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170 16[2006/2007]4 ULR EUROPEAN CURRENT SURVEY

may have lowered TVO’s financial costs below the levels corresponding to market conditions.
The guarantee may also have lowered the financial costs linked to the Areva/Siemens offer
for TVO, and thereby have helped the Areva/Siemens consortium to win the contract for
the construction of the new nuclear power plant.

European Commission adopts new The European Commission has adopted amended guidelines for managing the electricity
rules for managing electricity cross- cross-border trade in the EU. These new guidelines should improve the way in which the
border trade in the EU electricity transmission system in the EU is operated, as they require improved co-operation
(IP/06/1539) 9 November 2006 between Transmission System Operators (‘TSOs’) in allocating cross-border flows and
managing bottlenecks in the transmission network. TSOs have to use a common method
to allocate transmission capacity, treating the European network as a single network. In
2007, the Commissioner plans to propose a set of measures to permit TSOs to work in a
legally established group with a mechanism to adopt legally binding security and operational
rules. The Group of European Energy Regulators (‘ERGEG’) has the power to prepare
these guidelines, which are consequently adopted by the Commission. The guidelines on
the management and allocation of available transfer capacity of interconnections between
national systems are often called ‘congestion management guidelines’ and contain a set of
rules which aim at the efficient use of the European electricity network taking full account
of security requirements.

European Commission orders Italy to The European Commission has approved a €16 million subsidy that Italy intends to grant
suspend payment of aid to AEM to AEM Torino, a local utility company producing, distributing and selling electricity and
Torino until it pays back previous heating. The aid is intended to cover costs incurred in the liberalisation process of the
illegal aid electricity sector (‘stranded costs’). The Commission considered that the subsidy is in
(IP/06/1544) 10 November 2006 accordance with EU State Aid rules. However, AEM Torino had previously received a
significant amount of illegal aid which had not yet been reimbursed. In 2002, the Commission
took a negative decision on fiscal aid granted by Italy to its local utility companies, but after
almost four years, Italy has still to recover the amounts granted at that time. Therefore, the
Commission has ordered Italy to suspend the payment of the €16 million of new aid until
AEM Torino had repaid the previous illegal aid.

Gas

European Commission approves The European Commission has approved the merger of Gaz de France (‘GDF’) and the
merger of Gaz de France and Suez, Suez group. After an in-depth investigation, the Commission initially found that the deal
subject to conditions would have anti-competitive effects in the gas and electricity wholesale and retail markets
(IP/06/1558) 14 November 2006 in Belgium and in the gas markets in France. The Commission’s concerns related mainly to
the removal of the increasing competitive pressure that GDF and Suez had been exerting
on each other in both Belgium and France. Given the conditions on the markets, including
very high barriers to entry, their respective dominant positions would be considerably
strengthened by the merger. In response to these concerns, the parties offered extensive
remedies, including the divestiture of Distrigaz and SPE, with Suez relinquishing its control
of Belgian network operator Fluxys. In light of these structural remedies, the Commission
concluded that the merger would not significantly impede competition in the European
Economic Area (EEA) or a substantial part of it.

European Commission welcomes ECJ The European Court of Justice (‘ECJ’) ruled against Spain for not having implemented the
judgment against Spain for non- Gas Directive of 2003. The provisions of this Directive should have been implemented by
implementation of the Gas Directive 1 July 2004. Spain could also be condemned soon for the non-transposition of the Electricity
(IP/06/1573) 16 November 2006 Directive. Luxembourg (which was already condemned by the ECJ on 19 May 2006), and
Spain are the only two Member States that have failed to transpose the Gas and Electricity
Directives. In its report on the Internal Market for electricity and gas adopted in November
2005, the Commission identified the delay in applying the Gas and Electricity Directives as
one of the main causes for the shortcomings in the European internal energy market. The
Commission announced that it will carry out a detailed country-by-country review of the
effectiveness in practice of the legislative and regulatory measures in connection with
market opening, including specific additional national measures.

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