The European Third Energy Package: How Significant for the Liberalisation of Energy Markets in the European Union?

Abstract

The liberalisation process of energy markets in the European Union (EU) started with the adoption of Directive 96/92/EC concerning common rules of the internal market in electricity (the First Electricity Directive) and Directive 98/30/EC on common rules for the internal market in natural gas (the First Gas Directive) . These directives were repealed after the adoption of a package of legislations (the Second Energy Package) concerning to the EU gas and electricity markets in 2003. Perception that the mechanism provided by the Second Energy Package fell short and the competition in the EU energy market did not flourish as expected; European Commission (EC) launched an inquiry in 2005 into the functioning of the European single market for electricity and gas. In its final report, EC identified a number of problems to be solved, possibly by introducing new legislation. Based on this sector inquiry, EC proposed the Third Energy Package (TEP) for the electricity and gas markets which was finally adopted on 25 June 2009. The significant reforms introduced by the package are the implementation of more stringent unbundling rules designed to ensure effective independence of the network business from the rest of the vertically integrated energy utilities, the establishment of an agency as a new body to coordinate the actions of the national regulatory authorities (NRAs), the strengthening of NRAs, the enhancement of transparency, and the formation of ‘European Network of Transmission System Operators’ for electricity and gas.This study aims to examine the importance of the TEP for the liberalisation of energy markets in EU. With this respect, firstly, brief information on historical developments will be provided. Then, the content of TEP will be analyzed from the liberalisation point of view. In this context, the rationale of amendments and innovations introduced by the TEP will be amplified with reference to relevant cases. The findings of the research will be presented as conclusion.