The European Union aims to integrate its Member States' fragmented electricity and natural gas markets into a single energy market, under the pillar of economic competitiveness which is one of the three key objectives of its Energy Strategy.
For this purpose, regulatory integration is needed next to infrastructure investments in order to have a reliable and integrated energy network in Europe. Financial aid for Trans-European Energy Networks has been provided since the 1990s and recently the Connecting Europe Facility has been established for this purpose. Part of this facility is the designation of priority infrastructure projects, which will receive financial as well as regulatory aid on an EU level.
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Competitiveness policies in the European project
1950s: European Coal and Steel Community & Euratom
Energy has always been a major point of the European construction. The Paris Treaty signed in 1951, establish European Coal and Steel Community (ECSC). The aim was to create a common market for coal and steel among Belgium, France, West Germany, Italy and the Netherlands, in order to neutralise competition between European nations over natural resources and ensure a good energy supply within those countries.
In 1957, the Treaties of Rome were signed by the ECSC members, including the Euratom treaty, aiming to foster co-operation in the nuclear field.
The three phases in the deregulation of the market:
The first two phases, so-called free market, are following the adoption of Directive 96/9 2 of 19 December 1996 which established the principle of opening up sites of over 100 GW / year in national energy markets. Due to the limited success of this first Directive, it was repealed in 2003 and replaced by Directive 2003/54 / EC that aimed at speeding up liberalization. This is commonly referred to as "the second energy-climate package". In France, these two Directives have been included in National law through law 2000-108 of 10 February 2000 and 2004-803 of 9 August 2004, amended by Law No. 2003-8 of 3 January 2003 and Law No 2006-1537 of 7 December 2006.
EU Energy Markets Legislation : the Third Energy Package package
The third package of energy market liberalisation rests on 5 pillars:
Unbundling
Requires an ownership separation for electricity generation and transmission networks. Companies active in both generation and transmission are therefore required to split up. This forced split aims at increasing competition.
Independent regulators
Fostering a competitive energy market requires independent regulators. Among other aspects, regulators are required by law to run independent budgets and be able to impose binding decisions and penalties upon non-compliance.
Co-operation of National regulators
A new Agency, the Agency for the Cooperation of Energy Regulators (ACER), was formed to help national regulators coordinate the smooth functioning of an integrated energy market. The agency is independet of the European Commission, national governments, and energy companies. Areas of work for the agency include: deciding on cross-border issues in case of disagreement and monitoring e.g. retail prices.
Cross-border cooperation of transmission operators
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). (Taken from: https://ec.europa.eu/energy/en/topics/markets-and-consumers/market-legislation)
Open and fair retail markets
Consumer protection is at the heart of the third package. Consumers should be enabled to freely choose or change their suppliers and be make decisions based on accurate information on what they consume.
Today: Energy Union strategy
The implementation of the Energy Union strategy with a forward looking climate change policy was launched as one of the political priorities of the Juncker Commission in February 2015. The goal of the union is to make energy more secure, affordable and sustainable. It will allow a free flow of energy across borders and a secure supply in every EU country through one unique internal energy market.