COUNCIL RECOMMENDATION of 27 October 1981 on electricity tariff structures in the Community (81/924/EEC)

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Economic Community, and in particular Article 235 thereof,

Having regard to the draft recommendation from the Commission,

Having regard to the opinion of the European Parliament (1),

Whereas in its resolution of 13 February 1975 (2) the Council emphasized the need to make it possible for prices to cover, gradually and to the fullest extent feasible, the costs of making energy available and the amortization of necessary investments

Whereas consistency in energy pricing structures is a fundamental element of economic and energy policy;

Whereas rational tariff structures make for better utilization of resources;

Whereas tariff structures founded on common principles lead to more homogeneous conditions of supply and enable electricity prices to be fixed more consistently throughout the Community;

Whereas the distribution of electricity is a public service, irrespective of the legal status of the undertakings involved ; whereas for that reason undertakings must ensure equality of treatment of consumers in comparable supply conditions;

Whereas electricity supply undertakings should, in accordance with the principles of sound management, cover their costs on the basis of the most objective allocation possible of such costs among the various categories of users;

Whereas promotional tariff structures preventing the rational use of energy should be avoided;

Whereas the principles underlying electricity tariff structures vary between countries in the Community, although certain of these structures already reflect a common approach ; whereas efforts to bring about simplification and unification must be pursued,

HEREBY RECOMMENDS TO THE MEMBER STATES:

That they take appropriate steps, if they have not already done so, to ensure that electricity tariff structures are based on the following common principles: 1. Electricity tariff structures should be drawn up and adopted so as to allow the application of a rational price policy and to reflect the costs incurred in supplying the various categories of consumer ; tariff structures should be designed with the rational use of energy in mind, should avoid encouraging unjustifiable consumption and should be as clear and simple as possible.

2. The two-part tariff system which, of the various tariff options available, best reflects the cost structure of providing electricity, should be generally used (3).

3. Promotional tariff structures which encourage unnecessary consumption and in which the price of electricity is artificially lowered as increasing amounts of electricity are used should be discontinued.

4. Tariffs based on the use to which electricity is put should be eliminated, unless such tariffs conform with the general requirements of Point 1 above and contribute to the achievement of long-term energy policy objectives.

5. With the aim of transferring demand to off-peak periods or to allow load-shedding, provision should be made for multiple tariffs with differential rates and/or for the possibility of interruptible supplies.

6. Tariffs should not be kept artificially low, for example on social grounds or for anti-inflationary policy reasons ; in such cases, separate action, where warranted, should be taken.

(1) OJ No C 144, 15.6.1981, p. 105. (2) OJ No C 153, 9.7.1975, p. 6. (3) The term "two-part tariff" covers tariff structures consisting of a fixed component and a component which varies with the amount of electricity used. 7. Tariffs should be formulated in such a way that it is possible to up-date prices at regular intervals;

That research be pursued and developed, in close cooperation at Community level, into the characteristics of electricity demand for different categories of consumers and their evolution in the long term, with the objective of further improving tariff structures;

That electricity prices on the market be characterized by the greatest possible degree of transparency, and that these prices and the cost to the consumer be made known to the public as far as possible.

Done at Luxembourg, 27 October 1981.

For the Council

The President

P. WALKER