7 yrs
Policy News, BB200709

European Commission proposes further liberalisation of Europe’s electricity and gas markets

01.10.2007

On 19 September, the European Commission adopted a package of proposals to further liberalise Europe’s electricity and gas markets. The proposals cover five main areas:

- unbundling;
- regulatory oversight and cooperation;
- network cooperation;
- transparency and record keeping; and
- access to storage and LNG facilities.


EWEA has welcomed this package of proposals as an important step towards a single European electricity market, but still feels that it not far-reaching enough. The Commission, as expected, proposed ownership unbundling as its preferred option. However, in cases where a member state does not favour such unbundling, it may introduce a so-called Independent System Operator (ISO) model. According to the ISO model, the network assets would continue to be owned by the company, which is also active in supply, but the technical and commercial operation of these assets would be managed by an independent company, designated by the member state.

The proposed ISO model will require careful monitoring and comprehensive regulation. For the wind energy sector, it is crucial that ISOs are made responsible for the operation as well as the expansion of grids. In this respect, the Commission has proposed increased regulation in instances when the ISO model is adopted, including obligatory owner financing of investments decided by the ISO and ISO compliance with a ten year network investment plan proposed by the regulatory authority. Furthermore, the designation of the independent system operator will have to be approved by the Commission.

Given the political reality in the Council, the ISO model was probably as far as the Commission could go at this stage on these controversial issues. It is thus an important step towards improving competition, but more still needs to be done. EWEA continues to believe that full ownership unbundling is the most effective tool to promote grid investments and secure fair third party access to Europe’s power network.

The Commission has proposed that all national regulators are truly independent from both industry and governmental (regarding day-to-day operational decision making) interests, with the clear objective of promoting competition. Their powers and duties will be strengthened, including the ability to make binding decisions and to impose penalties on companies that do not comply with their legal obligations or with regulator decisions.

- The Commission has also proposed a requirement for regulators to cooperate with regulators from other member states and, to facilitate this proposal, has formed the European Agency for the cooperation of Energy Regulators. An additional proposal is the formalisation of cooperation between transmission network operators to:
- develop draft standards and codes that will facilitate the harmonisation or compatibility of operational procedures and access regimes;
- coordinate network operation and the planning of network investments; and
- to monitor the development of the transmission network capacities, which would require the publication of a 10 year European investment plan every two years, obliging operators to engage in regular consultation with industry players on all aspects of the decision-making process.

For further information, including a Q&A and impact assessment from the Commission, please see:

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

 Older