COMPETITION COUNCIL
LexInter | October 14, 2003 | 0 Comments

OPINION OF THE COMPETITION COUNCIL

The Competition Council (plenary session),

Having regard to the letter registered on March 18, 1998 under number A 240, by which the Minister of the Economy, Finance and Industry and the Secretary of State for Industry referred the matter to the Competition Council, on the under Article 5 of Ordinance No. 86-1243 of 1 st  December 1986 a request for an opinion on the principles to be respected or down provisions to ensure the competitive functioning of the electricity market;

Having regard to the modified treaty of March 25, 1957, establishing the European Community;

Having regard to Directive 96/92 / EC of the European Parliament and of the Council of the European Union of December 19, 1996 concerning common rules for the internal market in electricity;

Considering Ordinance No. 86-1243 of 1 st  December 1986 as amended relating to freedom of prices and competition and Decree No. 86-1309 of 29 September 1986 modified for its application;

Considering the law n ° 46-628 of April 8, 1946 on the nationalization of electricity and gas;

Having heard the rapporteurs, the general rapporteur and the government commissioner, the representatives of EDF, the General heating company and Usinor-Sacilor heard in accordance with the provisions of article 25 of the aforementioned ordinance;

Is of the opinion to respond to the request presented in the sense of the following observations:

The Minister of Economy, Finance and Industry and the Secretary of State for Industry seized the Competition Council on the basis of Article 5 of the Ordinance of 1 st  December 1986 a request for an opinion on the analysis that can be made, in terms of competition, of the various options considered with regard to the adaptation of the electricity system in France with a view to the transposition of Directive 96/92 / EC of the European Parliament and of the Council of the European Union.

To this end, a document entitled “Towards the future French electricity organization” has been prepared. The opinion of the Competition Council was requested by the ministers, in particular on the various options retained by this “White Paper”, concerning the conditions of access to the electricity production market, the conditions of access the transmission and distribution networks, the conditions for exercising the activity of the operators of the corresponding networks, the methods for setting prices and the rules applicable to separate the various activities.

The movement to open up the electricity sector to competition began in June 1987 at the Copenhagen Energy Council, and resulted in the adoption of Directive 96/92 / EC of the European Parliament and of the Council. of the European Union dated December 19, 1996.

By adopting this directive which outlines the contours of a single electricity market, the States of the European Union have agreed to modify the organization of their national electricity sector before February 19, 1999. While some of these States, such as Sweden, Finland and the United Kingdom have implemented reforms which already seem to meet the main provisions of the said directive, others, such as Germany or Italy, have not yet completed the process of its transposition.

Before examining the competition concerns raised by the options identified in the White Paper (II), it is appropriate to briefly describe the main provisions of the Directive as well as the electricity sector (I).

 I. – The electrical sector in Europe and France

A. – TOWARDS A SINGLE ELECTRICITY MARKET

1. The community issue of market opening

The original text of the Treaty of Rome does not contain any specific provision concerning energy, which is the subject of the Treaties establishing the ECSC and Euratom; the Single Act entered into force on 1 st  July 1987 did not formally included in the completion of the program “internal market”. However, Title XII of the Treaty on European Union provides for the development of trans-European networks in the energy infrastructure sectors, as well as the interconnection and interoperability of national networks to promote the opening up of disadvantaged regions.

Since the 1930s, the electricity systems of European countries have been characterized by production and transport monopolies, integrated in law or in fact with monopolies serving the end customer.

The technical and economic characteristics of electricity production have led to the emergence of a common industrial model in all states. The method of electricity production, which is essential for the majority of uses, qualified as “centralized”, is very capital intensive: the initial investments are very important and the depreciation periods very long (for example a nuclear unit of 1,300 MW costs 15 billion francs and is amortized over at least thirty years). To make these investments profitable, it is necessary, in return, to produce on a large scale, which has favored the development of monopoly structures.

Over the past ten to fifteen years, however, techniques for generating electricity from cogeneration or combined cycle gas turbines have improved their performance. These techniques require much less heavy investment but, above all, benefit from the very low level of gas prices. In addition, they are less sensitive to economies of scale, which facilitates production at a more decentralized level. New operators are therefore in a position to enter national markets. Consequently, it appeared that it was no longer necessary to preserve a total monopoly in the sector, transport nevertheless remaining a natural monopoly. In addition to this deregulation argument, the European Commission considers it a concern to decompartmentalize national electricity markets.

The first phase of the completion of the internal electricity market took place in 1990 with the adoption of two directives. Directive 90/377 / EEC of June 29, 1990 established a community procedure ensuring price transparency for the industrial end consumer of gas and electricity. Council Directive 90/547 / EEC of 29 October 1990 relates to the transit of electricity on large high voltage networks, from or to Community territory and involving the crossing of at least one Community border.

At the same time, the Commission applied competition law to energy and in particular article 37 of the Treaty, making, moreover, a minimal application of 2 of article 90. In an IJssel Centrale decision of 16 January 1991 ( Case IV / 32.732), it recognized, for the first time, that Dutch electricity production companies, having an obligation to deliver electricity to electricity distribution companies and to supply it at the lowest cost, were responsible for “services of general economic interest”. It condemned as excessive, in the light of these obligations of general economic interest, the contractual export and import restrictions imposed by these companies.

The Commission also challenged national laws where monopolies for the import and export of electricity and / or gas still existed, by initiating nine infringement proceedings in the course of 1991.

In the Almelo judgment of 27 April 1994 (case C 393/92), the Court of Justice of the European Communities applied the 2 of Article 90 of the Treaty of Rome to the electricity sector, considering that the competition rules do not apply to the electricity sector. ‘apply to companies responsible for the management of services of economic interest only “in so far as the application of these rules does not prevent the fulfillment in law or in fact of the particular mission which has been assigned to them”.

This case-law was confirmed and clarified in the judgments of 23 October 1997 concerning the exclusive rights to import and export gas and electricity, indicating that, in the context of infringement proceedings, it is not the responsibility of the Member State, “when it sets out in detail the reasons why, in the event of the abolition of the incriminated measures, the accomplishment, under economically acceptable conditions, of the missions of general interest with which it has entrusted a company, would be, in his eyes, accused, to go even further to demonstrate positively that no other conceivable measure (…) can ensure the accomplishment of said missions under the same conditions “.

Furthermore, the Court ruled that the security of a minimum supply of basic energy products was one of the components of “public security” and could justify derogations from Article 37 of the Treaty, according to the provisions of the Article 36 of the same Treaty (July 10, 1984, case 72/83 – Campus Oil Ltd and others v. Minister of Industry). The Court also gave a legal basis to the use of the electricity sector as an instrument of security of supply in a so-called “Telecommunications terminals” judgment of 19 March 1991.

2. Economic data 

Intra-community trade is, for the time being, limited to exchanges carried out within the framework of the Union for the coordination of the production and transport of electricity (UCPTE), which brings together the incumbent operators of the Member States of the European Union and organizes voluntary cooperation between them for the technical management of international connection networks. These exchanges represent 10% of Europe’s consumption, in the form of relief and sharing of reserves, hour-to-hour exchanges and guaranteed energy exchanges. Favored by the chronic under-capacities of certain States, such as Italy, and by the competitiveness of surplus countries, such as France, Belgium and Spain, electricity exchanges doubled between 1980 and 1990.

 3. The main provisions of Directive 96/92 / EC 

By adopting this directive, the European Parliament and the Council of Ministers have chosen the path of gradually opening up the electricity production market to competition. Certain electricity consumers, known as “eligible customers”, will be able to buy their electricity from the suppliers of their choice, by making them compete. The directive thus defines the contours of a competitive electricity market, which will exist alongside a captive market where end consumers will not have the choice of their electricity supplier. Article 19 sets a progressive threshold for market liberalization, calculated at Community level. When the directive enters into force in February 1999, each state will have to open up to competition at least 22% of its national electricity production market.

The directive does not deal with the opening up to competition of the transmission and distribution of electricity. It asks the States to organize the access of independent producers to national electricity transmission and distribution networks which continue to be managed by the former monopolies. To this end, the Member States can choose between three forms of access to the networks described in Articles 17 and 18 of the Directive: negotiated access (article 17-1), regulated access (article 17-4) and single buyer system (Article 18). In the context of negotiated access, the users authorized to request access to the network negotiate on a case-by-case basis, with each of the network operators, the price of access to the network, while in the regulated access system, tariffs are subject to regulation and are set by the competent authority. The single purchaser system is technically close to the other two, but it amounts, as described in article 18-2, to obliging the single purchaser to publish a sales rate to eligible customers.

It is up to each Member State to designate a transmission network manager, responsible on the one hand for the operation, maintenance, development of the network and security of supply and, on the other hand, for technical management of energy flows on the network, ensuring its security and operation.

The directive does not oblige Member States to split integrated electricity companies into production, transmission and distribution activities (“unbundling”). Article 14 requires the presentation of separate accounts for each of these activities and the presentation of “consolidated accounts” for activities carried out outside the electricity sector.

Under Article 20, States designate a ”  competent authority, which must be independent of the parties, to” settle disputes relating to the contracts and negotiations in question  “.

The directive places great emphasis on the principle of subsidiarity as well as on the concept of public service, recalled in Article 3.

The States must thus, within the limits of the opening traced by the directive, define the eligible customers. They may or may not include distributors or resellers without their own means of production. With regard to the siting of new production plants, they can opt between an authorization system and a more formalized tendering system. They choose how producers access the network. They also have great latitude in organizing the operation of the sector open to competition. The text does not specify whether physical bilateral transactions are authorized, on the Scandinavian, American or Spanish mode, or on the contrary prohibited, in accordance with the British pool model (exchange where a spot electricity market is organized where producers and eligible end customers meet). It is silent on the desirable form for possible futures, organized or over-the-counter markets.

Finally, by virtue of 2 of article 3 of the directive, the Member States are free ”  to impose on companies in the electricity sector public service obligations, in the general economic interest, which may relate to the security, including security of supply, regularity, quality and price of supply, as well as environmental protection  “. To ensure that these obligations are met, they can rely on long-term planning of needs.

Article 24 allows Member States to ”  request to benefit from a transitional regime  “, for example to be able to ask electricity producers to financially compensate for the “stranded costs” of the incumbent producer, that is to say the costs that have become irrecoverable for the latter as a result of the transition from a monopoly situation to a regime partially open to competition.

Article 26 specifies that the European Commission will draw up a report on the experience acquired in the functioning of the internal electricity market, in order to allow the European Parliament and the Council of Ministers to examine the ”  possibility of a new opening of the market, which would become effective nine years after the entry into force of this Directive  “.

The Member States must transpose the provisions of the directive by February 19, 1999 at the latest, with the exception of Belgium, Greece and Ireland, which have an additional time, due to the specificities of their network electric.

4. The challenges of transposing the directive in Europe

The establishment by the directive of common rules for the internal electricity market creates for the States and their operators an imperative of competitiveness which must be based on a strategic analysis of the sector.

Future competition will have little to do with a battle of small independent producers selling off their plant’s product. As the results of recent American calls for tenders show, competition at the production stage will mainly take place between groups capable of operating fleet effects and, therefore, relying on large markets.

In the downstream electricity market, competition will come from entities capable of carrying out several activities (centralized and decentralized production; cogeneration; supply of guaranteed kWh; metering and billing, information processing and consulting services. in energy engineering, facility management; joint provision of other local services, etc.).

This competition will come mainly from large companies, in particular network companies, able to adapt quickly to changes in demand. To ensure the functioning of the market adapted to the exercise of competition, the national authorities will have to take the measure of the stakes and in particular be able to set up an organization guaranteeing a fair treatment of the operators and considering the taking of industrial risks. It seems that the continental states of the Union are embarking on this path.

In the light of the operations in progress, it is clear that, insofar as the adaptation of companies in the sector depends directly on them, the European States are already engaged in operations of restructuring of the offer. Where production is dispersed, concentration operations develop; Thus, discussions are well advanced in the Netherlands so that there will soon be only one electricity producer and two producers dominate the sector in Spain with 80% of the market (Iberdrola and Endesa). Where the producer is already of good size but not very present on the downstream markets, the regulator enables it to strengthen itself: Vattenfall, the Swedish public operator which holds 50% of the national production market and more than half of the regional networks , thus acquired a 15% market share in the distribution sector in a short period of time, through acquisitions; Sydkraft, the second largest producer with 23% of the market, has embarked on the same path.

Where a “spot” electricity market has been organized, where prices are established at levels close to variable costs because of the existence of overcapacities, the State may be tempted to resort to the reimbursement mechanism. costs incurred by the incumbent operator and which have become irrecoverable as a result of opening up to competition (stranded costs). Thus, the Spanish authorities have set the amount of costs of this kind at nearly 80 billion francs that national producers will be able to recover over ten years.

Regarding alliances in the energy sector or diversification into other local services or telecommunications, the national authorities have approved such guidelines. The phenomenon is not new, particularly in Germany, where electricity generation companies belong to widely diversified groups. It is in Italy where, while various hypotheses of restructuring of the national company Enel are evoked, this one established partnerships with the American companies Enron and Entergy and formed with Deutsche Telekom and France Télécom a company intended to run. the third mobile telephone license, as well as entry into the fixed telephone market. The phenomenon is also recent in Spain, where Endesa, a company with a dominant public shareholder,

These structural changes make it possible to take the measure of the task awaiting the French public authorities while taking into account the specificities of the national context.

B. – ELECTRICITY MANAGEMENT IN FRANCE

1. EDF’s monopoly

Under the terms of articles 1 and 2 of the law of April 8, 1946, companies producing, transporting and distributing electricity, with the exception of companies producing and distributing electricity which were already placed under the control of public capital or cooperatives at the time of nationalization, as well as the activities of importing and exporting electricity, were nationalized and entrusted to a national public industrial and commercial establishment (EPIC), called Electricité de France (EDF).

In 1998, EDF provided 90% of national electricity production (94% if we include the production of the Compagnie Nationale du Rhône), 100% of transmission and 95% of distribution.

National electricity production in 1997 amounted to 481 TWh (489 TWh in 1996). Of this total, nuclear power represents 78%. EDF produced 453.5 TWh, of which 83% of nuclear origin, 13% of hydraulic origin and 4% of conventional thermal origin (including 3% coal and 1% fuel oil). The net balance of electricity exchanges with foreign countries stood at 65.3 TWh, EDF being the leading European company to export electricity. The installed capacity of the park in 1997 was 102,500 MW, broken down into 61,500 MW of nuclear origin, 17,700 of thermal origin and 23,300 of hydraulic origin.

As electricity cannot be stored, production must adjust in real time to the quantities demanded, while demand varies depending on the climate, the season, the hours of the day and economic activity. Basic and semi-basic power plants – capital-intensive but fuel-efficient nuclear and hydraulic power plants – are used to meet most of the demand, while to meet peak-hour demand it is necessary to use much more expensive production units, such as conventional thermal installations.

In 1997, electricity consumption, which tends to stagnate, amounted to 410.5 TWh against 414 TWh in 1996. Excluding losses, consumption of industries on own production (12.6 TWh) and internal sales to EDF, net electricity sales in 1997 amounted to 369.9 TWh, which can be divided between three main categories of buyers: large industry and large customers, numbering around 600 , (green tariffs B and C) which buy 27% of the electricity, small and medium-sized businesses, communities and businesses (green A and yellow tariffs) 35%, households, traders and craftsmen (blue tariffs) 38%.

EDF exclusively transports electricity through the high and very high voltage network to its large industrial customers. The public establishment distributes electricity in 95% of the municipalities, which uses the low and medium voltage network.

The distributors not nationalized in 1946 (DNN), ie nineteen “independent” entities, have the distribution concession on the territory of 2,789 municipalities. These are municipal distribution boards, departmental boards and rural cooperatives.

2. EDF accounts

In 1997, EDF’s turnover amounted to 186.5 billion francs, slightly down on 1996 (191 billion), taking into account a slight decrease in production and the tariff reduction in April 1997 in application of the company contract signed with the State on April 8, 1997. The net accounting result, after payments to the State (1.5 billion francs in remuneration of capital allocations, 1 , 1 billion additional remuneration and 3 billion in respect of corporation tax), amounts to 1.5 billion francs. In 1997, for the first time, the public establishment became liable for corporation tax.

EDF’s financial statements are presented in accordance with the rules in use in industrial and commercial companies, taking into account certain specific principles, having regard to the specific characteristics of the company. They only become final after joint approval by the Minister responsible for the economy and the Minister responsible for industry. A decree of 22 October 1947 requires it to adopt a specific chart of accounts submitted for examination by the National Accounting Council and approved by interministerial decree. Under the terms of article 4 of the law of April 8, 1946, EDF services are subject to the control of auditors appointed by the minister responsible for the economy.

3. The supervision and control of EPIC

In the Ministry of Industry, the management of gas, electricity and coal (DIGEC) is responsible, under Article 13 of Decree 93-1272 of 1 st  December 1993, “the development and implementation of government policy in the field of electricity, (…). It is responsible for the preparation and application of texts concerning the use and operation of services (. ..) of electricity. It exercises supervision over Electricité de France (…) and (its) subsidiaries and State technical control over all companies and organizations contributing to the public service (…) ) electricity “. It is also competent “for statutory and social problems of interest to all organizations contributing to the public service (…

Decree n ° 53-707 of August 9, 1953 relating to State control over national public enterprises is applicable to EDF

4. The specificities of the French system

France occupies a special place in Europe, because of the choices made regarding public service and energy policy, the competitive situation, present and future, of its incumbent operator, the way in which the latter is regulated, and the status social with which it is endowed.

France has entrusted its public operator with missions of general interest more extensive than those imposed in most other European countries, and first of all the supply at an accessible and uniform price throughout the national territory, including in the overseas departments, which implies an equalization of tariffs. Secondly, EDF is implementing one of the main components of the energy policy based on independence with regard to imports, in particular gas, and which is characterized by the high share of nuclear production in total electricity production. .

France has a high-performance operator with EDF whose competitive advantage tends to diminish due to the fact that other electricity producers on the one hand improve their productivity and on the other hand develop through clean growth or acquisitions. In addition, the range of production technologies making it possible to compete with its successes in the production of electricity from nuclear and hydraulic sources (centralized and decentralized gas production, medium and small cogeneration) is widening.

The regulatory process of the French operator is moreover reduced for the moment, in fact, to a not very transparent tete-a-tete between the public authorities and him. However, such a face-to-face meeting today appears inadequate, as the demand for public debate on energy policy is strong, while local communities are eager to get involved in the control of distribution companies and the arrival new players seem inevitable.

From the point of view of competition, the French operator finally appears to be linked more than any other European operator to the public authorities because of its status as an EPIC Unique in Europe, the scope of its industrial activity is set by the law governing it. constitutes, in the name of the principle of specialty, and this principle has a strict expression today. Its strategy is controlled directly by the State in its capacity of “sole shareholder”, until now with modest means and in a largely administrative mode.

 II. – Principles and provisions for effective competition

A. – PUBLIC SERVICE AND COMPETITION MISSIONS

1. Services and obligations of general interest

The definition of services of general economic interest

Current situation

EDF is invested with missions of general interest as a concessionaire of the electricity transmission network, called the general supply network (RAG). Under the terms of article 8 of the specifications, the public establishment must maintain, renew and extend the transport network, so as to fulfill the obligation to supply the electrical energy defined in article 10. Article 24 also obliges it, in its capacity as network concessionaire, to strict equality of treatment on the one hand of all customers and on the other hand of all independent producers having the same “electrical characteristics” ( periods – power – voltage – supply).

The provisions of the White Paper

The White Paper proposes to include in law a definition of the public service missions devolved on EDF and non-nationalized distributors, namely universality, equality, quality, continuity, the search for the lowest cost and adaptability. The means to achieve these objectives are the long-term programming of investments, research and technological development as well as the obligation to purchase electricity produced from certain energy sources.

Competitive analysis

Article 3 of the Directive, referring in particular to the provisions of Article 90 of the Treaty, provides that Member States may impose public service obligations on undertakings in the electricity sector, in the general economic interest, which may relate to security, including security of supply, regularity, quality and price of the supply as well as environmental protection.

As the Court of Justice of the European Communities ruled in the judgments of 23 October 1997 relating to monopolies of import and export of electricity and gas (in particular C.159 / 94), it is necessary, to attribute to a public operator with exclusive rights in compliance with the rules of the Treaty, whether the operator is expressly entrusted by an act of public authority (law, regulation, or even public service concession) with the management of a service of interest general economic, that the resulting “particular mission” be precisely defined and, finally, that it be established that the exclusive rights granted are necessary to allow the accomplishment of this mission, under acceptable economic conditions. This same demonstration should be made in 2006, when examining the effects of the directive,

It is therefore necessary that the services of general economic interest devolved to public operators (EDF, non-nationalized distributors) be precisely identified. By virtue of the same article 3 of the directive, the “specific tasks” constituting them must be clearly defined, transparent, non-discriminatory and verifiable. The Court of Justice of the European Communities has a broad conception of these particular missions, since it implicitly recognized in the aforementioned judgments of 23 October 1997 that the obligation to seek the most competitive rates and the lowest cost for the community, as well as that environmental and regional planning obligations could constitute services of general economic interest.

The definition of these particular missions devolved to public operators is all the more important as the exclusive rights from which they can benefit are justified by the existence of these missions.

From the point of view of their content, the missions of general interest assigned to the French electricity sector for the years to come are not limited to the obligation to connect everyone to a network ensuring quality distribution. They consist in ensuring the supply of electricity in a continuous manner, at a lower cost, at a uniform price throughout the territory according to a national equalization and from a combination of fuels (and therefore of manufacturing techniques) preserving security. supply, that is to say including nuclear and clean coal, and limiting dependence on gas.

The “support” activities for the accomplishment of these missions must be identifiable. For example, EDF will have to determine the contribution of each of its activities to the performance of these missions. The production activity, which represents 50% of the cost of the kilowatt / hour on the meter, is primarily concerned.

The financing of services of general economic interest and other obligations related to public policies

The provisions of the White Paper

The White Paper proposes that certain “public service charges”, such as national tariff equalization, be financed by EDF and non-nationalized distributors in return for the exclusive rights they enjoy (transmission and distribution monopolies). He also suggests that other charges related to public policies (additional cost due to aid for renewable energies, equal treatment of overseas departments) be paid by a tax on transport or by the creation of a fund for general interest charges. .

Competitive analysis

It is necessary to clearly distinguish services of general economic interest, which will be the responsibility of one or more operators and to which exclusive or special rights may be associated according to the aforementioned case-law of the Court of Justice, from other missions related to public policies, such as the obligation to purchase electricity produced from renewable energy sources, which are imposed on the electricity sector as a whole and should therefore be paid for by all actors.

With regard to the financing of these other missions of general interest, the White Paper provides for the participation of independent producers and eligible consumers on the competitive market in the financing of some of them.

The Competition Council is in favor of such financing through a fund, a mechanism which it considers preferable to a system of additional charges to the price of transport: this method is, in fact, more transparent, it makes it possible to identify the financing of missions of general interest and the cost of transport and it presents a lower risk of price distortion.

Finally, the Council recommends that the costs of services of general economic interest and missions of general interest be assessed by the regulatory body, according to a model that is “verifiable, opposable and transparent”.

2. The evolution of the activity of the public operator

Previous situation

EDF is subject, like any public establishment, to the principle of specialty. Its object is strictly delimited by the provisions of article 46 of the law of April 8, 1946 as amended, under the terms of which decrees must set ”  the conditions under which the distribution services must cease all industrial and commercial activities relating to repairs, maintenance of indoor facilities, sale, lease of appliances and, in general, all activities other than those defined in Article 1 st  “, ie production, transport, distribution, import and export of electricity. These texts have still not intervened.

In an opinion of July 7, 1994, the Council of State recognized the existence of a ”  certain legal margin of diversification  ” of EDF and determined the two conditions which must satisfy the economic activities of diversification of an industrial establishment. and commercial to respect the principle of specialty:

these activities must be the normal complement of its main statutory mission;

they must be both of general interest and directly useful to the public establishment “in particular by its adaptation to technical developments, to the requirements of a good management of the interests entrusted to the establishment, the know-how of its personnel, the vigor of its research and the enhancement of its skills, all means put at the service of its main purpose “.

With regard to these principles, the Council of State considered admissible the exercise of activities of waste treatment, public lighting, engineering, unlike activities of cartography, remote monitoring and cable networks.

In an opinion n ° 94-A-15 of May 10, 1994 relating to a request for an opinion on the problems raised by the diversification of the activities of EDF and GDF with regard to competition law, the Competition Council recommended a number of measures to ensure that EDF subsidiaries operate under conditions comparable to those of private companies in the same sector. In particular, it requested the grouping of all of the company’s diversification activities under a common holding company which would gain access to the capital market, the creation of subsidiaries for each of these activities and the establishment, for each of the subsidiaries thus formed, of a legal autonomy,

The Board also recommended vigilant monitoring of the company’s diversification into new sectors and called for a concrete assessment of the consequences of the diversification process depending on the structure of the markets concerned, since atomized markets with little capital need to be subjected to special vigilance.

Following these two opinions, the Minister of Industry, the Minister of the Economy and the President of EDF undertook, by letters of April 26 and May 4, 1995, to respect a protocol relating to the complementary activities of EDF dated April 13, 1995. This protocol incorporates the main provisions of the two opinions cited above. The Minister of Industry set up, within DIGEC, a diversification observatory, responsible for monitoring the application of the protocol. This observatory has no power of sanction and has a purely advisory role. Composed of representatives of the main trade unions concerned, representatives of EDF and representatives of the ministries concerned,

EDF has withdrawn from mapping and remote monitoring. Two holding companies bring together all of its diversification subsidiaries: SDS (Synergy, development and services), and CHARTH (Holding company for thermal application and production).

The SDS holding company brings together both diversification services complementary to EDF’s activity and services more closely linked to its main activity (electricity distribution, energy services). The diversification services are mainly attached to two holding companies SDS Environnement and Citelum whose capital is 100% owned by EDF SDS Environnement manages the group’s shareholdings in the field of waste incineration in France and abroad, thanks in particular to the Tiru company, 51% controlled; Citelum brings together public lighting, signage and illumination activities. The SDS holding company also participates in videocommunication activities, thanks to its two “cable operators”, the Electricité de Strasbourg group and the Videopole group.

 The activities of EDF subsidiaries grouped into the CHARTH holding company are oriented around four main areas: thermal production (clean coal, decentralized production, cogeneration through a Cogetherm subsidiary), fuels, renewable energy and water. Its wholly-owned subsidiary Cofiva also holds the majority of the capital of six engineering companies.

All in all, EDF’s diversification represents sales estimated at more than one billion francs for 1997.

b) The provisions of the White Paper:

The White Paper sets out the possibility that EDF could develop services “around the kWh” intended for eligible customers, in order to be able to offer the same services as its competitors, and, in the future, intended for captive customers.

Competitive analysis

The White Paper does not give a precise definition of services ”  around the kwh” . As described in the company contract signed between EDF and the State on April 8, 1997, the public operator actually wishes to develop activities “downstream of the meter”, namely essentially consulting and monitoring activities. electricity demand, technical management of buildings, reversible air conditioning, energy diagnostics for households or industries, design, upkeep and maintenance of electrical installations. These services seem to him currently prohibited by article 46 of the law of 1946.

The Competition Council reiterates that it is not for it to rule, when examining cases in the context of litigation, on the compliance of EDF’s activities with the principle of specialty, as it stated in a decision 93-D-15 of 1 st  July 1993. Acting on this decision on 10 February 1994, the court of appeal of Paris said ”  inoperative what (…) the claim that the infringement of the principle of specialty constitutes in itself an abuse of a dominant position “.

In terms of principles and following the opening of the electricity market to competition, due to the fact that, as in other sectors, customer demand is expressed in terms of products and services, and the concern for competition to be fair, the Board considers that the law should give EDF more freedom of action and that the question of extending the scope of activity of the public establishment must therefore be raised.

However, since EDF remains the holder of the monopoly for the supply of electricity to part of the customer base (non-eligible customers), the Council considers that its intervention in competitive markets must be framed by rules taking into account the specific situations of competition in each of them. ‘between them. More precisely, the mechanisms by which the operator affects its costs between the free market and the captive kwh market will have to be specified. Its action on the service markets must be carried out in accordance with the principles of respect for competition set out in the Council’s opinion of 10 May 1994.

B. – THE OPENING OF THE MARKET

Definition of eligible customers

The provisions of the directive

According to article 19 of the directive, will be eligible consumers and will therefore be able to purchase their electricity from the electricity producers of their choice, all end consumers consuming at least one hundred gigawatts / hour per year (per consumption site and self-production included). For the rest, in accordance with the principle of subsidiarity, the States choose the criteria for selecting other eligible customers, while respecting the opening up of the market at least equal to the percentage defined at Community level. This percentage will be gradually increased over a period of 6 years, resulting in an opening which will go from 22% in 1999 to 33% in 2003. States can go beyond the requirements of the directive and choose a greater opening of their market. The list of selected criteria must be submitted no later than January 31 of each year to the Commission for publication in the OJEC. The Commission may request their modification ” if they prevent the practical application of this Directive as regards the proper functioning of the internal market in electricity  “.

The process of opening up should normally result in a comparable level of opening up of national markets. However, the possibility of an imbalance between border states having chosen a different opening led to the adoption of 5 of article 9 of the directive. It provides that an eligible customer in his State of origin may freely purchase electricity from independent producers established in another Member State, if he fulfills the eligibility conditions in that other State; this State may not deny it access to its transport network. If it does not meet the eligibility conditions, the Commission may however require, “ taking into account the market situation and the common interest, the party refusing to perform the supply of electricity requested at the request of the Member State in whose territory the eligible customer is established  “.

b) The provisions of the White Paper:

The White Paper retains a minimum opening of the French market, limited to the floor set by the directive, 70% of national consumption remaining a guaranteed outlet for EDF According to its editors, a total liberalization of the market would risk calling into question the national planning of the energy policy, only the existence of a captive market making it possible to integrate a long-term logic.

The eligibility criteria used are consumption criteria: large electricity consumers are selected, which represents around 400 eligible customers by 1999 and 3,000 around 2003. EDF’s main customers, consuming more than 100 gigawatts per hour are currently Eurodif (between 15 and 20 TWh), the non-nationalized distributor Electricité de Strasbourg, Péchiney, Elf Atochem, Usinor-Sacilor (more than 5 TWh), Air Liquide, Rhône Poulenc, SNCF and Solvay.

Unlike states where the market is completely open, the eligibility criteria, as soon as they are assessed by consumption site, exclude consumer groups, department store chains or municipalities.

Competition concerns

Eligible electricity consumers will play a driving role in the dynamics of competition and will exert strong pressure to obtain a faster lowering of the thresholds, all the European countries having chosen a total opening, with the exception of Belgium and from France. Indeed, in the current situation, for a large industrialist, the price of electricity varies from 0.13 to 0.30 F / kwh depending on the country and region.

The choice of eligibility criteria relating only to consumption per site is likely to lead to anti-competitive effects, some of which are inevitable, since they are due to the very existence of eligibility thresholds (regardless of the criterion adopted for establish these thresholds) while others are due to the choice of the volume of consumption per site as an eligibility criterion.

In addition, it is clear that the existence of thresholds is likely to disadvantage French companies compared to their competitors carrying out their activities in States which have chosen a wider opening of the electricity sector, such as Germany.

But beyond this effect, the choice of an eligibility threshold based on consumption per site implies that in certain sectors, companies competing on the national market will not be treated in the same way, those with the best sites. larger ones with a priori less expensive electricity supply than their competitors with smaller sites.

Such an effect could be attenuated, or even eliminated if the relative share of the quantity consumed per site were taken into account for the definition of eligibility, alternatively or cumulatively, with the criterion of the importance in absolute value of the quantity consumed per site. electricity in the added value of economic sectors or in the intermediate consumption of companies. This index, besides being undoubtedly more representative of the degree of dependence of companies on electricity, would have the advantage of treating companies competing on the same markets equally.

In addition, the coexistence within EDF of activities under monopoly (supply of captive customers, transport, distribution) and competing activities (market of eligible persons) can generate cross-subsidy practices between activities, likely to facilitate predatory pricing practices aimed at eligible customers, offset by additional costs weighing on captive customers and prohibiting access to the market by potential competitors. Such practices, which would undoubtedly be contrary to the public service mission, would also constitute infringements of competition.

The Council recalls in this regard that when a company holding a dominant position on a market carries out both activities of general interest and activities open to competition, the monitoring of compliance with the competition rules requires that a clear separation between these two types of activity (opinion n ° 96-A-10 of June 25, 1996), so as to prevent competing activities from benefiting for their development from the conditions specific to the exercise of the missions of general interest, to the detriment of companies operating in the same markets. The competition authorities generally consider that the separation of accounts constitutes a necessary condition for the exercise of the control of the respect of the rules of the competition. In this case,

2. Fate of existing independent producers

The amended nationalization law of April 8, 1946 excluded five types of electricity production companies from nationalization: companies with a production of less than 12 million KWh or energy production facilities when the installed capacity is lower. at 8,000 kVA, “cogeneration” and self-generation installations and installations operated by local authorities to use waste or to use hydraulic energy up to the limit, in the latter case, of 8,000 kVA. These non-nationalized producers make around 5% of production. Decree n ° 55-662 of May 20, 1955 obliges EDF, the boards and the non-nationalized distributors to buy the electricity produced by these producers. The purchase obligation can be suspended if EDF’s own production is sufficient to meet demand. However, decree n ° 94-1110 of December 20, 1994 made permanent the obligation to purchase electricity produced by cogeneration installations and installations using renewable energies or waste.

Existing non-nationalized producers are independent producers within the meaning of the directive and can therefore now sell their production directly to eligible customers. They don’t need new permissions. Since the obligation to purchase autonomous production weighing on EDF was justified by the public establishment’s monopoly on the sale of the public establishment, one can question its relevance, since independent producers can sell their production directly to their customers. customer base.

If such a purchase obligation were maintained, on the grounds that, initially, it is not certain that small independent producers can, even by grouping together, usefully meet the demand of the few and very large eligible customers, at the very least, EDF’s obligation to purchase should not result in an indirect subsidy to the activities and producers concerned, such as to distort competition.

3. Conditions for the exercise of competition

The directive does not contain any statutory or social provision. However, the White Paper indicates that the staff regulations, which by virtue of article 47 of the law of April 8, 1946 apply ”  to all personnel in the electricity and gas industry  “, would be maintained. This statement, to say the least ambiguous, seems to suggest that the statute of the electricity and gas industry would be applied to the personnel of the new independent producers.

Following the nationalization of the electrical industries, the national statute of the personnel of these industries was approved by a decree of June 22, 1946. This statute established a single pension plan and unified the provident plans from which the personnel could benefit. . This derogatory status from ordinary law includes a number of advantages for the staff, including a guarantee of employment similar to the civil service statute, the benefit of services provided by a works council funded by a levy. 1% on operating income and an advantageous retirement plan (25 years of contribution, retirement at age 55 for retirees from active service, reference of the last year of salary for the calculation of the retirement pension).

In its opinion n ° 96-A-12 of September 17, 1996, the Competition Council recalled that “the proper functioning of competition on a market does not necessarily imply that all operators are in operating conditions It assumes, however, that no operator benefits for its development from facilities that others could not obtain and of such magnitude as to allow it to distort competition, unless they are justified by considerations of general interest. “In the same opinion, he indicated that” if it was established that a network enjoys a competitive advantage as a result of the status of its staff, this cannot in itself constitute a practice prohibited by competition law “.

Given the gradual opening up of the market and the difficulty for new entrants to penetrate a market that has remained captive for a very long time, the application of the status of the electricity and gas industry to the staff of potential competitors of EDF, by increasing the cost their unrequited production costs would be such as to constitute a brake on market access as well as a source of disparity in competition between electricity producers in different European states.

It should be noted that if EDF considers that it would suffer a disadvantage in the competition because of the status of its staff, it is also obvious that EDF also has advantages, due to its status as an EPIC which does not not subject to the same financial constraints as those faced by its competitors. In this perspective, the search for an “equalization” of the conditions of competition must be considered with caution and taking into account all the differentiating factors between competing players.

The Competition Council undertook this exhaustive examination to assess the competitive relations between the financial services of the Post Office and the banks in two opinions n ° 96-A-10 of June 25, 1996 and n ° 96-A-12 of September 17, 1996.

4. Control of production with regard to energy policy

The provisions of the directive:

Under Article 4 of the Directive, for the construction of new production facilities, states can opt between the authorization formula and / or a tendering system.

Article 5 of the directive governs the authorization system: the criteria proposed by the States may relate to the safety and security of electricity networks, installations and equipment, environmental protection, land use and the choice of sites, use of the public domain, energy efficiency, the nature of the primary sources, the particular characteristics of the applicant (technical, economic and financial capacities). This system is by right for independent producers.

Article 6 applies to calls for tenders: the procedure is based on a biennial provisional inventory carried out by the transport manager or any other competent authority. The procedure is identical to that of Community procurement law. The specifications may use the criteria listed above.

The criteria retained by the directive for the two procedures are identical and make it possible in particular to take into account dimensions such as the nature of the primary energy sources or the needs of the public service. In addition, the conditions for granting the authorization or awarding the contract must be objective, transparent and non-discriminatory, the procedures public, and the refusal decisions justified. States must designate an independent body for production, transport and distribution activities, which will be responsible for organizing the control and monitoring of tendering procedures.

b) The provisions of the White Paper

The White Paper seems to favor the tendering system for the selection of production facilities intended to supply captive consumers. The production installations of autoproducers or independent producers or even of certain innovative installations would, on the other hand, be subject to an authorization system, the whole being part of a long-term programming of production investments.

Competitive analysis

It is clear that the new means of production will have to be part of the programming drawn up at the initiative of the public authorities under the energy policy.

Both authorization and tendering systems are likely to allow effective control of public power in the area of ​​energy. However, these two development methods must be distinguished.

A debate may have arisen as to whether the call for tenders procedure will constitute the essential procedure for constituting the park and whether the authorization will only concern the cases provided for in the White Paper (that is to say the equipment of the independent producers supplying eligible customers, installations of producers benefiting from an EDF purchase obligation, innovative installations and autoproducers) or if the authorization must constitute the normal means of development of the park, the call for offers intervening only to make up for the lack of individual initiative in the realization of public programming.

The tendering procedure gives the public authorities the option of deciding whether or not to implement a particular type of production facility. When the public authorities launch a call for tenders for equipment, the selected producers will enter into contracts with EDF, these contracts setting the technical and commercial conditions for the sale of electricity. EDF. will thus be obliged to buy this electricity without having had the choice of the means of production (even if EDF could have responded to the call for tenders). EDF will then have to sell this electricity. Unless this puts the public establishment in difficulty, the captive customer market will constitute the essential outlet from which the equipment programs can be determined by call for tenders. The operators do not have, in this case, the possibility of defining the technical specifications of the equipment; they do not run a business risk if they win the tender; finally, the electricity produced by independent operators who have won a call for tenders is not placed directly on the market of final consumers, in particular that of eligible parties, the electricity being purchased by EDF.

In the case of authorization, the means of production and the supplier are not chosen by the State, even if the latter authorizes the equipment only if it is part of the long-term programming. that he defined. It is the operator (EDF or an independent producer) who designs the technical specifications of the equipment (within the framework set by the public authorities), who carries them out and who must find customers.

The authorization procedure allows market players to exercise a certain initiative as regards the production schedule and the means of production they wish to acquire. It also allows each operator, because he has the project management of his means of production, to design these and therefore promotes technological competition between the operators. Finally, it allows operators to fully assume the business risk that will allow the development of competition on the market, because they will have to be concerned with the sale of the electricity they will produce from these installations. This procedure is therefore favorable to the development of competition.

On the contrary, the main use of the call for tenders procedure is likely to limit the development of competition with respect to the authorization procedure, even though the latter procedure would make it possible to combine the public programming of investments. , both in quantity and by type of fuel, and the play of competition.

Under these conditions, the Council considers that recourse to the authorization procedure should be the rule and that the call for tenders procedure should be used in cases where the sole initiative of the operators does not allow the objectives set to be met. as part of public programming.

vs. – ACCESS TO THE NETWORK

1. Current situation

The national public electricity network currently consists of:

  • a so-called “general supply network” (RAG) transport network;

and

  • a public distribution network.

The transport network

Under the terms of the 1946 law, EDF has a monopoly on the transmission and distribution of electricity in France. EDF is required, under the terms of article 2 of decree n ° 558-662 of May 20, 1955, to transport the electricity produced by independent producers to their establishments or subsidiaries “without the places of use being able to exceed three” . The specifications relating to the RAG concession provide, in its article 28, that ”  the prices that the concessionaire is authorized to charge for transport and, if necessary, for the necessary transformations cannot exceed the maximum indicated in the attached document “. It is also provided for possibilities of adaptation” to special cases “. These prices must vary in the same proportions as the sales price and, in the event of disagreement, it is decided by the competent minister after opinion of the Superior Council of electricity and gas.

EDF has owned the RAG since the entry into force of Law No. 97-1026 of November 10, 1997 (known as the “MUFF Law”) which provides that: ”  The works of the general electric power supply network are deemed to constitute the property of Electricité de France since the concession of this network was granted  “. With regard to the transport network, a 1958 concession had made it possible to unify the various concessions issued by the State since 1946. The law of November 10, 1997 made it possible to remove the ambiguity relating to the RAG property regime which remained. in the new standard specifications adopted in 1994.

The specifications of the concessions currently in force provide that any structure with a voltage equal to or greater than 63 kV falls under the RAG and that any structure with a voltage below this threshold falls under the public distribution. However, structures of lower voltage can be classified in the RAG if they are used for the distribution of energy or the service of several concessions.

Nationally, EDF’s National System Exploitation Center (CNES) is responsible for coordinating all production resources, foreign exchanges and the interconnection network (400 kV). At the regional level, the seven Regional System Operation Centers (CRES) are responsible for the “fine” management of the hydraulics and distribution networks (225 kV). These different entities, which employ around 1,000 people, are responsible for the management and operation of the transport network. Decisions are taken according to decision cycles ranging from daily to medium term (5 years).

At any time, the manager of the production-transport-consumption system must, in the case of non-renewable energies, arbitrate between different solutions to minimize the overall expenditure. The choice between two means of production at a given time depends on their proportional costs if we do not take into account the availability of fuel. On the other hand, if the quantity of energy likely to be mobilized is limited, then, in order to adopt the optimal decision, it is necessary to choose between immediate or future use of a particular means of production. The use value of a good, supposed to represent the future utility of said good, is then used as an indicator to determine the choice between several solutions.

For the management of the supply / demand balance, EDF is currently based on “scales” made up of the classification of the “order costs” of the different production groups, it being specified that the “order cost” of a production group at a given time corresponds to the “use value” of the marginal kWh likely to be produced by this group.

The “use values”, which make it possible to classify in a single scale all the means of production and management of demand, summarize policies for the forward management of energy stocks, which make it possible to establish programs of daily production supposed to ensure optimal management over time.

b) Distribution:

Distribution networks carry low and medium voltage current to consumers, households and SMEs. The distribution of electricity is a local service organized by the law of June 15, 1906 and assumed by 102 specialized joint centers, the EDF-GDF Services centers depending on the management common to EDF and GDF, called “EDF-GDF Services” . The distribution network belongs to the municipalities and the unions of municipalities. Before 1946, this network was operated by concessionaires or under the supervision of the municipalities.

In 1946, the ownership of the concessionaires’ capital was transferred to EDF, which therefore became the sole concessionaire in 95% of the municipalities. The public establishment fulfills its mission in accordance with concession contracts, including clauses on the quality of service and product. Each granting authority controls its concessionaire, through the intermediary of a control agent, possibly assisted by specialists, who monitors EDF projects and carries out an audit in its offices once a year. This control obligation is based on article 32 of the standard specifications adopted in 1991.

The boards (around 177), which existed when the 1946 law was adopted, have not been nationalized and ensure the distribution of electricity in 5% of the municipalities; they buy electricity wholesale from EDF The state control companies are more and more frequently transformed into semi-public companies (SEM) in which, like that of Grenoble, EDF and other producers take holdings. About a third of distributors produce some of the electricity they distribute.

2. The provisions of the White Paper

a) The transport network:

The mode of access to the network adopted by the White Paper seems to be “third party access to the regulated network” (ATR).

It is planned that a single operator of the transmission network, an “essential and monopolistic resource”, will be appointed in the person of EDF, which will remain the owner of the network.

In accordance with Articles 7 and 8 of Directive 96/92, the network manager will be responsible for three missions:

guarantee the interconnection and the good condition of the networks;

to balance supply and demand “in real time”, given the absence of the possibility of storing electricity;

to channel the energy of independent producers and foreign suppliers to their customers as well as that of autoproducers to their establishments and subsidiaries.

Due to the dual role of EDF, network manager on the one hand, producer, transporter and distributor on the other, the White Paper recommends the implementation of several measures to prevent system malfunctions:

independence of the management of the transport network from other functions;

definition of “objective techno-economic” criteria with regard to the arbitration to be carried out between the various means of production supplying the network, in accordance with article 8.2 of the directive, the use of means of production not having to be carried out depending on the identity of the potential producer;

accounting separation between the different activities in order to identify costs and avoid “cross-subsidies”.

It is specified that the accounting separation must apply not only to vertically integrated companies but also to companies with a horizontally diversified activity. The coexistence, within EDF-GDF Services, of joint electricity and gas distribution activities is mentioned by way of example.

Exceptions to the “order of economic precedence” are provided for, in accordance with Article 8 3 and 4 of the Directive. They relate in particular to production facilities that use renewable energy sources or waste or to facilities that use indigenous fuel sources of primary energy.

b) Distribution:

Under the terms of the White Paper, the current system of concessions between local authorities on the one hand, EDF or the approximately 140 current distributors on the other hand, would be maintained.

Use of transport and distribution networks

Distribution network operators must be subject to the same obligations as those imposed on the transmission network operator. The management of the entire network should aim to enable independent producers to ensure delivery to their eligible customers and to allow autoproducers to deliver electricity to their establishments and subsidiaries.

With regard to direct lines connecting an independent producer to an eligible customer, provided for by 1 and 2 of article 21 of the directive, the White Paper advocates limiting their construction to cases in which the network capacity is insufficient. to meet demand, especially to protect the environment.

Competition issues

Article 7 of Directive 96/92 / EC provides that “Member States designate, or ask companies that own transmission networks to designate, for a period to be determined by Member States on the basis of efficiency considerations and economic balance, a network manager who will be responsible for the operation, maintenance and, where applicable, development of the transmission network in a given area, as well as its interconnections with other networks, to guarantee security of supply “.

It will first be necessary to specify the rules for connection to monopoly networks. The necessary measures must then be taken so that the conditions of use of these networks, that is to say essentially payment for the transport service and congestion treatment, are explicit, economically justified, but at the same time commercially not. dissuasive and, of course, non-discriminatory.

To this end, the regime of access to the “regulated” network of article 17-4 which provides for the publication of transmission tariffs appears much preferable to that called “negotiated access” (article 17-1), regime in which authorized producers and eligible customers must individually negotiate network access with the network operator.

According to the very terms of the directive, the State must also ensure that the entity declared “operator of the major transport network” administers the system for using this network and ensures its safe operation (thanks to a balanced permanent supply and demand) in full management independence, for the equal benefit of all stakeholders. As such, it is essential that the network operator, as is the case wherever there is an opening of the market, does not exercise any function of purchasing or selling electricity; if this management is carried out by a service of the integrated operator, as in other countries including Germany, measures must be taken to ensure non-discriminatory management of the electricity system and, to this end,

a) EDF, operator of the transmission network, operator of the network and producer competing with independent producers:

The function of the network manager is to manage the energy flows on the network, taking into account exchanges with other interconnected networks. It ensures network security, reliability and efficiency. To this end, it ensures the proper functioning of auxiliary services such as emergency services, in the event of failure of one or more production units, this taking into account the non-storable nature of the electricity.

It is provided for in 6 of article 7 of directive n ° 96/92 / CE that ”  unless the transmission network is already independent of production and distribution activities, the network operator must be independent, at less in terms of management, other activities unrelated to the transport network  “. The 1 of article 8 of the directive also specifies that the operator of the transmission network is ”  responsible for calling up production facilities located in his area and for determining the use of interconnections with other networks  ” .

The provisions set out in the White Paper propose to entrust a division of EDF, producer and distributor of electricity, with the management and operation of the transmission network.

These proposals, which aim to entrust the management of the transmission network to a single operator in competition with other operators on the production market, differ from the solutions adopted in other industrialized countries.

Thus, in Sweden, where the regional high voltage transmission networks of 70 and 130 kV (HT) and local (20 kV) are de jure monopolies exploited by the producers, since the entry into force of the new law on electricity, 1 st  January 1996, the high-voltage transport functions (THT) 220 and 400 kV and production are separated, the EHV network is managed by Svenska Krafnät owned company of the state and independent producers. In Spain, the operation of the national grid is also entrusted to a company with majority public capital separate from the production companies, Red Electrica. The same is true in England and Wales where an independent company, National Grid, has a monopoly on high voltage transmission.

The combination of the activities of network operator and producer by a single entity could give rise to problems with regard to competition. In fact, in this hypothesis, the network manager could be tempted to unduly favor the production department of the company to which it belongs to the detriment of its competitors, in particular by calling first and foremost the central offices of this same company or by disclosing information. of a commercial nature relating to its competitors of which it may become aware in the exercise of its function of network operator. It is precisely this situation that the directive seeks to prohibit.

The Competition Council sanctioned, in accordance with case law of the Court of Justice of the European Communities, discriminatory practices on the part of a holder of essential resources, on the basis of Article 86 of the Treaty of Rome or of the Article 8 of the Ordinance of 1 st  December 1986 (see in particular decision No 96-D-51 of 3 September 1996 relating to practices of LLC Heli-Inter Assistance).

Determining the manager’s status is therefore of fundamental importance in terms of opening up the electricity sector to competition. The simple accounting separation of activities, which would be limited to a set of entries, is not likely to settle a question as important as that of the necessary autonomy of management of the carrier. It is therefore necessary to put in place a formula which guarantees a smooth and transparent operation of competition.

The creation of a department within EDF, the management of which would be entrusted to a salaried executive, would be insufficient to guarantee the management neutrality provided for in Directive 96/92 / EC. It will be recalled, as the Paris Court of Appeal indicated in a judgment dated September 22, 1993, that the delegation of power given to an agency manager is not in itself sufficient to establish that the latter is “freed. directives and controls of the company to which it is subordinate “and that it” enjoys full freedom to contract, to decide on its investments and the power to define its own industrial and commercial strategy “.

In the perspective mentioned by the White Paper of entrusting the management of the transmission network to an independent EDF department separate from the other departments of the company, it would be appropriate, in order to comply with Directive No. 96/92 / EC, that this activity is at least the subject of an accounting individualization such as to dissuade cross-subsidy practices and to allow identification of the transport costs, that the person in charge of the direction of this unit is the subject of a statutory protection and that penal sanctions be provided for against natural persons in charge of management operations, in particular within EDF, who disclose commercial information likely to create a competitive disadvantage for the producers concerned.However, these precautions do not appear sufficient in view of the necessary independence of the network manager for the development of the electricity sector.

 The creation of a specialized subsidiary within EDF would not be such as to guarantee non-discriminatory access to the network, since this subsidiary does not have sufficient autonomy from its parent company. In a Viho / Parker Pen case (Viho Europe BV v. Commission, 24 October 1996) the Court of Justice of the European Communities indeed considered that ”  for the purposes of the application of the competition rules, the unity of conduct on the market of the parent company and its subsidiaries takes precedence over the formal separation between these two companies, resulting from their separate legal personalities “.

The Competition Council considers that the creation of a public establishment, separate from EDF and completely autonomous in terms of management, would in this respect bring the best guarantee of desirable independence, in a competitive system that fully respects the spirit of Directive 96/92 / EC.

b) The organization of access to the transport network by producers:

On the basis of the aforementioned directive and the proposals of the White Paper, a right of access to the network is granted to producers authorized to supply electricity to eligible consumers, to producers having signed contracts with the network operator afterwards. calls for tenders and to authorized producers benefiting from the purchase obligation, subject to technical delivery constraints.

National or foreign producers authorized to deliver electricity to eligible consumers as well as companies producing electricity for their establishments or subsidiaries must, except for the existence of direct lines, use the transmission network and (or) the distribution networks. .

The question of transport pricing

The choice of electricity transmission pricing can have effects on competition as well as on industrial policy, depending on whether or not the transmission price includes a distance component.

Transmission pricing should enable the transmission network operator to balance its income statement, most of the charges being linked to the construction and maintenance of lines as well as to so-called network “adjustment” services ( supply and demand balance in real time). Given their nature as a “natural monopoly”, the use of transmission and distribution networks should give rise to ”  fair remuneration  ” which covers only the costs of transporting electricity (losses and adjustment included). Too high prices could indeed constitute a crippling obstacle to the opening of the market as intended by the Treaty of Rome and be analyzed as a barrier to entry into the market.

In addition, simple pricing should be implemented: pricing according to a so-called “postage stamp” system, set independently of the distance for different voltage levels, seems to offer the best guarantees of openness to competition. The choice of such a method, applied in all the countries which have opened their network (except Germany, at present) is also justified by the network of the whole of the territory in means of production as well as by the density of the network. national transport network. In this regard, it should be noted that non-uniform pricing systems applied in neighboring countries could be the source of disparities in competition between operators located in different States of the European Union.

Transport pricing should also be transparent and non-discriminatory.

In the event that, as provided for in the White Paper, EDF is both dominant producer and network operator, the authorities in charge of competition should be able to ensure at all times the fairness of the conduct of the network. dominant operator and in particular that it be subject to the same conditions of use of the transport network as its competitors. In addition to the establishment of separate accounts by the department responsible for transport, it would then be advisable to provide for internal invoicing procedures for the company, which are totally transparent.

In its opinion n ° 93-A-15 dated September 28, 1993 relating to the operating conditions of the Donges-Melun-Metz pipeline, the Competition Council recalled that if the basic transport tariffs and the conditions any discounts must be objective, transparent and non-discriminatory, “any system comprising tariff advantages according to the quantities transported” would be liable to affect the game of competition, given the fact that one of the companies having to operate the pipeline was able to transport very large quantities of fuel. Transmission pricing comprising a component that largely takes into account the quantities of electricity transported would risk introducing an asymmetry in the competition to the advantage of EDF.

Finally, regardless of the pricing principle adopted, in the light of the experience carried out in the telecommunications sector, an audit should be carried out independently, prior to the opening of the network to competition, in order to to enable potential operators to know the costs of transport before they enter the market.

Technical conditions for connection to transmission and distribution networks

In accordance with Directive 96/92 / EC, it is up to the Member States to ensure that technical specifications are drawn up and published setting the minimum design and operating requirements for connection to the network of production facilities, distribution networks, directly connected customer equipment, interconnection circuits and direct lines.

These requirements, which must ensure the interoperability of networks, must be “objective and non-discriminatory”. They must be notified to the European Commission, in accordance with Council Directive 83/189 / EEC of 28 March 1983, providing for an information procedure in the field of technical standards and regulations.

In its decision n ° 96-D-80 of 10 December 1996 relating to referrals submitted by various independent producers, the Competition Council condemned practices consisting in limiting access to the electricity market by making it more difficult conditions for connecting independent producers to the network, without bringing the new technical criteria to the attention of the companies concerned. These practices have had the effect of increasing the cost of projects and delaying them. The choice of voltage level (63 or 225 kV) as well as the unjustified extension of connection times could also constitute a brake on the development of competition in the sector considered.

The competition authorities consider that a company in a dominant position on a market can abuse this position by reserving downstream markets by setting specific standards or by excessive patent protection (see in particular the Hilti case, European Commission, December 22, 1987). The Court of Justice has also specified (case C-18/88 – Régie des télégraphes et des telephones c / GB-Inno-BM SA) that articles 3 point f), 90 and 86 of the Treaty of Rome are opposed that a Member State confers on the company operating the public telecommunications network the power to enact standards relating to telephone devices and to verify their compliance by economic operators, whereas it is the competitor of these operators on the market for these devices.

The case investigated by the Competition Council relating to the technical control sector (decision n ° 89-D-07 dated March 21, 1989) has shown that technical specification procedures by bodies independent of production companies can, however, sometimes be the source of distortions of competition, which, in the case of a sector as vital as energy, would justify the introduction into the law of provisions such as to be entrusted to the competent minister, if necessary after opinion of the Competition Council and the Higher Council for Electricity and Gas, the responsibility for setting the standards in question by regulatory means.

c) The confidentiality and neutrality of the network operator:

In order to avoid distortions of competition, the transmission system operator must preserve ”  the confidentiality of commercially sensitive information of which it becomes aware during the performance of its tasks  ” (Article 9 of the directive). In addition, it must respect total neutrality with regard to the information relating to production and consumption that may be communicated to operators, with the aim of market transparency.

The delimitation of the transport network and the interconnections with the distribution networks, as well as its availability for all operators, also appear to be an essential component of the functioning of a competitive system extended to the common market, in particular in the event of where the system put in place would allow wholesalers (“traders”) to compete with producers on the market, as regards the supply of energy to eligible voters.

The clear separation of the function of network operator from the production function is all the more justified since producers located in third countries could be required to use the transmission network to supply eligible consumers or because autoproducers could supply electricity to subsidiaries and establishments located on national territory. However, in the event of a cross-border dispute, in accordance with 4 of article 20 of the directive, the disputes will be settled by the regulatory authority of the territory in which the authorization was refused. A lack of sufficiently precise separation of the function of network manager and producer would obviously make the task of the regulator excessively complex.

d) Regarding the operation of the distribution network:

It is provided for by directive n ° 96/92 / CE that the Member States can (article 10) oblige distribution companies to supply customers located in a given zone and regulate the pricing. A network manager must be appointed to develop the distribution network and allow interconnection with other networks. It must (article 11) ensure the security of the network and refrain from any discrimination, in particular for the benefit of its subsidiaries or shareholders.

With regard to the construction of direct lines likely to allow a producer to supply establishments, subsidiaries or eligible customers, the directive provides (article 21.2) that ”  Member States shall set the criteria relating to the granting of authorizations construction of direct lines in their territory  “and that they can (Article 21.5)” refuse the authorization of a direct line “, if the granting of such authorization goes against public service obligations. The refusal ”  must be duly motivated and justified  “.

The White Paper indicates that the construction of such lines should be ”  essentially supplementary in France  “, that their authorization should be subordinated to the “inadequacy or impossible nature of access to existing networks” and that refusals, justified in particular by questions of environment, could be subject to a dispute settlement procedure. The Court of Justice of the European Communities recognizes that ”  the prerogatives relating to the protection of the environment (…) are typically the prerogatives of public power  ” (Enterprise port of Genoa, March 18, 1997).

The impact in terms of competition of the implementation of such a prerogative justifies the establishment of an authorization procedure by the competent minister, after an in-depth investigation by the departments concerned, any objections that may be the subject of of an appeal before the competent administrative authority, if necessary, after an arbitration attempt.

D. – ORGANIZATION AND OPERATION OF THE REGULATION

1. The directive

The directive makes it possible to distinguish two components of the regulatory mission: a regulatory function and a function of monitoring the proper functioning of the market.

The State must ensure the establishment of criteria and authorization procedures for new producers (Articles 5 and 6), objective and non-discriminatory connection standards to the network (2 of Article 7), approve the criteria for call up production facilities (2 of article 8) and lay down the criteria for granting direct lines (article 21).

It must also ensure that separate accounts are kept by the integrated companies (Article 14), ensure the supervision of the network operator (Articles 11 and 12) and take the necessary measures to ensure access by independent producers to the network.

The directive provides for the designation of independent bodies:

for the monitoring and control of tendering procedures (4 of article 6),

for the settlement of contractual disputes.

Directive n ° 96/92 / CE indeed provides, in its article 20, that ”  the Member States designate a competent authority, which must be independent of the parties, to settle disputes relating to the contracts and negotiations in question. must in particular settle disputes concerning contracts, negotiations and denial of access and purchase  “. It is also provided that in the event of a cross-border dispute, the authority competent to settle the dispute will be the one to which the manager who refuses use or access to the network falls, and that recourse to this authority will be ”  without prejudice to the exercise of remedies under Community law  “.

It is also specified, in article 22 of the directive, that “the Member States create appropriate and effective mechanisms of regulation, control and transparency in order to avoid any abuse of a dominant position, to the detriment in particular of consumers, and any predatory behavior. These mechanisms take into account the provisions of the treaty, and more particularly its article 86  “.

 2. The White Paper

The White Paper mentions the possibility of creating a ”  specialized body  ” which should “be  linked to the application of competition law (in particular the Competition Council)  “.

At the same time, he indicates that the technico-economic regulatory function ”  should continue to be carried out directly by the State  ” while advocating certain changes:

a distinction should be made between the administrative structure responsible for regulation and the structure responsible for supervising EDF;

  • the regulator would be endowed with the power of sanction;
  • the Higher Council for Electricity and Gas would have an advisory role;
  • the regulator should articulate its powers with the Competition Council and the courts.

Under Article 13 of Decree 93-1272 of 1 st  December 1993 on the organization of the central administration of the Ministry of Industry, Posts and Telecommunications and Foreign Trade, ”  the direction of gas , electricity and coal is responsible for the development and implementation of government policy in the field of electricity (…..). It exercises supervision over Electricité de France, Gaz of France (…..)  “.

In addition, article 28 of the specifications relating to the concession of the general electric power supply network, approved by the ministerial decree of November 27, 1958 specifies that in the event of disagreement on the connection conditions between autonomous producers and EDF ”  it will be ruled by the minister in charge of electricity, after consulting the Higher Council for Electricity and Gas  “.

The proposal made in the White Paper therefore aims to retain the regulatory role of the State, which is also responsible for overseeing the sector, through the ministry responsible for industry.

This situation exists in several Member States of the European Union such as Sweden, for example, a state in which regulation has been entrusted to a specialized administration, the Electricity Network Authority, belonging to the General Directorate for Industrial and Technical Development (NUTEK). . However, the situation in this country is very different from the situation in France: in this country, which is part of NORDEL, a cooperation organization bringing together Sweden, Norway, Finland and Denmark, there are indeed many producers capable of compete with each other. Furthermore, the transmission and production functions are separate and there are electricity suppliers, performing a function distinct from that of the distributors, whose role is to operate the distribution networks.

The White Paper proposal is also different from that prevailing in the United Kingdom, a country in which the function of regulating the electricity system is entrusted to an independent authority, the Office of Electricity Regulation (OFFER), chaired by the Director General of Electricity. Supply (DGES).

3. A problem for organizing regulation

The problems that the regulation will have to deal with in the new organization of the electricity sector can be grouped into two main categories:

Questions relating to the definition and pricing of services of general interest provided by the operator in return for exclusive rights, those relating to the specification and financing of obligations of general interest imposed on all players and those affecting to the control of investments in the field of production, condition above all the success of public policies. When they have not been settled by law, they therefore seem to have to be the responsibility of the Minister in charge of energy himself and his services;

Questions relating to access to the networks, the management of the electricity system and associated markets as well as the control of the action of the incumbent on the free kilowatt-hour market and on the service markets are crucial. for a satisfactory development of competition. This will involve applying particularly complex operating rules, in the service of public policy considerations and the development of competition. These skills must be mobilized for the equal benefit of all market participants, therefore without being influenced by the supervisory administration which is also a “shareholder” of the public operator.

Several structural solutions make it possible to respond to these concerns. We can imagine that the body is a directorate (of regulation) of the ministry in charge of energy, having at its head a person in charge directly attached to this one, an independent administrative authority of the type of the Authority of regulation of telecommunications (ART), or specialized training from the Competition Council. Each has advantages and disadvantages that should be assessed in the light of the French context.

If we choose the ” Regulatory Department ” solution   , strong guarantees of its independence from the supervisory administration of the public operator appear to have to be given: appointment of the director for a long period, choice of an expert not engaged in a purely administrative career, for example.

The solution of the Autonomous Administrative Authority allows a concentration of competences and demonstrates the concern for independence vis-à-vis the supervision of the public operator, in particular in the eyes of the European Commission and the Court of Justice. This choice is likely to limit contentious referrals to Community authorities. It presupposes the implementation of mechanisms to control the action of the Authority and its cooperation with other regulatory players, primarily the Competition Council.

The solution of specialized training within the Competition Council, like what has been done in Australia, a country in which the competition authority also performs regulatory functions in certain sectors, allows greater consistency in cases concerning competition law with regard to the various network services, assuming that this solution will be gradually extended in the future. For the Board, it implies strong growth and a substantial development of its skills and resources. It also involves close cooperation with the services of the ministry in charge of energy.

The organization of regulation in the form of a specialized authority supposes that the articulation between the powers of the Minister, those of this specialized authority and those of the Competition Council is clearly defined. The creation of an authority with broader competence, which would cover the various forms of energy, in particular gas, could also be considered, given the competition already existing between certain energies.

If the path of an independent authority is chosen, and to ensure effective functioning of competition in the sector, close coordination of the actions of the regulator and the Competition Council should be put in place, providing for a mandatory consultation procedure. , in particular in order to avoid diverging views on the functioning of the market. In particular, a mandatory notification procedure should be provided for in several cases, such as, for example, that in which the network operator opposes an operator’s access to the transmission network.

In this case, it will therefore be necessary to clearly identify, without prejudice to the specific role of the Competition Council, particularly in litigation, each component of the regulatory function.

Thus, the Minister could retain direct responsibility:

  • to develop and implement energy policy;
  • to monitor compliance with public service missions;
  • to set the sales tariffs to captive customers;
  • to set the criteria for authorization or tender procedures and to follow said procedures;
  • to decide on the technical requirements for connection to the networks;
  • to set the tariffs for access to the transport and distribution networks.

 The regulatory authority, whatever the formula chosen, would have the following mission:

to examine requests for authorization from independent producers and requests for direct lines;

  • assess the costs of public service missions;
  • to formulate an opinion on the interconnection tariffs and on the technical connection standards as well as on the tariffs intended for end consumers decreed by the administration;
  • to penalize the failures of the network operator (to confidentiality, to the producers’ right of access, to its public service missions);
  • to settle connection disputes between electricity producers and the operator of the transmission network.

It will also be necessary to provide for means of appeal against the decisions of the regulatory authority as well as an obligation to publicize and give reasons for decisions.

CONCLUSION

In the context of the transposition of Directive 96/92 / EC, attention should be drawn to the following points:

first, the Council notes that the choice of an eligibility threshold based on consumption per site introduces distortions of competition; In this regard, it recommends taking into account, alongside the criterion of consumption volume per site, other criteria which take into account the relative share of electricity in the added value of the major sectors of the economy or the intermediate consumption of companies;

secondly, for the choice of new means of production, the main use of an authorization system appears to be the best guarantee for reconciling the imperatives of energy policy and the imperatives of competition;

thirdly, the specialty of the public establishment provided for by the law of 1946 is no longer compatible with the new conditions of supply on the electricity market, emanating from large diversified groups which notably combine services with the supply of kWh: this situation calls for an extension of the scope of activity of the public establishment EDF However, its interventions must be carried out in accordance with the principles recalled by the Board in its opinion n ° 94-A-15 of 10 May 1994;

fourthly, the Council considers that the organization of the conditions of access to the transmission network is fundamental to guarantee the exercise of competition and that it is essential that the function of operator of the transmission network be exercised in complete independence production and distribution activities; it recommends to establish this independence that this function be carried out within the framework of an autonomous public establishment;

fifthly, the Council considers it necessary that regulation be entrusted to an independent authority, whose missions must be clearly defined and the decisions, reasoned and made public, must be subject to judicial control.

Deliberation, on the report of Mrs Irène Luc, MM. Jean-René Bourhis and Raymond Leban, by Mr. Barbeau, president, MM. Cortesse and Jenny, vice-presidents, Mme Boutard-Labarde, MM. Callu and Gicquel, Mrs Hagelsteen, MM. Marleix, Pichon, Rocca, Sargos, Sloan and Thiolon, members.


The general rapporteur,


President,

   
   
   

Marie PICARD

Charles BARBEAU

Leave a Comment

Your email address will not be published.


CAPTCHA Image
Reload Image