The consumer and the internal market in energy: who benefits?

Abstract:

In a reference from a Dutch court for a preliminary ruling, the Court of Justice considered a number of matters arising from the liberalisation of the EU electricity sector. In its judgment it ruled that: (a) a prohibition of discrimination under Arts 7(5) and 16 of Directive 96/92 concerning common rules for the internal market in electricity is not limited to technical rules but must apply to all forms of discrimination; and (b) these Articles preclude national measures that grant an undertaking preferential capacity for the cross-border transmission of electricity, whether those measures derive from the system operator, the controller of the system management or the legislature, in the case where such measures have not been authorised within the framework of the procedure set out in Art.24 of Directive 96/92 (Member States can apply for derogations from the prohibition of discrimination). Essentially, the preferential treatment for the electricity generating firms concerned had to be terminated but the long-term take-or-pay contracts for electricity imports had to be honoured. The case subsequently resumed in the Dutch Court but in September 2005 the preferential treatment was terminated by the transmission service operator. In a wider context, the case is significant in being initiated by a consumers association with the aim, inter alia, of lowering energy prices. However, the length of time that the case has taken from its initiation in the Netherlands suggests that the direct benefits to consumers from pursuing change throuught the courts are likely to be small. The immediate beneficiaries from this case are likely to be the companies engaged in electricity trading on the EU market.