Legislation: The EU Electricity & Gas markets: third legislative package - September 2007

Website: ec.europa.eu/energy/electricity/package_2007/index_en.htm

Source: IP/07/1361 Date: 19/09/2007
[EN FR DE DA ES NL IT SV PT FI EL CS ET HU LT LV MT PL SK SL BG RO]

On 19 September 2007, the European Commission adopted a third package of legislative proposals to ensure a real and effective choice of supplier and benefits to every single EU citizen. The Commission's proposals put consumer choice, fairer prices, cleaner energy and security of supply at the centre of its approach.

The package promotes sustainability by stimulating energy efficiency and guaranteeing that even smaller companies, for instance those that invest in renewable energy, have access to the energy market. A competitive market will also ensure greater security of supply, by improving the conditions for investments in power plants and transmission networks, and thus help avoid interruptions in power or gas supplies. Guarantees of fair competition with third country companies are also strengthened.

"An open and fair internal energy market is essential to ensure that the EU can rise to the challenges of climate change, increased import dependence and global competitiveness. This is about getting a better deal for consumers and business and making sure that third country companies respect our rules", explained European Commission President Barroso.

"We have moved a long way towards an internal energy market in the EU over the last 10 years. It is now time to complete this process and ensure that the benefits of this market are real, effective and available to each and every person and company. The EU now has to take the necessary steps to ensure that all its citizens can choose their own supplier and be sure that they are getting the best deal", said Energy Commissioner Piebalgs.

"The time has come for households and businesses to enjoy the full benefits of a competitive energy market in terms of choice of supplier and fairer prices. Today's proposals would deliver these benefits", told Competition Commissioner Kroes.

To make the internal market work for all consumers whether large or small, and to help the EU achieve more secure, competitive and sustainable energy, the Commission is proposing a number of measures to complement the existing rules.

• Separation of production and supply from transmission networks: Network ownership and operation should be "unbundled". This refers to the separation between the network operation of electricity and gas from supply and generation activities. The proposals make it clear that the Commission's preferred option in this respect is ownership unbundling - in other words that a single company can no longer own both transmission and be occupied in energy production or supply activities. In addition, the Commission proposes a second option, the "independent system operator" which makes it possible for existing vertically integrated companies to retain network ownership, but provided that the assets are actually operated by a company or body completely independent from it. Either one of these options will create new incentives for companies to invest in new infrastructure, inter-connection capacity and new generation capacity, thereby avoiding black-outs and unnecessary price surges.
• The Commission recognizes the strategic importance of Energy Policy. Therefore the package contains safeguards to ensure that in the event that companies from third countries wish to acquire a significant interest or even control over an EU network, they will have to demonstrably and unequivocally comply with the same unbundling requirements as EU companies. The Commission can intervene where a purchaser cannot demonstrate both its direct and indirect independence from supply and generation activities.
• Facilitating cross-border energy trade: The Commission proposes to establish an Agency for the cooperation of National Energy Regulators, with binding decision powers, to complement National Regulators. This will ensure the proper handling of cross-border cases and enable the EU to develop a real European network working as one single grid, promoting diversity and security of supply.
• More effective national regulators: the Commission proposes measures to strengthen and guarantee the independence of national regulators in Member States.
• Promoting cross border collaboration and investment: The Commission proposes a new European Network for Transmission System Operators. EU grid operators would cooperate and develop common commercial and technical codes and security standards, as well as plan and coordinate the investments needed at EU level. This would also ease cross border trade and create a more level playing field for operators.
• Greater transparency: Steps to improve market transparency on network operation and supply will guarantee equal access to information, make pricing more transparent, increase trust in the market and help avoid market manipulation.
• Increased solidarity: by bringing national markets closer together, the Commission foresees more potential for Member States to assist one another in the face of energy supply threats.

Customers will also benefit from a new Energy Customers' Charter to be launched in 2008. This will include measures to address fuel poverty, information for customers to choose a supplier and supply options, actions to lower red tape when changing energy suppliers and to protect citizens from unfair selling practises. A separate information campaign will inform customers of their rights.

The proposed package of measures was anticipated in the Commission's Energy Policy for Europe which was endorsed by the European Council in March 2007. This set out the need for the EU to draw up a new energy path towards a more secure, sustainable and low-carbon economy, for the benefit of all citizens. Fully competitive markets are an essential pre-requisite to reaching this goal. From 1 July 2007, citizens across the EU already have a right to choose their supplier. The new package aims to ensure that all suppliers fulfil high standards of service, sustainability and security.

The Commission's proposals for the internal energy market are an integral part of the Lisbon Strategy and the EU's energy strategy and will be discussed among Heads of State and Government at their regular Summits.

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