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Brussels, 4 April 2006

The Commission takes action against Member States which have not opened up their energy markets properly

With 28 letters of formal notice sent to 17 Member States today, the Commission has started firm action to monitor the implementation of the legislation on the internal market in energy and to carry out a detailed examination of whether the basic laws adopted by the Member States to transpose the gas and electricity directives are in conformity with this legislation. Austria, Belgium, the Czech Republic, Germany, Estonia, Spain, Finland, France, Greece, Ireland, Italy, Lithuania, Latvia, Poland, Sweden, Slovakia and the United Kingdom will be receiving letters of formal notice for failure to transpose the directives properly or, the case in Spain, for failure to apply them properly. The Commission is also taking Spain and Luxembourg to the Court of Justice for failure to send it their national implementing measures. It is still looking into whether Portugal’s and Hungary’s laws are in conformity with the legislation.

Mr Andris Piebalgs, the Commissioner with special responsibility for energy, stressed that “the Member States must implement the directives on gas and electricity quickly and in full, not only in form but also in substance. Having carried out a detailed examination, the Commission has decided to launch a large number of infringement procedures against Member States which have not applied these rules or other measures which are essential to achieve a high level of growth and competitiveness in Europe.”

The directives creating an internal market in gas and electricity are essential for a genuine, competitive energy market in Europe. The European legislation must be properly transposed into national legislation to enable the markets to operate and to ensure that they are opened up effectively for all consumers on 1 July 2007.

The European Commission has made the completion of the internal market in electricity and gas one of the six priority areas of the strategy for sustainable, competitive and secure energy which it adopted in March 2006. In the Commission’s view, the sustainable, competitive and secure supply of energy will not be possible without open, competitive energy markets that enable European companies to compete Europe-wide rather than just being national champions.

The creation of a European energy market of this kind will, the Commission believes, be a key factor in reducing energy prices, improving the security of supply in the EU and boosting competitiveness. The Member States are currently opening up their markets in such different ways that this is hampering the development of a genuinely competitive European market.

In November 2005, the Commission indicated in its report on the completion of the internal market in electricity and gas that it would be giving top priority to the implementation of the directives. The Commission is paying very close attention to the transposition of both the letter and the spirit of the directives.

The action taken concerns failure to comply with several different points in the directives and, in the case of Spain, is in response to two complaints.

During its examination of the conformity of the national legislation, the Commission focused in particular on those aspects which form the principal elements of modern market regulation and guarantee competition. These are: the extent to which the markets are opened up, a real possibility of changing supplier, and the emergence of new market entrants with non-discriminatory access guaranteed by strong, independent regulators. At the same time, consumer protection must be ensured and there must be provision for a right to receive electricity.

In this context, the chief problems found regarding transposition concern:

  • the persistence of regulated prices, especially for the benefit of eligible customers, putting obstacles in the path of new market entrants;
  • the lack of legal unbundling and insufficient managerial separation between electricity and gas transmission and distribution system operators to ensure that they are independent of each other;
  • discriminatory third-party access to networks and insufficiently transparent tariffs;
  • the free choice of supplier;
  • the powers of regulators, in particular as regards setting tariffs for access to networks;
  • the preferential access given in the case of certain long-standing electricity or gas contracts;
  • failure to notify public service obligations and to indicate the origin of electricity properly.

In Austria, certain regional laws have not been adopted. While the federal legislation was adopted within the deadlines, it has no direct legal effect.

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