The Internal Energy Market E-Book

Fabrizio Lala

• Herausgeber: Alpina srl
• Kategorie: Wissenschaft und neue Technologien
• Sprache: Englisch

Veröffentlichungsjahr: 2014

Beschreibung

The energy strategy of European Union is an item of utmost political concern, since it tightly intertwined with controversial commercial relationship with Russia and the US.

In spite of the fact that energy had always played a leading role in the European Union, it was not included or since the beginning of the European Community within the common policies in the same.

Things began to change in the following twenty years, when oil became more and more important for the world economy, replacing coal as the main energy source.
This ebook provides a general legal basis on the subject, focusing on the matters related to the ownership and management of the network, which is a key topic when delaing with natural monopolies, such as electricity.

This work is helpful for understanding the background fo present-day discussion about Europe Energy Strategy ant the antitrust aspects of the ongoing mergers in the European market of energy equipment

Leseprobe

Fabrizio Lala graduated from the University of Turin, attended the International Trade Law Post-graduate course andholds a Masters in European Interdisciplinary Studies from the College of Europe.

After several apprenteeships in Brussels in the areas of energy and antitrust law, he was admitted to the Turin Bar in 2012. He is an associate practicing industrial and intellectual property law, as well as EU law, at Jacobacci Law Firm. Languages; Italian, French, English, German

© November 2007 by Alpina S.r.l., Turin

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Cover photo – ownership of Edipower, Milan

Cover: Chiara Lasagni and Francesco Rizzi

FABRIZIO LALA

THE INTERNAL ENERGY MARKET

TOWARDS A THIRD WAVE OF LIBERALISATION

CONTENTS

CONTENTS

INTRODUCTION

THE LEGAL POWERS OF THE EC

1.

A.

a) Article 5 ECT

B.

a)

b)

C.

2.

A.

B.

C.

a)

b)

THE ELECTRICITY AND GAS DIRECTIVES

1.

A.

a)

b)

c)

d)

B.

a)

b)

c)

2.

Conclusion: The Failings of the liberalisation, the road ahead

THE ROAD AHEAD

1.

2.

3.

A.

B.

a)

b)

C.

a)

b)

c)

d)

e)

f)

D.

CONCLUSION

BIBLIOGRAPHY

INTRODUCTION

Energy has always played a leading role in the European Union, suffice it to say that two of the first three Treaties that were signed, the one creating the Coal and Steal Community and EURATOM1, dealt with problems related to this field. In spite of that, Energy is not included in the Community competences2, on the contrary, it is an area of competence left to the Member States.

What are the reasons of such exclusion? The answer seems simple, as energy has always been a matter of high political relevance, for this reason the powers of the national governments have not been touched.

There are indeed other concrete historical and economic reasons for the lack of provisions concerning energy policy in the EEC Treaty, signed in 1957. In the 1950’s, coal was still the most important source of energy in the Globe3 and it guaranteed a good security of supply. On the other

hand, nuclear power was seen as the main future energy source. If one considers things from this point of view, the modus operandi of the six founding Members of the Community is reasonable: the present energy source, coal, and the future one, nuclear power, were the object of the aforementioned Treaties, therefore there seemed to be no need to include more rules on a sensitive topic such as energy in the EEC Treaty.

Things began to change when, in the following twenty years, oil became more and more important in the world economy, replacing coal as the main energy source. The dependence of Europe on imports from abroad, together with the oil crisis of the 1970’s, called for a revision of what had been established in the founding Treaties.

In 1973, the first oil crisis that followed the Yom Kippur war led to major changes in the industry. The embargo on nations supporting Israel in its conflict with Syria and Egypt imposed by OAPEC4, the fact that crude oil prices had quadruped and the succeeding stagflation called for a reorganisation of the energy industry.

At the European level, the Council, with its Resolution of 17 September 19745 set the first objectives of the European energy policy. The main goals described in the document were a reduction of the Community’s energy dependency, to be achieved with an improvement of security of supply.

With the Council Resolution of 16 September 1986 concerning new Community energy policy objectives for 1995 and convergence of the policies of the Member States6 new proposals for the convergence of the Member States’ policies were settled. However, this document did not

produce the expected outcomes, mostly because of the use of the resolution as its legal instrument. Given its non binding nature, energy policies of the Member States should have converged spontaneously towards a common goal, but this was not possible because of the differences in strategies and between states that were sufficient and others that were dependent from imports.

The signing of the Single European Act7 was a turning point for matters related to energy. Article 8A of the SEA defines the main objective, the progressive establishment of the internal market, “an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this Treaty”, over a period expiring on 31 December 1992. It was a motivating force for the Commission to propose rules aimed at the elimination of the barriers to the creation of a European wide market for energy too, as energy represents a significant share of production costs, hence the existence of national, separated markets is a disincentive to the growth of a large number of industries8. In the document of the Commission of May 1988, the setting-up of a true internal energy market is one of the pillars of a larger European Single Market9.

The Treaty of Maastricht10 brought about some changes in the Treaty of Rome, including a reference to energy in the list of Community’s activities. According to letter u of article 3, they shall as a matter of fact include “measures in the field of energy, civil protection and tourism”. However, the proposal of the introduction of an autonomous section for energy, already put forward in the Spaak Report11, was laid aside.

However, the topic was discussed again at the intergovernmental level. The outcome was the assignment to the Commission of the task of formulating new proposals. The answer came in 1995 with the submission of a Green Paper for a European Union Energy Policy and a White Paper presenting an energy policy for the European Union12.

These documents could be considered as the first step in the restructuring of the European gas and electricity markets.

Three different stages were described.

The first step would consist in the adoption of the Directives on transit through transmission grids of electricity and gas13 and on transparency of prices for industrial consumers14.

In the second stage, the focus was on the removal of special and exclusive rights in the activities of production, transmission and distribution, as well as the establishment of a small degree of unbundling of the transport infrastructures. Directive 96/92/EC15 on the internal market of electricity was the first instrument used to introduce these principles. Directive 98/30/EC16, concerning natural gas, followed two years later.

According to the original plan, the third phase would have concluded the process of liberalisation, with the complete opening of the markets by July 2007, according to what is provided for by Directive 2003/54/CE17, repealing the pre-existing 96/92/EC and also by Directive 2003/55/EC, repealing Directive 98/30/EC.

Today, one could say that the European Union is still far from achieving the goal of a true internal energy market. Markets in Europe remain to a large extent national. More than ten years have passed from the first Directive that launched the liberalisation process. The progresses of the opening of the market have been analyzed with yearly benchmarking, starting from 2001. In 2005, the European Commission launched an inquiry into competition in gas and electricity markets, pursuant to Article 17 of Regulation 1/2003 EC18. The inquiry has shown a number of obstacles, proving the insufficiencies of the legal framework coming from the Directives19.

New entrants find an important obstacle in regulated prices. Unbundling of transmission and distribution appears largely insufficient, and it doesn’t help to remove the lack of independence of the operators. It derives from this that preference in access to the network is accorded to incumbents, which is another obstacle for new entrants. The insufficient competences given to the national regulators worsen the situation.

The sector inquiry has been followed by a detailed review of the current situation in every Member State20.

34 infringement procedures against 20 Member States for violation and non transposition of the existing Directives have been launched in this period. On December 12th 2006, the Commission has sent 26 reasoned opinions to 16 Member States