takes the view that the derogation from Chapter III, in accordance with Article 44(1), should not concern the installation of new power capacity that can be developed in an isolated system, but only the refurbishing, upgrading or expanding of the existing production capacity. Existing generation capacity consists of the power plants that already operate or are under construction on the NIIs. Any new power plant that will be installed on those islands is considered new generation capacity.

(26)

RAE notes that independent power producers (‘IPPs’) (i.e. other than PPC) have demonstrated a strong interest for developing RES and cogeneration power plants in all micro isolated systems during the last two decades. Consequently, third-party access to the power systems of all NIIs concerning RES and combined heat and power (‘CHP’) development should not be restricted.

(27)

RAE states that it does not oppose granting a derogation for the activation of new conventional power plants, provided certain conditions are met. However, Article 44(1) of Directive 2009/72/EC does not provide for the possibility of derogation for new capacity.

(28)

RAE deems that capacity expansion of existing conventional plants concerns mainly a short-term lack of capacity in the NIIs arising from unexpected damages on existing capacity or delayed installation of new capacity, especially during high-demand periods (e.g. summer peaks). These expansions are subject to an open tendering procedure according to Article 8 of Directive 2009/72/EC. Such a procedure is time-consuming and not suited to the urgent nature of emergency situations.

(29)

RAE accepts that PPC, should cover any such emergency situations. Taking into account that PPC is able to move mobile conventional units from islands in which there is a capacity surplus to those with a capacity deficit, this solution might also be the most economical one.

(30)

RAE stresses that any derogation must allow specifying the appropriate licensing procedure for emergency case situations, and, specifically, which of the criteria mentioned in Article 7 of Directive 2009/72/EC must be examined by the competent licensing authorities.

(31)

RAE deems that derogation should be granted with a limited duration such as a maximum of 10 years.

(32)

According to RAE, the supply of electricity in the NIIs is connected in practical terms to the NII PSO and the NII PSO compensation because (i) the cost of electricity generation in the NIIs is significantly higher than that in the mainland and (ii) the Greek State requires a uniform pricing, per customer category, throughout its territory.

(33)

The NII Code foresees the installation of certain metering and recording equipment on the NIIs for hourly measuring, energy management and control centres, monitoring and related IT systems. RAE maintains that this infrastructure is indispensable for:

(34)

RAE consequently argues that, regardless as to whether one or more suppliers are licensed to be active within a micro isolated system, this infrastructure must be installed in the isolated systems on the NIIs.

(35)

The estimated cost for installing this infrastructure is not expected to exceed EURO 20 to 30 million for all NIIs, including Crete and Rhodes. RAE deems this amount reasonable, especially when considering the expected benefits i.e. securing transparency and verification of the NII PSO as well as the sound and controlled operation of the isolated electricity systems.

(36)

Contrary to YPEKA, RAE takes the view that licensing more than one supplier to be active in a given isolated system on the NIIs will not entail substantial additional cost of the infrastructure required as the same infrastructure is in any event already necessary for the daily scheduling of NII located generation units, market settlement and for providing for the NII PSO.

(37)

Furthermore, RAE deems that additional significant benefits for NII consumers exist in allowing more than a single supplier to be active.

(38)

Consequently, RAE takes the view that the permanent exclusion of alternative suppliers in NII markets is not warranted. The installation of the necessary infrastructure as described above is expected to be completed in a time period of three to five years. RAE would not oppose a possible derogation strictly for this time-period, without any further extension.

(39)

RAE further notes that in case the status of any isolated system on the NIIs changes so that it no longer falls into the category of small or micro isolated systems, the derogation should automatically cease to apply. This could arise where the isolated systems on the NIIs are interconnected with the Greek interconnected system.

(40)

Article 44(1) of Directive 2009/72/EC provides for the possibility to derogate from certain provisions of the Directive, where the derogation applies to small isolated systems and micro isolated systems.

(41)

According to Article 2(26) of Directive 2009/72/EC, a small isolated system is any system with consumption of less than 3 000 GWh in the year 1996, where less than 5 % of annual consumption is obtained through interconnection with other systems.'

(42)

According to Article 2(27) of Directive 2009/72/EC a micro isolated system is any system with consumption less than 500 GWh in the year 1996, where there is no connection with other systems.

(43)

The isolated systems identified in the application consist of one and, occasionally, several NIIs (see columns 1 and 2 of the Table). Even if an isolated system consists of several NIIs that are interconnected between them, the electricity system constituted by those interconnected NIIs is isolated, in the sense that it is not connected to any other electricity system.

(44)

The application claims that 31 of the 32 isolated systems are micro isolated systems, the largest of which is Rhodes. The micro isolated systems for which the application has been made represented 5,24 % of the total sales of electricity in Greece in 2010. The isolated system of Crete is considered a small isolated system. Crete represented in 2010 3,01 % of Greek electricity demand.

Annual demand by Isolated System

(45)

The table above contains the isolated systems as identified in the application and provides certain information on each of them. From this information it can be derived that all isolated systems, except Crete, had in 1996 an electricity demand that qualifies them as micro isolated systems within the meaning of Article 2(27) of Directive 2009/72/EC. With regard to Crete it needs to be mentioned in addition that, as Crete was and still is not interconnected to any other electricity system, the percentage share of demand satisfied through interconnectors was and still is zero, i.e. lower than 5 %. Crete is thus a small isolated system within the meaning of Article 2(26) of Directive 2009/72/EC.

(46)

The RAE opinion did not comment on the isolated systems identified in the application.

(47)

The Commission thus concludes that isolated systems as identified in column 1 of above table are all micro isolated systems within the meaning of Article 2(27) of Directive 2009/72/EC, except for Crete, which is a small isolated system within the meaning of Article 2(26) of Directive 2009/72/EC.

(48)

The Commission considers that substantial problems for the operation of conventional power plants in the micro isolated systems exist. This is due in particular to the following elements:

(49)

The Commission therefore concludes that substantial problems exist for the operation of conventional power plants within the NII isolated systems as identified in the table above.

(50)

Pursuant to Article 44(1) of Directive 2009/72/EC derogations from the provision of Chapter III can only be granted as far as refurbishing, upgrading and expanding existing capacity is concerned.

(51)

Consequently, derogation from the provisions in Chapter III of Directive 2009/72/EC cannot be granted for new capacity.

(52)

Instead, given that the isolated systems on the NIIs are distribution networks, should the authorisation procedure for new capacity fail to provide for the satisfactory authorisation of new capacity for the isolated systems on the NIIs, the Greek authorities may consider using the provisions of Article 7(3) of Directive 2009/72/EC also for new small conventional capacity. Such new small conventional capacity may for instance include temporary generation capacity that may be made available on a long term basis without permanent attribution to a specific location.

(53)

As stated above, all NIIs are micro isolated systems, with the exception of Crete, which is a small isolated system.

(54)

Consequently, derogation from the provisions in Chapter III of Directive 2009/72/EC cannot be granted for Crete.

(55)

The application does not explicitly mention that the requested derogation regards conventional plants only.

(56)

Article 133(3) of Law 4001/2011 however expressly excludes electricity produced by using renewable energy sources, by high-efficiency cogeneration or hybrid plants and in the case of auto producers from the scope of exclusive production licence that may be awarded to PPC. The same follows from Article 225 of the NII Code.

(57)

Moreover, the provided justification relates to substantial problems with the operation of conventional power plants only. In fact, it is reasoned that those power plants are confronted with substantial problems as a result, inter alia, of the increase in RES penetration.

(58)

Consequently, even if the application should seek to request derogation from the provisions of Chapter III of Directive 2009/72/EC for generation plants other than conventional power plants, the derogation cannot be granted, as no grounds justifying it were provided.

(59)

In view of the above-mentioned substantial problems for the operation of conventional power plants within the small isolated systems, derogation can be granted for the authorisation of existing conventional capacity to the extent that this concerns the refurbishing, upgrading and expanding of existing conventional capacity. Such authorisation can be directly granted to PPC.

(60)

For the purpose of this derogation:

(61)

However, there are no grounds for a derogation from the criteria and conditions, such as those laid down in Article 7(2) of Directive 2009/72/EC, under which an authorisation is granted to PPC.

(62)

Moreover, in case the derogation is granted directly to PPC, it is important that the terms stipulate the obligations as regards the time by which the authorised conventional power plant must be fully operational and include provisions ensuring full and effective compliance with such obligations. Upon expiry, on RAE's sole discretion, such direct authorisation can be prolonged but only if it expired for reasons fully beyond the control of PPC. Upon expiry, RAE should organise an authorisation procedure in full compliance with Article 7(1) of Directive 2009/72/EC, thus including the participation of third parties.

(63)

By definition, tendering within the meaning of Article 8 of Directive 2009/72/EC concerns the capacity that remains to be constructed and authorised and, hence, constitutes new capacity.

(64)

For the reasons already set out above, derogation for new capacity should not be granted pursuant to Article 44(1) of Directive 2009/72/EC.

(65)

The application concerns the derogation from Chapter VIII of Directive 2009/72/EC and, hence, may be deemed to include a request for derogation from the provisions of Article 32 regarding third party access (‘TPA’).

(66)

The application does not specify whether the requested derogation also covers Article 32 of Directive 2009/72/EC nor does it provide any grounds justifying such a derogation. Instead, Law 4001/2011 and the NII code oblige DEDDIE to provide non-discriminatory third party access to the distribution system as operated by DEDDIE (e.g. Article 127 of Law 4001/2011). Consequently, such a derogation cannot be granted.

(67)

The application essentially argues that PPC should remain the sole supplier licensed to supply customers on the NII on the grounds that developing the necessary infrastructure for the operation and supervision of the electricity market in micro isolated systems together with those necessary for market opening for third party suppliers entails operating costs to the NII operator that outweigh the benefits that may accrue to consumers from market opening.

(68)

As becomes apparent from the RAE opinion, the infrastructure installed on the NIIs seeks to ensure that the NII PSO can be administered, in compliance with existing law, in a transparent, verifiable and non-discriminatory manner. Moreover, the infrastructure is required for operating the NII isolated systems from a technical and economical point of view. Consequently, as the infrastructure is necessary in any event to meet those requirements, regardless as to the number of suppliers that are licensed on the NIIs, market opening does not increase the cost of the infrastructure.

(69)

Even if similar infrastructure is required, market opening is not intrinsically connected to the technical operation of the isolated systems on the NIIs or the NII PSO as there is no causal link between the technical and economical operation of these isolated systems and the operation of the NII PSO in accordance with the relevant legal requirements on the one hand and the question as to whether one or several suppliers are licenced to supply NII electricity consumers on the other hand.

(70)

It is correct that the higher production costs in the NIIs as compared to the production costs in the interconnected system must be recovered from suppliers active in the NIIs by repartitioning the respective part of the NII PSO compensation as a function of the electricity sales to their customers. However, establishing the production costs on the NIIs is in any way required to determine the financial compensation for the NII PSO, regardless as to the number of suppliers active on the NIIs.

(71)

The sole additional requirement for market opening is the repartitioning to each supplier of the respective parts of the NII PSO compensation as a function of the electricity sales of their customers. Even the related customer data, in particular metering data, are required regardless as to whether one of more than one supplier is licensed to supply NII based customers.

(72)

Consequently, granting the NII PSO compensation to suppliers merely entails the ability to attribute customers' metering data to a particular licenced supplier, which is primarily an administrative process based on information entirely or to a very large extent collected regardless as to whether market opening on the NIIs exists or not. Secondly, this ability is a precondition for the proper operation of any electricity supply market. Such costs can therefore not be accepted as providing grounds for derogation for market opening, as they are not specific to the operation of the isolated systems on the NIIs and connected to a substantial problem in the operation thereof.

(73)

It is important to note that drawing up registers to attribute metering information to suppliers is part of the infrastructure to be put in place. Whereas putting in place the full envisaged infrastructure will facilitate the optimal operation of isolated electricity systems, the full realisation of the related investments is not a necessary condition for market opening to take place.

(74)

The fact that a large variation in the values of the average annual variable production cost per NII may exist is immaterial. Indeed, even if substantiated, such variation concerns the cost of producing electricity within the NII isolated systems. Establishing this amount is already required for administrating the NII PSO in accordance with the legal requirements and, moreover, is not affected in any way by the number of suppliers licenced to supply NII based customers. Moreover, in view of the fact that the administration of the NII PSO is already based on a monthly system for each isolated system separately, it is difficult to conceive that large annual variations per NII can give rise to material problems.

(75)

It follows from the above that the number of suppliers licensed to supply customers on the NIIs is neither intrinsically linked to the technical and economic operation of the isolated systems nor to the operation of the NII PSO in accordance with the relevant legal requirements.

(76)

It can moreover be noted that market opening has benefits that outweigh the costs, should those exist, of market opening. As RAE notes, alternative suppliers in the NIIs could provide additional significant benefits to the NII based customers by combining the provision of other services with that of electricity supply.

(77)

Consequently, the request for derogation on a permanent basis from Article 33 should not be granted.

(78)

In view of the above, it must be recognised that market opening requires setting up practical arrangements to enable the NII isolated systems to be operated fully in line with the NII Code. Practical problems related to market opening may entail either the unavailability of the registers required to attribute meters and metering data to suppliers or the fact that the optimal infrastructure configuration is not yet in place On this basis, granting a derogation from Article 33 of Directive 2009/72/EC that is limited in time can be envisaged.

(79)

In assessing the duration of such a derogation from Chapter VIII, the following two considerations are relevant:

(80)

Consequently, a derogation from market opening should be granted for at least 2 years after the entry into force of the NII Code, i.e. until 17 February 2016, in order for the registers, that are a necessary requirement for market opening, to be established. As the full infrastructure has to be installed at the latest 5 years after the entry into force of the NII code, the validity of the derogation should in any event be limited to 5 years after the entry into force of the NII code, i.e. until 17 February 2019 for any of the NII isolated system. However, as the derogation can only be justified where substantial and material problems remain for market opening that are directly attributable to the non-completion of the infrastructure investment programme on the NIIs, it should be verified regularly whether such problems persist on a given NII isolated system. Such verification should use as a benchmark an investment plan by DEDDIE, approved by the competent Greek authorities, for the installation of the required infrastructure on the NIIs. This plan should therefore be finalized and approved by 17 February 2015.

(81)

In order not to delay market opening unnecessarily, the infrastructure investment plan of DEDDIE should be approved by RAE and should prioritise the isolated systems of Crete and Rhodes, as those are the most populous NIIs.

(82)

From 17 February 2016, and thereafter on an annual basis until 17 February 2019, DEDDIE should draw-up a report, which should be approved by RAE, specifying on what grounds market opening has not yet occurred in a given NII isolated system. This report should be published and notified to the Commission.

(83)

The application concerns derogation from Chapter VIII of Directive 2009/72/EC and, hence, may be deemed to include a request for derogation from Article 34 regarding direct lines within the meaning of Article 2(15) of Directive 2009/72/EC.

(84)

The application does not specify whether the requested derogation also covers Article 34 of Directive 2009/72/EC.

(85)

Consequently, even if the application is meant to request derogation from Article 34 of Directive 2009/72/EC, such a derogation should not be granted as no grounds justifying it were provided.

(86)

The present derogation concerns micro isolated systems that are precisely characterised by the fact that they are not or, in the case of small isolated systems, only to a very limited degree, interconnected with other electricity systems.

(87)

However:

(88)

It is necessary to explicitly provide that the present derogation for a given isolated system ceases automatically as soon as an interconnection between a given isolated system and the Greek interconnected system has become fully operational.

(89)

DEDDIE, even if legally and functionally unbundled, is 100 % owned by PPC. Contrary to a distribution system operator within the meaning of Directive 2009/72/EC, DEDDIE also has extensive tasks in the operation of the NII isolated systems and the operation of generation on the NIIs, including the conventional generation capacity owned by PPC and, hence, its economic remuneration. As set out above, interconnection affects the economic viability of the conventional power plants currently installed within the isolated systems on the NIIs.

(90)

Derogations should only be granted if they are proportional and do not go beyond what is strictly necessary. It is therefore necessary to provide clear incentives and transparency as regards decisions whether to interconnect the NII isolated systems.

(91)

Article 108 of Law 4001/2011 provides that:

‘ ADMIE SA shall submit a ten-year Greek electricity transmission system development plan to the RAE by 31 March each year […] The ten-year Greek electricity transmission system development plan shall in particular: […] (c) provide a technical and financial cost-benefit study for important transmission works […], especially for […] connectors between islands and the transmission system, including a timeframe, estimated cash flow and financing requirements for all investment projects ’

(92)

In order to ensure that clear incentives and transparency as regards decisions whether to interconnect the NII isolated systems exist, the Greek authorities should ensure that:

(93)

It is necessary to review the facts on which the present derogation is based, in particular after the plans for interconnecting certain isolated systems are due to be completed and the deadlines for installing the infrastructure as provided for in Article 237 of the NII Code have expired.

(94)

Consequently, any derogation shall be valid until 1 January 2021.

(95)

As stated above, the application of 17 January 2012 renewed the initial application that was submitted in 2003.

(96)

Article 26(1) of Directive 2003/54/EC, repealed by Directive 2009/72/EC, also contained provisions allowing Member States to apply for derogations from certain provisions of that Directive in case of substantial problems with the operation of small and micro isolated systems. Pursuant to article 48 of Directive 2009/72/EC references to the repealed Article 26(1) of Directive 2003/54/EC shall be construed as references to Article 44(1) of Directive 2009/72/EC.

(97)

The definitions of small isolated system and micro isolated system employed in Article 2(26) and (27) of Directive 2003/54/EC are identical to those used in Article 2(26) and (27) of Directive 2009/72/EC.

(98)

Both these definitions refer to the demand for electricity in isolated systems in 1996, which did not change. Moreover, Crete was not interconnected to the Greek interconnected system neither in 2003 nor in 2012, or at the moment at which the present derogation decision takes effect

(99)

Consequently, all micro and small isolated electricity systems that qualify as micro or small isolated system in the application, qualified as such when the initial application was made and when the present derogation decision takes effect.

(100)

Consequently, no legal or factual changes have occurred with regard to the small and micro isolated systems that may qualify for derogation under Directive 2003/54/EC and Directive 2009/72/EC.

(101)

Article 26(1) of Directive 2003/54/EC allowed granting derogation from its Chapter III, which contains provisions, as those of Chapter III of Directive 2009/72/EC regarding authorisation procedures for new capacity and tendering for new capacity.

(102)

Article 26(1) of Directive 2003/54/EC allowed granting derogation from its Chapter VII which contains provisions, as those of Chapter VIII of Directive 2009/72/EC, concerning third party access, market opening and direct lines.

(103)

Had the Commission granted derogation in response to the initial application, it could have done so on the same terms as under the present derogation under Directive 2009/72/EC.

(104)

Moreover, no change in the factual circumstances has occurred since 2003. Indeed, the geographical situation of the NIIs, the economic factors governing the operation of the electrical systems within NII isolated systems and the nature of the substantial problems that exit with the operation of conventional power plants within the NII isolated systems have not materially changed since 2003.

(105)

The initial application has been pending since 2003. The non-action of the Commission should not be to the detriment of the Hellenic Republic. The Hellenic Republic has complied with its obligations under Article 26(1) of Directive 2003/54/EC and Article 44(1) of Directive 2009/72/EC and submitted a duly justified request for derogation under those Articles for the isolated systems on the NIIs.

(106)

It is therefore appropriate that the present derogation decision takes effects from the date of notification of the initial application, i.e. from 5 December 2003,