Brussels, 15/03/2010 (Agence Europe) - In its most recent progress report on setting up an internal market in the EU in electricity and gas published on 11 March 2010, the European Commission points out that the financial crisis has been having a serious impact on the internal energy market since the end of 2008 by increasing pressure on investment plans, causing problems with acquiring finance, generating uncertainty about supply and causing a slump in demand, especially for gas. It has, however, also opened up the prospects of new competition because greater quantities of gas are now being offered at lower prices by trading platforms. The report concludes that despite the influence of falling demand for electricity and gas on prices for the end user, the falling energy prices on the wholesale market have not yet filtered through to consumer prices. Prices in the first six months of 2009 were generally higher than in the first six months of 2008, notes the Commission, believing that the great diversity of retail prices is explained by insufficient integration of the retail market. The Commission comments that Member States' energy regulators tend to focus on consumers and the deployment of smart energy meters, paving the way for smart energy networks on the single market, which it describes as a promising trend for getting customers to take an active part in the single market, improving energy efficiency, stimulating large-scale integration of renewable energy, encouraging extra energy services, improving transparency on the market and making it easier for consumers to chop and change supplier. Describing as positive for the smooth functioning of the market, cooperation among EU electricity bourses and the current trend of increased trading, the Commission regrets that little has changed in terms of the high level of concentration on the market despite encouraging signs on the retail and wholesale markets. The Commission nevertheless prides itself on its plans to incentivise investment through its range of infrastructure measures and the third package of legislation on liberalising the internal energy market (adopted in June 2009), which includes clearer sector-specific rules. In preparing for implementation of the third legislative package, it is working with national regulators on ERGEG and transport network managers on ENTSO-E (electricity) and ENTSO-G (gas) on pilot guidelines. The Member States must demonstrate their commitment to the internal energy market by properly and promptly transposing the third legislative package into their legal systems., argues the Commission, promising to help them introduce the new measures but warning that it will be keeping a close eye on the situation to ensure the second package of legislation is properly introduced, using formal infringement proceedings where necessary. The Commission highlights the importance of more proactive transport and distribution networks in the form of smart meters and smart networks in order to extend the internal energy market, pointing out that it will move beyond simply introducing energy regulations by making full use of the powers available to it under competition law. (E.H. trans fl)