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19.2.1.  EU Electricity and gas markets

    The prime objective in the field of the internal energy market is to liberalise and integrate the electricity and natural gas markets. The most important challenge here is to apply the competition rules of the Treaty to the monopolies for transmission and distribution of gas and electricity, even though these are entrusted with the operation of services of general economic interest [see sections 6.6.4 and 15.5.4]. A separation between the management of networks and production or sales encourages companies to invest more in networks, thereby promoting the entry onto the market of new arrivals and increasing security of supply. Another issue is the reconciliation of the objectives of the prevention of trade barriers and of energy efficiency by way of the adoption of European standards established by the European Standardisation Bodies (CEN and CENELEC) [see section 6.2.3]. A final problem is in the monitoring of the markets and the cooperation on interconnected systems between national regulatory authorities in both the gas and electricity sectors.

    Serious steps towards the liberalisation of the electricity and gas sectors were taken in the late 1990s. European Directives, revised in 2003, set up common rules for the internal market in electricity [Directive 2009/72] and natural gas [Directive 2009/73]. They are based on a balanced approach concerning access to the systems, public service obligations and competition rules and on the broad application of the subsidiarity principle [see section 3.2], in order to take account of the different national electricity and gas systems. The Directives lay down the rules relating to the organisation and functioning of the electricity and gas sectors, access to the market, the criteria and procedures applicable to calls for tenders and the granting of authorisations and the operation of systems. The respect of the public service requirements is a fundamental requirement of these Directives. They specify common minimum standards to be respected by all Member States, which take into account the objectives of common protection, security of supply, environmental protection and equivalent levels of competition in all Member States. Public service obligations may relate to security, including security of supply, regularity, quality and price of supplies, and environmental protection, including energy efficiency and climate protection. However, the public service requirements are interpreted on a national basis, taking into account national circumstances, subject to the respect of European law. The Agency for the Cooperation of Energy Regulators assists the competent regulatory authorities in exercising, at European level, the regulatory tasks performed in the Member States and, where necessary, in coordinating their action [Regulation 713/2009].

    In order to ensure that consumers and other market participants can have confidence in the integrity of electricity and gas markets, that prices set on wholesale energy markets reflect a fair and competitive interplay between supply and demand, and that no profits can be drawn from market abuse, a Regulation establishes rules prohibiting abusive practices affecting wholesale energy markets [Regulation 1227/2011, last amended by Regulation 1348/2014]. It provides for the monitoring of wholesale electricity and gas markets by the Agency for the Cooperation of Energy Regulators in close collaboration with national regulatory authorities and taking into account the interactions between the Emissions Trading Scheme and wholesale energy markets [see section 16.2].

    Α Regulation set up fair rules for cross-border exchanges in electricity, thus enhancing competition within the internal electricity market, taking into account the specificities of national and regional markets [Regulation 714/2009, last amended by Regulation 543/2013]. To this end, it established a compensation mechanism for cross border flows of electricity and set up harmonised principles on cross-border transmission charges and the allocation of available capacities of interconnections between national transmission systems. It, thus, facilitates the emergence of a well-functioning and transparent wholesale market with a high level of security of supply in electricity.

    Directive 2005/89 establishes measures aimed at safeguarding security of electricity supply so as to ensure the proper functioning of the internal market for electricity and to ensure: (a) an adequate level of generation capacity; (b) an adequate balance between supply and demand; and (c) an appropriate level of interconnection between Member States for the development of the internal market.

    A regulation establishes conditions for access to the natural gas transmission networks in the EU [Regulation 715/2009]. It has three aims:(a) setting non-discriminatory rules for access conditions to natural gas transmission systems taking into account the specificities of national and regional markets with a view to ensuring the proper functioning of the internal gas market; (b) setting non-discriminatory rules for access conditions to LNG facilities and storage facilities taking into account the special characteristics of national and regional markets; and (c) facilitating the emergence of a well-functioning and transparent wholesale market with a high level of security of supply in gas and providing mechanisms to harmonise the network access rules for cross-border exchanges in gas. To promote these objectives, the Regulation set up the European network of transmission system operators (ENTSO) for Gas.

    Energy price transparency is essential to the achievement and smooth functioning of the internal energy market, because it can help to obviate discrimination against users by increasing their freedom to choose between different energy sources and different suppliers. Therefore a directive engages Member States to take the steps necessary to ensure that undertakings which supply gas or electricity to industrial end-users communicate to the Statistical Office of the European Union (Eurostat): (1) the prices and terms of sale of gas and electricity to industrial end-users; (2) the price systems in use; and (3) the breakdown of consumers and the corresponding volumes by category of consumption to ensure the representativeness of these categories at national level [Regulation 2016/1952].

    A series of guidelines are designed to create a favourable environment for the development of trans-European energy networks in the electricity and gas sectors [Regulation 347/2013 last amended by Regulation 1391/2013, see section 6.8]. They set the following objectives: strengthening the security of the EU's energy supplies by improving the efficiency and reliability of all European electricity and gas systems; ensuring effective operation of the internal market by providing an infrastructure which allows supply to respond to the demand for natural gas and electricity throughout the EU; promoting economic and social cohesion by facilitating the development and reducing the isolation of the less-favoured, peripheral and island regions. They also take account of the rapidly changing market, especially for natural gas, the acceleration towards the extension of the interconnected networks across the European continent and the prospects of Union enlargement. Priority projects must be compatible with sustainable development, have a significant impact on the competitive operation of the internal market and/or contribute to strengthening security of supply in the Union.

    In order to attain these objectives, the guidelines envisage, on the one hand, broad lines of action to identify projects of common interest and, on the other, technical, administrative, legal and financial measures, concerning in particular authorisation procedures. Indeed, unlike transport networks, the realisation of trans-European energy networks is not in the first instance a financing problem, because investments in these networks are generally lucrative. The problem in this sector is that investments are often hampered by administrative constraints, notably delays and blockages in obtaining the authorisations needed for the construction and operation of oil and gas pipelines, by exclusive import and export rights and by transport monopolies. Moreover, natural gas pipelines have to be built from gas fields, which are often located at great distances from the markets in Western Europe. Since trans-European networks have to be developed on all the countries of Europe and the basin of the Mediterranean, the priority for the European Union in this sector is to remove or bypass these obstacles. Therefore, the Commission recommends increased transparency and coordination of authorisation procedures and collaboration between the Member States and, where appropriate, with the third countries concerned [Recommendation 1999/28].

    The Court of Justice has recognised that the exclusive rights granted to certain establishments to import and export gas and electricity give rise to discrimination against importers and exporters established in other Member States, contrary to Article 37 (EEC, new Article 37 TFEU). According to the Court, this type of discrimination can only be justified by Article 90 (EEC, new Article 106 TFEU] if the tasks assigned to  undertakings entrusted with the operation of services of general interest can be achieved only through the grant of exclusive rights and provided that the development of trade is not affected to an extent contrary to the interests of the Community/Union [Cases C-157/94, C-158/94, C-159/94 and C-160/94].

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    Your roadmap in the maze of the European Union.

    Based on the book of Nicholas Moussis:
    Access to European Union law, economics, policies
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