European Commission sets out a new impetus for the internal energy market

The EU has clearly recognised that the internal energy market is the policy line that ensures fair prices to citizens and industries. At the same time, it guarantees that even smaller companies, for instance those that invest in renewable energy, have access to the energy market. A well functioning market also ensures sufficient investments in power plants and transmission networks to avoid interruptions in power or gas supply. In order to realise the full potential of the internal gas and electricity market, the European Commission has put forward new proposals as part of its Energy Policy for Europe.

A real Internal Energy Market is essential to deliver all three of Europe's energy objectives: A competitive market will cut costs for citizens and companies and stimulate energy efficiency and investment; It is vital for the emissions trading mechanism to work properly. An effectively functioning and competitive Internal Energy Market can provide major advantages in terms of security of supply. The Internal Energy Market Communication and the final Report on the Competition Sectoral Enquiry demonstrate that the present rules and measures have not yet achieved these objectives. More needs to be done to create a real European gas and electricity grid and to have a truly competitive market.

The Commission's main objective is to have a complete internal energy market with open competition and effective regulation in place by January 2009. A real European grid should work as a one single grid. A number of measures are needed to achieve these objectives, mostly of a rather technical nature:

New rules to avoid discrimination are needed, for instance through a clearer separation of energy production from energy distribution. Two unbundling options are considered to redress the problem with a clear preference for ownership unbundling.
It is also important to have the European wide regulation functioning, not least to facilitate cross-border electricity trade. The Commission considers that it is necessary to establish a new single body at EU level or, at a minimum, a European network of Independent Regulators which would need to take due account of the European interest and have the appropriate involvement of the Commission.
Electricity and gas networks are at the heart of a well functioning European market. Several actions are proposed to speed up investments in key bottlenecks, which typically occur at borders between countries. A number of the most problematic missing links has been identified, such as power links between Germany, Poland and Lithuania, off-shore wind power connections in Northern Europe, electricity connections between Spain and France, gas pipelines from the Caspian to central Europe.
Transparency is essential to market functioning. New legislation will be needed to establish minimum requirements.
Common minimum, binding network security standards are necessary.

All the measures above are essential for ensuring that sufficient new power generation capacity is built throughout Europe. The Commission is convinced that high investments are needed to ensure the capacity and transmission. Finally, the Commission will pay special attention to the rights of consumers' and energy as a public service. An Energy Customers' Charter will be launched - this will include measures to address fuel poverty, information for customers to choose a supplier and supply options, actions to lower red tape when changing energy suppliers and to protect citizens from unfair selling practises. A specific information campaign will be launched to support this initiative.