The history of legislation in the field of the European Union’s energy markets covers 4 major sets of legislative measures adopted, respectively, in years: 1996/98, 2003, 2009, 2018.
The process started with the adoption of:
- the Directive 96/92/EC concerning common rules for the internal market in electricity, and
- the Directive 98/30/EC concerning common rules for the internal market in gas.
The first and the second legislative packages focused on development of market access, notably, the Directive 2003/54/EC and the Directive 2003/55/EC introduced the free choice of electricity and gas suppliers.
Third Energy Package
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The Third Energy Package was adopted in 2009 with the aim to further liberalise and integrate Europe's energy markets.
The Package pursues the general objective of completing the European Union Internal Energy Market (IEM) and contains provisions on a number of aspects related to electricity and gas supplies, in particular in the following areas:
- unbundling energy suppliers from network operators;
- strengthening the independence of regulators;
- establishing the Agency for the Cooperation of Energy Regulators (ACER);
- enhancing cross-border cooperation between transmission system operators and the creation of European Networks for Transmission System Operators (ENTSO-E and ENTSO-G);
- open, fair retail markets and consumer protection,
- contract switching,
- contract termination fees,
- billing of electricity and gas consumption,
- the right to receive information on energy consumption,
- quick and cheap disputes resolution.
With regard to consumer protection, the Third Energy Package prescribes the EU Member States to define the concept of vulnerable consumers at the national level and adopt the measures to protect such consumers and to address energy poverty.
The Third Energy Package consists of the following legal instruments:
Winter Energy Package (Clean Energy for All Europeans Package - CEP)
In November 2016 another set of legislative of proposals (known as the ‘Winter Energy Package’ or ‘Clean Energy for All Europeans Package’ or CEP) was released by the European Commission. The aim of the Winter Energy Package was to deal with new challenges facing energy markets, mainly demand response, renewable and decentral generation.
The new package consisted, inter alia, of the following elements:
- Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD),
- Proposal for a Directive of the European Parliament and of the Council on common rules for the internal market in electricity (recast), 30.11.2016, COM(2016) 864 final 2016/0380 (COD),
- Proposal for a Regulation of the European Parliament and of the Council on the Governance of the Energy Union, amending Directive 94/22/EC, Directive 98/70/EC, Directive 2009/31/EC, Regulation (EC) No 663/2009, Regulation (EC) No 715/2009, Directive 2009/73/EC, Council Directive 2009/119/EC, Directive 2010/31/EU, Directive 2012/27/EU, Directive 2013/30/EU and Council Directive (EU) 2015/652 and repealing Regulation (EU) No 525/2013, 30.11.2016, COM(2016) 759 final 2016/0375 (COD),
- Proposal for a Regulation of the European Parliament and of the Council on risk-preparedness in the electricity sector and repealing Directive 2005/89/EC, 30.11.2016 COM(2016) 862 final, 2016/0377 (COD),
- Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources (recast) COM/2016/0767 final/2 - 2016/0382 (COD),
- Proposal for a Directive of the European Parliament and of the Council amending Directive 2012/27/EU on energy efficiency (COM(2016) 761 final 2016/0376 (COD)).
The two core elements of this legislative initiative were the proposed directive on common rules for the internal market in electricity (which recasts Directive 2009/72/EC and concentrates on the role of customers in the electricity market) and the proposed internal electricity market regulation, which is focussed on the wholesale electricity market and the grid operation.
The said legislation was intended to amend existing energy market rules, among other things, in the following areas:
1. in the wholesale electricity markets Winter Energy Package proposed to remove:
- wholesale price cap,
- priority dispatch for mature renewable installations;
2. when it comes to electricity networks important modifications were envisioned by the Winter Energy Package as regards regional cooperation of system operation (in particular the creation of Regional Operational Centres);
3. in the retail electricity market, according to the the Winter Energy Package:
- consumers must have access to certified energy price comparison tools (PCTs),
- dynamic electricity price contracts will have to be made available,
- switching-related charges are prohibited.
Winter Energy Package also envisions the creation of the EU DSO entity to cooperate with Transmission System Operators (TSOs). Underlying assumptions of the Winter Energy Package and overall EU energy policy is that in general well-functioning electricity markets should ensure the security of supply (the security of electricity supply is defined as ‘the ability of an electricity system to guarantee an uninterrupted supply of electricity to consumers with a clearly defined level of performance’).
Inherent feature of this approach is that price limitations should be avoided so that electricity prices reflect actual demand and supply, and thus incentivise investments in generation capacity, interconnected transmission networks and flexibility of demand (demand response).
The first Council’s debate on the Winter Energy Package was held on 27 February 2017. The European Commission’s proposals underwent multiple changes after rounds of trilogues between representatives of the European institutions (European Commission, European Parliament and European Council). Political agreement on the Package was reached in December 2018.
The publication of the Winter Energy Package in the EU Official Journal has been completed on 14 June 2019. On this date in the OJ L 158 have been published:
- Regulation (EU) 2019/941 of the European Parliament and of the Council of 5 June 2019 on risk-preparedness in the electricity sector and repealing Directive 2005/89/EC,
- Regulation (EU) 2019/942 of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators,
- Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity,
- Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU.
The recast Electricity Directive (2019/944) entered into force on 4 July 2019 (20 days after its publication in the Official Journal of the European Union) and is to be transposed into national legislation by 31 December 2020.
Gas package adjustments
Next wave of necessary legislative adaptations to changing market circumstances is envisioned in the European Commission’s Inception Impact Assessment of 10 February 2021 (Hydrogen and Gas markets Decarbonisation Package Ref. Ares(2021)1159348).
The said document covers legislative proposals for :
- revision of Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC,
- revision of Regulation (EC) No 715/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005.
It is observed that, the Gas Directive and the Gas Regulation are primarily designed for the organisation and functioning of the current fossil-based natural gas sector. They do neither anticipate the emergence of alternative methane gases, such as bio- or synthetic-methane, or other gaseous fuels, such as hydrogen, nor different production patterns. For instance, they do not integrate the distributed production of renewable and low-carbon gases and they do not prevent disruptions caused by changing gas quality.
This focus on natural gas must change to support the deployment of decarbonised gases.
Regulatory chronicle
5 June 2023
5 April 2023
14 March 2023
Commission Staff Working Document, SWD(2023) 58 final
14 February 2023
ACER-CEER Reaction to the European Commission’s public consultation on electricity market design
ENTSO-E's Response to the European Commission Public Consultation on Electricity Market Design
23 January 2023
Consultation, electricity market – reform of the EU’s electricity market design
29 December 2022
Council Regulation (EU) 2022/2578 of 22 December 2022 establishing a market correction mechanism to protect Union citizens and the economy against excessively high prices published in the EU Official Journal.
The market correction mechanism sets a bidding limit on certain financial derivatives traded at EU exchanges. This bidding limit is activated when specific conditions are met.
22 December 2022
Council formally adopts temporary mechanism to limit excessive gas prices
19 December 2022
14 December 2022
Provisional agreement reached on REPowerEU
14 September 2022
18 May 2022
European Commission Communication Short-Term Energy Market Interventions and Long Term Improvements to the Electricity Market Design – a course for action (COM(2022) 236 final) - “Looking beyond the short term, the Commission considers that, based on the ACER report and its outreach to stakeholders, the current electricity market design delivers an efficient, well integrated market, allowing Europe to reap all the economic benefits of a single energy market, ensuring security of supply and sustaining the decarbonisation process”,
European Commission Communication, REPowerEU Plan, COM(2022) 230 final, Press release
31 March 2021
10 February 2021
Legislative proposals:
- Revision of Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC
- Revision of Regulation (EC) No 715/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005
23 July 2019
Public Consultation on The Bridge beyond 2025, PC_2019_G_06, ACER
25 June 2019
14 June 2019
published in the EU Official Journal L 158
3 May 2019
Directive (EU) 2019/692 of the European Parliament and of the Council of 17 April 2019 amending Directive 2009/73/EC concerning common rules for the internal market in natural gas published in the EU Official Journal
26 March 2019
18 January 2019
Council endorses agreement to make Europe's electricity market more competitive and consumer-centred
21 December 2018
Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (RED II) published in the Official Journal of the European Union
18 December 2018
Commission welcomes political agreement on conclusion of the Clean Energy for All Europeans package
Documentation
ACER Consolidated Annual Activity Report (CAAR) 2017
Third Report on the State of the Energy Union and its annexes, European Commission, 24 November 2017
Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD) and Annex
Proposal for a Directive of the European Parliament and of the Council on common rules for the internal market in electricity (recast), 30.11.2016, COM(2016) 864 final 2016/0380 (COD) and Annexes
Proposal for a Regulation of the European Parliament and of the Council on the Governance of the Energy Union, amending Directive 94/22/EC, Directive 98/70/EC, Directive 2009/31/EC, Regulation (EC) No 663/2009, Regulation (EC) No 715/2009, Directive 2009/73/EC, Council Directive 2009/119/EC, Directive 2010/31/EU, Directive 2012/27/EU, Directive 2013/30/EU and Council Directive (EU) 2015/652 and repealing Regulation (EU) No 525/2013, 30.11.2016, COM(2016) 759 final 2016/0375 (COD) and Annexes
Proposal for a Regulation of the European Parliament and of the Council on risk-preparedness in the electricity sector and repealing Directive 2005/89/EC, 30.11.2016 COM(2016) 862 final, 2016/0377 (COD) and Annex
EFET commentary on the Clean Energy Package for All Europeans, 20 April 201720 April 2017
Proposal for a Directive amending Directive 2009/73/EC concerning common rules for the internal market in natural gas, 6 December 2017, COM(2017)660 (amendments to ensure that the rules applicable to gas transmission pipelines connecting two or more EU Member States, are also applicable to pipelines to and from third countries within the European Union)
European Parliament, Briefing, EU Legislation in Progress, Internal market for electricity
The EU Clean Energy Package, Technical Report, October 2019, Athir Nouicer, Leonardo Meeus, European University Institute, Badia Fiesolana,
https://cadmus.eui.eu/bitstream/handle/1814/64524/EU-CEP-2019.pdf?sequence=1&isAllowed=y