European Commission launches new proposals to complete by 2005 the internal electricity and gas markets, March 2001

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Series Details 17.3.01
Publication Date 19/03/2001
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  • This In Focus has been updated by 'In Focus: Barcelona European Council agrees compromise deal on the liberalisation of electricity and gas markets, March 2002'

The European Commission proposed on the 13 March 2001 a set of new measures to open up the gas and electricity energy markets fully by 2005 for the benefit of European consumers, and to provide an effective, secure, competitive and integrated European energy market. These measures include:

  • bringing forward the schedule for the opening up of the gas and electricity market
  • reinforcing the conditions which encourage real and fair competition
  • securing energy supply and a high level of consumer protection
  • introducing a genuine single market in gas and electricity.

Background

For background information on the EU's energy policy see the European Sources Online: Topic Guide: Energy Policy

The current phase of EU action in the area of the energy began with the issuing in 1995 of a Green Paper 'For a European Union energy policy' (COM (1994)659 final) and, subsequently, a White Paper 'An energy policy for the European Union' (COM (1995)682 final). The White paper laid down guidelines for energy policy over the coming years.

The three pillars and strategic objectives of the European Union's energy policy in the future were established as:

  • overall competitiveness
  • security of energy supply
  • environmental protection.

This policy was to be implemented mainly by means of integration of the market, management of external dependency, promotion of sustainable development and support of energy research and technology.

In respect of the integration of the market the primary goal has been to liberalise the internal market for electricity and natural gas. Legislation has been adopted for both these sectors:

  • Electricity: Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity [ 396L0092]
  • Gas: Directive 98/30/EC of the European Parliament and of the Council of 22 June 1998 concerning common rules for the internal market in natural gas [ 398L0030]

which envisages a series of measures to provide for a fully liberalised and competitive market for these two sectors by 2008.

The European Commission's Directorate General for Energy and Transport maintains websites providing substantial information on the implementation of the legislation to liberalise the electricity and gas markets.

While progress has been made to open up the market in both these energy sectors to competition, some argue that progress has been slow and uneven. France has been cited as a notable laggard in opening up its energy market, while progress towards liberalisation in other Member States has at times caused tensions between national governments, existing monopoly suppliers and new entrants. Detailed comments can be found in the hyperlinks listed below.

The special European Council held in Lisbon in March 2000 adopted a set of conclusions to ensure that the EU should within the next ten years 'become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion'. While the key emphasis of the strategy involved actions to promote the Information Society, there were also a series of recommendations to ensure a 'complete and fully operational internal market'. The European Commission, Council of the European Union, and the Member States were asked to do all they could to ensure the speeding up of liberalisation in areas such as gas, electricity, postal services and transport. The European Council would assess progress in this field at the European Council, Stockholm, 23-24 March 2001.

In May 2000 the European Commission issued a Communication 'Recent progress with building the internal electricity market' ( COM (2000)297 final). Whilst acknowledging progress, the Commission argued that two issues needed to be re-examined:

  • Unbundling of operation of the network from production/distribution
  • Regulated third-party access

The Commission concluded that the opening of the market provided for in the laws implementing the Directive were not enough to create a true single market in practice. In particular, the objective should be a truly integrated pan-EU energy market rather than fifteen more or less liberalised markets.

Reaction to this Communication by the European Parliament and Council of the European Union can be traced through PreLex.

The latest report on liberalisation of the gas market is available in MEMO/00/52.

In November 2000 the European Commission launched an overall debate on a future European energy strategy with a Green Paper on energy supply security ( COM (2000)769 final). A summary is available ( IP/00/1368). The progress of the Green Paper through the EU's policy process can be traced through PreLex.

One of the questions asked in the Green Paper is:

Does not Europe's increasingly integrated internal market, where decisions taken in one country have an impact on the others, call for a consistent and co-ordinated policy at Community level? What should such a policy consist of and where should competition rules fit in?

It in this context that the European Commission introduced its Communication and set of proposals 'Completing the internal energy market' on the 13 March 2001.

Communication: Completing the internal energy market

The Communication from the European Commission says that the conditions are right for a further significant step in the market opening process, leading to the rapid completion of the internal markets in electricity and gas. Thus, the Commission proposes amendments to the existing Directives governing the internal market in electricity and gas to speed up the process so that by 2005 all consumers (both domestic and industrial) will have choice to choose their suppliers.

The Commission also proposes that the management of the gas and electricity transmission grids should be legally separate from production and sales activities, and that they operate entirely independently. Network access tariffs should be set, published and approved by national regulators before entering into force. Each Member State should have a regulator, who should be independent of Member State administrations.

In addition, the Commisison proposes additional measures regarding security of supply and public service and a range of initiatives to encourage the establishment of a genuine pan-EU market in gas and electricity. These include:

  • adoption of rules on cross-border tariff-setting and congestion management for electricity
  • development of a European infrastructure plan for electricity and gas
  • negotiation of reciprocal electricity-market-opening agreements with the EU's neighbours.

The text of the Communication 'Completing the internal energy market' is available (please note at the time of compilation of this In Focus the text was headed 'unofficial version'). To trace the confirmed version and follow the progress of the Communication in the EU's policy making progress insert title in the 'words from the title' field or insert COM (2001) 125 in the relevant fields of PreLex .

The texts of two related proposals for Directives are also available

  • Proposal for a Directive amending Directives 96/92/EC and 98/30/EC concerning common rules for the internal markets in electricity and natural gas
  • Proposal for a Regulation on conditions for access to the network for cross-border exchanges in electricity
European Sources Online: European Voice:
15.02.96: New optimism over electricity liberalisation
09.05.96: Hopes rise for deal on electricity
13.06.96: Hopes rise for EU electricity deal
26.09.96: Deadlock in dispute over energy deals
12.12.96: The Parliament approved draft legislation
06.03.97: Electricity sparks highlight dangers for gas market
20.03.97: Dutch optimistic over gas liberalisation plan
03.04.97: Passing on the lessons of bitter experience
03.04.97: Plan to open half gas market within decade
17.04.97: Energy monopolies weighed in balance
22.05.97: Pipedreams in EU gas market
05.06.97: US seizes spoils of liberalisation
12.06.97: French stymie latest attempt to open gas markets
26.06.97: New gas plan is in the pipeline
04.09.97: Dismay over presidency's new gas proposals
11.09.97: Warm response to gas proposal
02.10.97: Electricity liberalisation powers ahead
23.10.97: Norway worried by gas liberalisation issue
30.10.97: French still seeking compromise over gas under Luxembourg presidency
11.12.97: MEPs set to approve gas market deal
18.12.97: Late burst of energy for liberalisation
12.02.98: Minnows face defeat in power battle
05.03.98: Italian power partnership triggers alarm
07.05.98: Ministers to set seal on gas liberalisation
28.05.98: EU to study aftermath of liberalisation
15.10.98: Gas industry powers its way towards bright future
15.10.98: Measuring up the energy markets
29.10.98: Electricity generation powers ahead, but transportation lags
17.12.98: Slotting final pieces into the liberalisation jigsaw
07.01.99: Energy liberalisation surges towards full power up
07.01.99: US firm's progress in Europe shows extent of market opening
18.02.99: Officials claim bright outlook for first phase of electricity market opening
18.03.99: Anger over French and Spanish approach to power liberalisation
08.04.99: France escapes swift action on energy law
06.05.99: Dutch call for France to rethink energy law wins British backing
13.05.99: Paris should save its energy
07.10.99: Gas sector poised for revolution
28.10.99: Monti set to unveil energy aid rulebook
04.11.99: Gas sector prepares for liberalisation
20.01.00: 'Green' energy risks being left out in the cold
20.01.00: Sparks fly over electricity liberalisation
03.02.00: France this week passed a bill to liberalise its electricity market...
17.02.00: Italy faces obstacles as it moves to open gas market
04.05.00: Mixed success for market-opening in electricity industry
04.05.00: EU reaps dividends of market-opening
04.05.00: EU's least enthusiastic liberaliser to take charge of market-opening drive
04.05.00: Greens warn of threat posed by liberalisation
04.05.00: Regulators face key test as chill winds of competition blow through gas sector
15.06.00: Energy sector faces race to catch up
27.07.00: Dawn of a new era for Europe's gas industry
26.10.00: Commission bids to reduce the risk of future energy crises
01.02.01: Dark days for electricity sector dim hopes of French volte-face
08.02.01: Prodi attacks lack of progress on goals for Stockholm summit
22.02.01: Full power ahead for energy market liberalisation

EU Institutions

European Commission
European Council, Stockholm, 23-24.03.01
Economic reforms for goods and services
Fact Sheets: 15. Gas and electricity liberalisation and cross-border markets
 
European Commission: DG Energy and Transport
Homepage
Conventional energies: Gas
Conventional energies: Electricity
New and renewable energies
Annual Energy Review
European energy to 2020
Trans-European Energy Networks
 
European Commission: Eurostat
Environment and Energy
 
European Commission: Press and Communication Service: RAPID
Press Releases:
16.01.01: Loyola de Palacio calls for further liberalisation of gas and electricity markets (IP/01/59)
30.01.01: Loyola de Palacio sets out the conditions for successful gas and electricity liberalisation (IP/01/132)
12.03.01: UKFrench electricity interconnector opens up, increasing scope for competition (IP/01/341)
Memos:
13.09.00: Commision welcomes gas liberalisation first results (MEMO/00/52)
12.03.01: Role of interconnectors in the electricity market. A competition perspective (MEMO/01/76)
Speeches:
29.01.01: The creation of a fully operational Energy Market (SPEECH/01/34)
Recent Press Releases and related information sources on energy (includes transport)
 
European Commission: Press and Communication Service: SCADPLUS
Energy
 
European Parliament: Fact Sheets
Energy

International Organisations

International Energy Agency
Homepage
  Electricity
  Natural Gas
  Market reforms
  Regulatory reform: European gas
 

National Organisations

United Kingdom: Department of Trade and Industry
Homepage
  Energy
  Energy in Europe
  The social effects of energy liberalisation: the UK experience, June 2000

Non-governmental Organisations

International Federation of Industrial Energy Consumers (IFIEC)
Homepage
  Electricity Working Documents
  Natural oil and gas Working Documents
 
EURELECTRIC
Homepage
 
EUROGAS
Homepage
 
European Energy Foundation
Homepage
 
European Transmission System Operators
Homepage
 
Union for the Coordination of Transmission of Electricity
Homepage
 
European Federation of Public Service Unions
Homepage
 
Royal Institute of International Affairs (RIIA)
Homepage

News Organisations

FT.com
11.12.00: Competition proves illusive (FT: World Energy Review, December 2000)
21.02.01: Ireland battles to meet power demand
28.02.01: German price outlook deteriorates
02.03.01: Norway ready to open gas market after EU pressure
05.03.01: The sale of German utilities stirs passions
13.03.01: Brussels in push to free energy trade
14.03.01: Energy liberalisation leaves EU members divided

Further and subsequent information on the subject of this In Focus can be found by an 'Advanced Search' in European Sources Online by inserting 'energy liberalisation in the EU', 'gas liberalisation', 'electricity liberalisation' etc in the keyword field.

  • This In Focus has been updated by 'In Focus: Barcelona European Council agrees compromise deal on the liberalisation of electricity and gas markets, March 2002'

Ian Thomson
Executive Editor, European Sources Online
Compiled: 17 March 2001
Links updated 4 April 2002

The European Commission proposed on the 13 March 2001 a set of new measures to open up the gas and electricity energy markets fully by 2005 for the benefit of European consumers.

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