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Third energy package

Electricity market design has replaced the electricity part of the third energy package from 2009, the gas part is still in place.

The previous round of EU energy market legislation, known as the third energy package, aims at improving the functioning of the internal energy market and resolving certain structural problems.

The package entered into force in September 2009. Since then, the Electricity Regulation (EC) No 714/2009 and the ACER Regulation (EC) No 713/2009 were revised, as part of the Clean energy for all Europeans package in 2019. The Electricity Directive (2009/72/EC) will remain in force until the end of 2020, when the last part of the new electricity market rules will apply. For natural gas markets, the third energy package is still applicable.

The package covers the following five areas: unbundling, independent regulators, ACER, cross-border cooperation and open and fair retail markets.


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 independent of the parent company

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

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, and regularly updated.

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 a number of changes, specifically

  • regulators must be independent from both industry interests and 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 the Agency for the Cooperation of Energy Regulators (ACER). It is independent from 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. This is done through the European Network for Transmission System Operators for Electricity (ENTSO-E) and the European Network for Transmission System Operators for Gas (ENTSOG).

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 .

Open and fair retail markets

The third package includes rules designed to benefit European energy consumers and protect their rights. They include the right to choose or change suppliers without extra charges, receive information on energy consumption, and quickly and cheaply resolve disputes.

More about energy consumer rights.