COMMISSION STAFF WORKING DOCUMENT Enforcement of the Third Internal Energy Market Package Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Progress towards completing the Internal Energy Market
Date: 2014-10-13
Institutions: European Commission
Subjects: EU Member State, electricity supply, gas, infringement procedure (EU), market access, national implementing measure, single market













EUR-Lex - 52014SC0315 - EN











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52014SC0315

COMMISSION STAFF WORKING DOCUMENT Enforcement of the Third Internal Energy Market Package Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Progress towards completing the Internal Energy Market /* SWD/2014/0315 final */









The
aim of the present annex[1]
is to present the Commission policy towards enforcement of the Third Internal Energy
Market Package (hereinafter "Third Energy Package"),[2] as
well as to highlight the main actions and results in this respect.
The
Commission policy towards ensuring compliance with the Third Energy Package
The
Member States had to transpose the Electricity Directive 2009/72/EC and the Gas
Directive 2009/73/EC, which are a fundamental part of the Third Energy Package,
by 3 March 2011 and to apply them from that date. The Directives set out
key rules necessary for a proper functioning of the electricity and gas
markets. The new or reinforced requirements concerning the unbundling of
networks, the independence and the powers of national regulators and the
functioning of retail markets via enhanced consumer protection measures
represent major developments compared to the provisions of the Second Energy
Package adopted in 2003. Important rules for the operation of the markets are
also set out in the Electricity Regulation (EC) No 714/2009 and in the Gas
Regulation (EC) No 715/2009, also part of the Third Energy Package and
applicable as from 3 March 2011.
Full
and correct implementation and application of the Third Energy Package is therefore
essential for the successful completion of the Internal Energy Market and has
always been a priority for the Commission. Accordingly, the Commission has been
systematically taking all necessary measures in order to assist the Member
States in fulfilling their obligations and to address cases where the national
legislations or practices have fallen short of the Third Energy Package requirements.

In
particular, given the highly legally and technically complex nature of the
Third Energy Package, the Commission has been available to discuss draft
measures and technical solutions with the national authorities on an on-going
basis since its adoption. Such cooperation has proven efficient to prevent deficiencies
at national level at an early stage as well as to resolve existing
incompatibilities. In order to facilitate the implementation of the Third Energy
Package, the Commission has also issued a number of interpretative notes,
providing guidance to national authorities and stakeholders concerned.[3]

At
the same time, the Commission has resorted to formal legal action (including infringement
procedures) where it has identified failures of the Member States to comply
with their obligations and no satisfactory or timely solutions have been
provided by the national authorities. 
In
this respect, in order to oversee the full and correct implementation of the
Third Energy Package by the Member States, the Commission follows two main
priorities:
As
a first step, the Commission focused on ensuring the full
transposition of the Electricity and Gas Directives, given the considerable
delays of the Member States to adopt the necessary acts introducing their
requirements into national law. As a result of the Commission's action national
legislation transposing fully the Directives is now in place in all except 2
Member States. 
The
existence of national frameworks has allowed the Commission to move to the second
step, i.e. take action to address incorrect transposition or bad application
of the Third Energy Package on national level.
More
details of the two main directions of the Commission action are presented below.
Action
for ensuring full transposition of the Third Energy Package Directives 
From
the beginning the Commission has taken a very proactive approach in ensuring
that the national legislations introduce all requirements of the Electricity
and Gas Directives. Following the expiry of the transposition deadline on 3 March
2011 it has systematically assessed all the national transposition measures
notified by the Member States in order to verify whether they fully
transpose the Directives, i.e. whether they contain rules corresponding to
all Directives' provisions (so-called "non-transposition check").[4]
Full
and timely transposition of the Directives has been a challenge for the vast
majority of the Member States. In fact, at the end of the transposition
deadline none of the Member States had achieved full transposition. 
In
September 2011, assessment of the received notifications indicated that the
situation was still not satisfactory. In order to urge the Member States to put
the necessary legal framework in place without further delay, the Commission
opened 38 infringement proceedings against 19 Member States for not transposing
or for transposing only partially the Directives. 
As
a result of this Commission action, the Member States speeded up considerably their
transposition efforts and in 2012 and 2013 the Commission received a high
number of notifications of national measures.  Based on the assessment of these
measures it was possible to terminate many of the infringement procedures as the
national legislation necessary for full transposition of the Directives was put
in place. 
The
Commission followed up on the unresolved cases in 2012 by sending reasoned
opinions. Ultimately, as of October 2012, the Commission started to refer cases
to the Court of Justice. So far the Commission has referred 15 cases to Court.[5] In 12
of these cases the Member States[6]
took the necessary steps to put the legislation in place after the referral and
thus managed to avoid a judgment under Article 260(3) TFEU.[7] 
As
of 22 September 2014 infringement proceedings for partial transposition of the Electricity
and/or Gas Directives are pending against two Member States, one of which has
recently adopted further transposition measures, under examination by the
Commission.[8]

Action
for ensuring correct transposition and application of the Third Energy Package
In
addition to ensuring that national legislation fully transposing the Electricity
and Gas Directives is in place, the Commission has started to identify and
resolve problems concerning incorrect transposition or bad application of
the Third Energy Package rules by the Member States (so-called
"non-conformity" problems).[9]
To
this end, the Commission has again taken a proactive approach. It is conducting
on its own initiative a systematic non-conformity assessment of the
national transposition measures, completed so far for almost all 28 Member
States.[10]

This
assessment has been initiated once a Member State has achieved if not full, at
least substantial transposition of the Directives.[11] The
assessment has targeted in particular those violations which have the highest
impact on the functioning of the internal market. This includes as a matter
of principle the three areas of the Directives which have been subject to core developments,
compared to the Second Energy Package, i.e. unbundling, independence, powers
and duties of the national regulatory authorities and consumer protection.
Other pertinent issues, for example, such relating to the application of the Electricity
and Gas Regulations, have been also addressed in the assessment on a
case-by-case basis, depending on the specificities of the national legislation
and situation (e.g. rules related to tariffs, interconnectors, etc.). 
On
this basis the Commission has opened EU Pilot cases[12] against
several Member States in order to clarify and discuss the potential
non-conformity problems with the national authorities. Where the Commission
concludes that the national law or practice is not in conformity with the Third
Energy Package requirements and the discussions with the Member State have failed to resolve the issue, it has initiated and will continue to initiate infringement
procedures in order to urge the Member States to correct the incompatibilities.
So
far 9 such systematic non-conformity EU Pilot cases have been initiated and 1
of them has resulted in an infringement procedure.[13]
Further EU Pilot cases and, if necessary, infringement procedures will follow
in 2014. 
In
parallel to these systematic non-conformity procedures, the Commission has also
acted on an ad-hoc basis. This type of action targets a specific
non-conformity problem of which the Commission becomes aware (via complaints
from individuals or undertakings[14]
or based on its own assessment) and which needs to be urgently raised with the Member State concerned.
Here
again, the Commission first opens an EU Pilot case against the Member State. In some cases these EU Pilot case have been already sufficient to persuade
the Member States to correct their legislation or practices.
Where
this has not been the case, the Commission has opened infringement procedures.
For example, the Commission launched 2 such infringement procedures in 2012 in
order to address national import and export restrictions relating to
electricity and gas.[15]
At
present 9 such EU Pilot cases on ad-hoc issues are on-going and might result in
further infringement procedures. They concern a variety of issues such as tariff
rules, potential export and import restrictions, independence requirements for
the national regulator, etc. 
Concluding
comments 
Effective
implementation and application for the Third Energy Package requirements is crucial
for fully ensuring open and competitive electricity and gas markets which
create a level-playing field for all market players. The Commission has been
systematically addressing identified deficiencies on the part of the Member
States to timely and fully comply with their obligations for the implementation
and application of the Third Energy Package. The Commission has consistently
sought resolution of such problems, via close cooperation with the Member States and resorting to infringement action, where necessary. However, the full and
correct implementation of the Third Energy Package rules in the EU will mainly
depend on the willingness of the Member States to comply with their obligations
under EU law. The Commission will continue to monitor compliance with these
obligations by means of appropriate enforcement action.
[1]
The present report reflects the situation as of 22  September 2014. 
[2]
The Third Energy Package comprises Directive 2009/72/EC of the
European Parliament and of the Council of 13 July 2009 concerning common rules
for the internal market in electricity and repealing 2003/54/EC, OJ  L 211,
14.08.2009, p. 55; Directive 2009/73/EC of the European Parliament and of
the Council of 13 July 2009 concerning common rules for the internal market in
natural gas and repealing Directive 2003/55/EC, OJ  L 211, 14.08.2009, p.
94; Regulation (EC) No 714/2009 of the European Parliament and of the
Council of 13 July 2009 on conditions for access to the network for
cross-border exchanges in electricity and repealing Regulation (EC) No
1228/2003, OJ L 211, 14.08.2009, p. 15; Regulation (EC) No 715/2009 of
the European Parliament and of the Council of 13 July 2009 on conditions for
access to the natural gas transmission networks and repealing Regulation (EC)
No 1775/2005, OJ L 211, 14.08.2009, p. 36; Regulation (EC) No 713/2009
of the European Parliament and of the Council of 13 July 2009 establishing an
Agency for the Cooperation of Energy Regulators, OJ L 211, 14.08.2009, p.
1.  
[3]
Available at http://ec.europa.eu/energy/gas_electricity/interpretative_notes/interpretative_note_en.htm.
[4]
In some cases, the number of notified transposition measures for a Directive
comprised over 100 legal acts notified by the national authorities.
[5]
Poland, Slovenia, Finland, Bulgaria, Estonia, UK, Romania  (for each of these
Member States as regards both the Electricity and Gas Directives) and Ireland
(as regards the Electricity Directive).
[6]
 UK, Bulgaria, Poland, Finland, Slovenia and Estonia (for each as regards both
the Electricity and Gas Directives).
[7]
This provision, a novelty in the Treaty on the Functioning of the European
Union, allows the Commission to propose to the Court to impose financial
penalties on the Member States in non-transposition procedures at the stage of
first referral to the Court.
[8]
These are the cases against Romania (as regards both the Electricity and Gas
Directives) and Ireland (as regards the Electricity Directive). On 17 September
2014 Romania has adopted amendments to its Electricity and Gas Law, relevant
for the transposition of the Directives. The Commission is examining whether
these measures fully transpose the Directives and will decide on the pending
infringement cases accordingly. 
[9]
These include cases where the national legislation transposes the requirements
of the Third Energy Package in a complete manner but incorrectly (e.g. it
subjects them to conditions the Third Energy Package does not envisage) or the
national law fully and correctly implements the EU rules but is poorly applied
in practice.
[10]
The assessment requires a lot of resources given the high number and complexity
of acts adopted by the Member States to implement the Third Energy Package as
well as the quite frequent changes that the national laws undergo. The timing
of the final outcome of such assessment depends also on whether further
amendments of the national legislation take place.
[11]
Thus the countries which have achieved full transposition first have been
subject to non-conformity assessment first.
[12]
EU Pilot is a system via which the Commission and the Member States discuss possible violations of EU law concerning incorrect transposition or bad
application of the acquis. An EU Pilot case will be closed, if the discussions
with the Member State bring a satisfactory outcome, or could give rise to an
infringement procedure (by sending to the Member State a letter of formal
notice), if the Commission concludes that a violation of EU law by the Member State is in place. More information on the EU Pilot's application is available at http://ec.europa.eu/eu_law/infringements/application_monitoring_en.htm
[13]
  Luxembourg. Information on the letter of formal notice issued is available at
http://ec.europa.eu/eu_law/eulaw/decisions/dec_20140328.htm
[14]
Contacts with the national energy regulators, including complaints from these
bodies, are another important source of information for the Commission in
identifying possible deficiencies at national level.
[15]
An infringement procedure was opened in 2012 against Spain for violation of the
Electricity Regulation (EC) No 714/2009 and was closed in 2013 due to
compliance. In 2012 the Commission also opened an infringement procedure
against Romania concerning restrictions for the export of gas which is
on-going. Information on the procedural steps decided by the Commission in the
cases is available at http://ec.europa.eu/eu_law/infringements/infringements_decisions_en.htm and
http://europa.eu/rapid/press-release_MEMO-14-470_en.htm.