Internal gas and electricity market

COM (2009) 115– The liberalisation of the EU's electricity and gas markets, which began several years ago, has contributed to the rejuvenation of the energy sector. It has helped to develop entrepreneurial potential in this sector, with beneficial effects on a variety of energy-related activities.

This report shows that significant improvements have taken place in the EU electricity and gas market. Nevertheless, the full potential of liberalisation has not yet been realised. There are still a number of areas and Member States where the existing legislation (second internal market package) has not yet been properly implemented or where the need for new legislation has become apparent. The Commission is taking action to ensure the correct implementation of EU legislation at national level through the application of infringement procedures and complementing the internal market legislation with the third internal energy market package. The 3rd internal market package is meant to complement the existing EU legislation and must not be used as an excuse for the inadequate implementation of the existing 2nd internal market package.

The Commission's conclusions on this report are that in 2007 and 2008 a great deal of effort was put into enhancing competition on the wholesale market; significant progress was made through the regional initiatives. There also seems to be a new trend towards building new energy infrastructure, which is crucial to overcoming the longstanding fragmentation of EU energy markets.

The Commission's finding with respect to market concentration is that progress has generally been slow. A number of wholesale markets, in particular, still suffer from limited competition and the lack of liquidity. There are signs that the situation on the retail market is about to improve. Member States should put even more effort into providing comprehensive data for supplier switching. A major issue in the reporting period was the increase in energy prices, in part due to the rising price of oil on the international market. This triggered major increases in energy end prices.

While short-term solutions, such as regulated prices, might appear to be advantageous in the light of rapidly increasing energy prices, the report stresses the likely consequences of such measures: investor confidence is undermined, market entry is deterred and the full benefits of the internal energy market are placed at risk. Over the coming two decades, the EU – like other parts of the world – has to address the need for major investments in infrastructure. In the long term only a properly functioning internal electricity and gas market can send the right price signals to encourage investment.

Source: MEUSAC Competitiveness and Consumer Affairs Sectoral Committee