Brussels, 14/10/2014 (Agence Europe) - Despite notable progress, much work remains to be done on completing the internal energy market, said a press release from the European Commission on Monday 13 October. The Commission calls for more to be invested in the strategic cross-border infrastructure and for smart grids to be developed in the electricity sector.
What has already been achieved. The integration of the EU's energy markets has delivered tangible results - mainly on the wholesale markets, the Commission points out. In particular, between 2008 and 2012 wholesale electricity prices declined by one-third and wholesale gas prices remained stable. Consumers have more choice among energy suppliers competing through lower prices and better services than ever. In addition, many missing links between EU member states have been completed or are under construction, and cross-border trade between most European countries has increased.
The Commission is also pleased that cross-border gas pipelines are being used more efficiently thanks to the common rules of the third liberalisation package on the use of gas networks. This legal framework prevents energy companies from excluding competitors from access to pipelines or from withholding the construction of important infrastructure, the Commission notes.
Adopted in 2009, the third legislative package for the liberalisation of electricity and gas markets includes the third Electricity Directive (2009/72/EC), the third Gas Directive (2009/73/EC), the regulation on conditions for access to cross-border exchanges in electricity (714/2009), the regulation on conditions for access to natural gas transmission networks (715/2009), and the regulation setting up an agency for the cooperation of energy regulators (713/2009). This framework provides for the unbundling of networks (the separation of network activities for electricity and gas from generation, production and supply). It also contains consumer protection mechanisms (particularly obliging member states to protect vulnerable consumers, to provide transparent billing and contractual information to consumers, and to establish a single point of contact and a mechanism for the out-of-Court solution of disputes), and it strengthens the independence of national regulatory authorities.
Lastly, the 2011 regulation on monitoring energy market integrity and transparency (REMIT) contributes to ensuring fair trade on wholesale markets, and the impossibility of manipulating prices.
What remains to be achieved. Additional measures are nevertheless needed to guarantee the proper functioning of the internal market and increased competition, to integrate renewable energies into the market, and to ensure - thanks to correct price signals - that energy is produced where it is cheapest and that the most cost-effective investment decisions are taken, the Commission states.
For this, more investments in infrastructure, including in smart grids, are urgently needed. In the gas sector, investments should focus on ending the isolation of the Baltic States and the diversification of supply in many member states in Central and South-Eastern Europe. In the electricity sector, linking the grids of the Iberian Peninsula, the Baltic region, Ireland and the United Kingdom better with the EU should be tackled as a priority. By 2020 three-quarters of the EU's projects of common interest should be completed, the Commission states.
The Commission also underlines the importance of using electricity infrastructure more efficiently and of basing its operation on the same set of simple, harmonised rules across Europe. The Commission is working on this and promises to adopt these rules in the coming months.
Government intervention should be limited to when secure energy flows cannot be guaranteed by the market - otherwise, their action may undermine investments in infrastructure and energy efficiency, and have a negative effect on consumer bills, the Commission states. The Commission recalls that it addressed this issue in November 2013.
The Commission also insists on the benefits of the regional approach to market integration as it can bring results faster and is better suited to address local issues.
Lastly, the Commission calls for retail and wholesale markets to be better linked.
Political objectives far from being achieved. In 2011, the Council confirmed the political objective for the EU to complete the internal energy market by the end of 2014, and it underlined than no member state should remain isolated from the European gas and electricity networks after 2015.
Completion of the internal energy market could bring net economic gains of between €16 billion and €40 billion each year, the Commission believes. (EH)