The Perspective of Long-Term Energy Supply Contracts in the Context of European Union Competition Law

Abstract

This article analyses long-term energy contracts in relation with third-party access right to energy transmission and distribution system. Long-term energy supply contracts remain quite controversial: while enhancing the need to create competitive common energy market and to increase diversification of energy sources, the obligation to supply energy sources is contracted for a long time period with the appropriate contracted price. These contractual obligations are not reviewed or adjusted according to changing market conditions. A problem occurs because long-term energy contracts limit the possibility for new market participants to enter and compete with the existing ones. The transmission system owners often abuse their right to refuse grant third-party access using an argument of long-term energy supply contracts with take-or-pay obligations. There is a doubt if the capacity reservation mechanisms, takeor- pay obligations and other limitations dealt in long-term contracts are in line with EU competition law requirements. However, long-term contracts provide stability of energy supply and also economic benefit to the consumer. The article analyzes long-term energy supply contracts perspective in the light of European Union competitive internal energy market.