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Energy, Climate change, Environment
Energy

Governance of the internal energy market

The current electricity market rules were adopted as part of the Clean energy for all Europeans package in 2019. It further improves the previous round of EU energy market legislation, known as the third energy package, aimed at improving the functioning of the internal energy market and resolving certain structural problems.

For natural gas markets, the third energy package is still applicable.

Unbundling

Unbundling is the separation of energy supply and generation from the operation of transmission networks. If a single company operates a transmission network and generates or sells energy at the same time, it may have an incentive to obstruct competitors' access to infrastructure. This prevents fair competition in the market and can lead to higher prices for consumers.

Unbundling must take place in one of three ways, depending on the preferences of individual EU countries

  • ownership unbundling - all integrated energy companies sell off their gas and electricity networks. In this case, no supply or production company is allowed to hold a majority share or interfere in the work of a transmission system operator
  • independent system operator - energy supply companies may still formally own gas or electricity transmission networks but must leave the entire operation, maintenance, and investment in the grid to an independent company
  • independent transmission system operator - energy supply companies may still own and operate gas or electricity networks but must do so through a subsidiary. All important decisions must be taken independently of the parent company

The European Commission publishes guidance documents, which explain how these unbundling models should be applied.

Commission opinions on national certification procedures

Operators that comply with the unbundling rules can apply for certification with their national energy regulator. Every operator in Europe must be certified and the Commission provides its opinion on the certification procedure. These opinions are published by the Commission. The opinions are listed per two years, as shown below.

Independent regulators

A competitive internal energy market cannot exist without independent regulators who ensure the application of the rules. The requirements for national regulators have undergone several changes, specifically

  • regulators must be independent of both industry interests and the government. They must be their own legal entity and have authority over their own budget. National governments must also supply them with sufficient resources to carry out their operations
  • regulators can issue binding decisions to companies and impose penalties on those that do not comply with their legal obligations
  • electricity generators, gas network operators, and energy suppliers are required to provide accurate data to regulators
  • regulators from different EU countries must cooperate with each other to promote competition, the opening up of the market, and an efficient and secure energy network system

Agency for the Cooperation of Energy Regulators

In order to help the different national regulators, cooperate and ensure the smooth functioning of the internal energy market, the EU established on 2011 the Agency for the Cooperation of Energy Regulators (ACER). It is independent of the Commission, national governments, and energy companies. ACER's work involves

  • drafting guidelines for the operation of cross-border gas pipelines and electricity networks
  • reviewing the implementation of EU-wide network development plans
  • deciding on cross-border issues if national regulators cannot agree or if they ask it to intervene
  • monitoring the functioning of the internal market including retail prices, network access for electricity produced from renewables, and consumer rights

Cross-border cooperation

National transmission system operators are responsible for ensuring electricity and natural gas is effectively transported through pipelines and grids.

Due to the cross-border nature of Europe's energy market, they must work together to ensure the optimal management of EU networks, which is done through

These organisations develop standards and draft network codes to adjust the flow of electricity and gas across different transmission systems. They also coordinate the planning of network investments and monitor the development of new transmission capabilities. This includes publishing Europe-wide 10-year investment plans for electricity and gas to help identify investment gaps.

Documents

  • 5 NOVEMBER 2013
Delivering the internal electricity market and making the most of public intervention (COM/2013/7243)
English
(HTML)
Download
  • 8 MAY 2013
Ownership unbundling: assessing conflicts of interests (SWD/2013/177)
English
(85.41 KB - PDF)
Download
  • 21 SEPTEMBER 2011
Certification of Transmission System Operators of networks for electricity and natural gas in the EU (SEC/2011/1095)
English
(66.37 KB - PDF)
Download
  • 20 JUNE 2011
Possibility of neighbouring countries and their Transmission System Operators to participate in ACER and in the ENTSOs (SEC/2011/546)
English
(29.69 KB - PDF)
Download
  • 22 JANUARY 2010
Interpretative note on unbundling in the electricity directive and the natural gas directive (2010)
English
(128.4 KB - PDF)
Download
  • 22 JANUARY 2010
Interpretative note on unbundling in the electricity directive and the natural gas directive (2010)
English
(73.26 KB - PDF)
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  • 22 JANUARY 2010
Interpretative note on regulatory authorities in the electricity directive and the natural gas directive (2010)
English
(93.48 KB - PDF)
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  • 22 JANUARY 2010
Interpretative note on the retail market in the electricity directive and the natural gas directive (2010)
English
(65.56 KB - PDF)
Download
  • 6 MAY 2009
Conditions for access to the network for cross-border exchanges in electricity (SEC/2009/642)
English
(83.58 KB - PDF)
Download

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