Procedure : 2007/2089(INI)
Document stages in plenary
Document selected : A6-0249/2007

Texts tabled :

A6-0249/2007

Debates :

PV 09/07/2007 - 19
CRE 09/07/2007 - 19

Votes :

PV 10/07/2007 - 8.38
CRE 10/07/2007 - 8.38
Explanations of votes

Texts adopted :

P6_TA(2007)0326

REPORT     
PDF 249kWORD 194k
26 June 2007
PE 386.605v02-00 A6-0249/2007

on Prospects for the internal gas and electricity market

(2007/2089(INI))

Committee on Industry, Research and Energy

Rapporteur: Alejo Vidal-Quadras

Draftswoman (*):

Sophia in t'Veld, Committee on Economic and Monetary Affairs

(*) Enhanced cooperation between committees - Rule 47 of the Rules of Procedures

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION
 EXPLANATORY STATEMENT
 OPINION of the Committee on Economic and Monetary Affairs (*)
 OPINIONOF THE COMMITTEE ON REGIONAL DEVELOPMENT
 PROCEDURE

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on Prospects for the internal gas and electricity market

(2007/2089(INI))

The European Parliament,

–   having regard to the Commission Communication – An Energy Policy for Europe (COM(2007)0001),

–   having regard to the Commission Communication – Prospects for the internal gas and electricity market (COM(2006)0841),

–   having regard to the Commission Communication – Inquiry pursuant to Article 17 of Regulation (EC) No 1/2003 into the European gas and electricity sectors (COM(2006)0851),

–   having regard to the Commission Communication – Priority Interconnection Plan (COM(2006)0846),

–   having regard to the Commission staff working document – Implementation Report on the prospects for the internal gas and electricity market (SEC(2006)1709) – Accompanying document to the Commission Communication (COM(2006)0841),

–   having regard to the Commission staff working document on EU energy policy data (SEC(2007)0012),

 having regard to its resolution of 14 December 2006 on a European strategy for sustainable, competitive and secure energy – Green paper(1),

–   having regard to its resolution of 23 March 2006 on security of energy supply in the European Union(2),

–   having regard to Decision No 1364/2006/EC of the European Parliament and of the Council of 6 September 2006 laying down guidelines for trans-European energy networks(3)

–   having regard to its position adopted at second reading on 23 May 2007 on the Council Common position for adopting a regulation of the European Parliament and of the Council laying down general rules for the granting of Community financial aid in the field of the trans-European transport and energy networks(4),

–   having regard to Directive 2005/89/EC of the European Parliament and of the Council of 18 January 2006 concerning measures to safeguard security of electricity supply and infrastructure investment(5)

–   having regard to Regulation (EC) No 1775/2005 of the European Parliament and of the Council of 28 September 2005 on conditions for access to the natural gas transmission networks(6) 

–   having regard to Council Directive 2004/67/EC of 26 April 2004 concerning measures to safeguard security of natural gas supply(7)

–   having regard to Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market inelectricity(8),

–   having regard to Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural(9)

–   having regard to Regulation (EC) No 1228/2003 of the European Parliament and of the Council of 26 June 2003 on conditions for access to the network for cross-border exchanges in electricity(10)

–   having regard to the Annual Report of the European Energy Regulators for the period 1 January 2006 to 31 December 2006 to all members of the CEER and the ERGEG, the European Parliament, the Council of Ministers and the European Commission, made under Article 3(8) of Commission Decision 2003/796/EC of 11 November 2003 on establishing the European Regulators Group for Electricity and Gas(11),

–   having regard to the Presidency Conclusions of the European Council of 8-9 March 2007, concerning the European Council's endorsement of a "European Council Action Plan (2007-2009) – Energy Policy for Europe" (7224/07),

–   having regard to Rule 45 of its Rules of Procedure,

–   having regard to the report of the Committee on Industry, Research and Energy and the opinions of the Committee on Economic and Monetary Affairs and the Committee on Regional Development (A6-0249/2007),

A. whereas the new European energy policy for sustainable, secure and competitive energy needs to be ambitious and aimed at long-term benefits, with the main focus on combating climate change, limiting the EU's external vulnerability to imports, and promoting growth and jobs,

B.  whereas an adequate legislative framework in accordance with the principle of sudsidiarity has to be established in a timely manner in order to achieve these ambitious and long-term benefits,

C. whereas the completion of the EU internal energy market and the creation of effective solidarity mechanisms between Member States are prerequisites for guaranteeing security of supply and economic efficiency,

D.  whereas liberalisation and market integration are of equal importance in facilitating cross-border trade, achieving greater economic efficiency and increasing market liquidity, and thus completing the EU internal energy market,

E.  whereas decisions about the energy mix in a Member State have consequences for the entire European Union as regards competition, security of supply and environmental sustainability,

F.  whereas the principles of social inclusion and equal opportunities for all mean that it is essential for every citizen of the Union to have affordable access to energy,

G.  whereas 20 out of the 27 Member States are yet to fully transpose Directives 2003/54/EC and 2003/55/EC in word and in spirit,

H.  Whereas the Commission Communication on the prospects for the internal gas and electricity market (COM(2006)0841) and the DG Competition report on the energy sector inquiry (SEC(2006)1724) conclude that the present rules and liberalisation measures have led to efficiency improvements in energy supply and delivered savings to customers, but that markets have not yet been opened fully and barriers to free competition still remain,

I.   whereas the establishment by the regulators of strong and effective harmonised rules on network access together with effective unbundling are pre-requisites to allowing new entrants to enter the market,

J.   whereas in some Member States long-term contracts apply to a substantial proportion of the market, thereby jeopardising the development of free competition and hence the creation of the internal energy market,

K.  whereas the implementation of existing EU unbundling provisions and regulatory frameworks in Member States vary considerably and this has serious implications for the development of a single electricity market,

L.  whereas the convergence and synchronisation of national action with regard to the unbundling provisions is the only way to proceed towards the creation of a single European energy market,

M.  whereas most gas undertakings' profits are generated mainly by their trading activities rather than gas extraction,

N.  whereas few Member States have opened their gas markets; whereas lower prices and a quality service in the supply in the gas market are key for the whole system, both for consumers and undertakings,

O.  whereas reducing congestion in the transmission of electricity requires both massive investment in the expansion and upgrading of the electricity grid and more efficient market-based congestion management mechanisms,

P. whereas any new proposed legislation should tackle the specific problems faced by the energy intensive industries, such as the high energy prices derived from the lack of competition in the markets,

Q.  whereas interconnection levels between several Member States are still insufficient, far from the agreements adopted at the Barcelona Summit and, in many cases, a variety of political and administrative impediments are the root cause of the delays in their construction,

R.  whereas, before proposing any legislation on the mandatory creation of gas storage facilities in each Member State, the Commission should put forward a cost benefit study and a thorough impact assessment,

S.  whereas liberalisation and market integration are of equal importance in completing the internal energy market,

T.  whereas the final sentence of point 33 of the Conclusions of the European Council held in Brussels on 8-9 March 2007 states the great importance of the energy-intensive sector and emphasises that cost-efficient measures are needed to improve both the competitiveness and the environmental impact of such European industries,

U.  whereas lack of transparency has been identified by the Commission as a barrier to the promotion of competition in the internal market,

V. whereas there is a need for a clear, stable and predictable regulatory framework for the long-term investments that are necessary in the energy sector,

W. whereas a European public energy authority could help to finance research and the development of renewable energies, maintain tariff equalisation and ensure equal access to energy for all citizens,

X.  whereas the available data suggest that Member States have made only limited use of targeted public service obligations to address vulnerable customers,

1.  Reiterates that the Lisbon Strategy can be a success only if further efforts are made to establish a common energy policy based on a broader vision of the common European interest in the energy field by respecting national characteristics and allowing Member States to adhere to their energy mixes in order to diversify energy sources and energy producers as much as possible;

Transmission unbundling

2.  Considers transmission ownership unbundling to be the most effective tool to promote investments in infrastructures in a non-discriminatory way, fair access to the grid for new entrants and transparency in the market; underlines however that this model might not address all of the issues at stake such as interconnections or congestion points;

3.  Recognises that the application of further unbundling measures for the gas sector is not straightforward; therefore urges the development of specific solutions to enable this sector to achieve the completion of the internal gas market, taking into account the differences between the upstream and downstream markets;

4. Calls on the Commission to present an analysis in which the expected costs of ownership unbundling for the Member States, the expected effects on investment in the networks, as well as the benefits for the internal market and consumers are demonstrated; points out that the analysis should address the question whether, and if so what problems or costs would arise if no unbundling is carried out by the state as well as the question whether the negative consequences differ as between state and private ownership; suggests furthermore that the analysis should consider what the advantages would be of an ownership unbundling compared to the independent regional market operator approach as regards the achievements of objectives;

5.  Urges the Commission to consider the structural differences between the EU electricity and gas sectors, including the fact that, some Member States have no indigenous production of these sources of energy and that, in important gas upstream markets, full economic reciprocity is not currently guaranteed; calls therefore on the Commission to come forward with a balanced proposal allowing EU gas companies to use pipeline investments and long-term contracts in order to raise their negotiating power vis-à-vis third countries;

6.  Insists that no third country company should be allowed to purchase energy infrastructure unless there is reciprocity with that country; 

Regulators

7.  Welcomes the Commission's proposal to enhance cooperation between national regulators at EU level, through a EU entity, as a way to promote a more European approach to regulation on cross-border issues; considers that increased convergence and harmonisation of their competences is essential to overcome technical and regulatory differences that impose serious barriers to cross-border trade and interconnections; underlines that the Commission should play a determining role, whilst not undermining the independence of regulators; believes that decisions by the regulators should be made on specifically defined technical and trade issues and on an informed basis considering, when appropriate, the views of TSOs and other relevant stakeholders, and should be legally binding;

8.  Points out that national regulators should remain the only authority responsible for decisions affecting their national market only; is in favour of their competences being extended to include the drawing up an inventory of required investments, and then the active promotion of the implementation thereof;

9.  Believes that regulators must ensure that any company owning energy infrastructure, and in particular transmission networks or pipelines, undertakes to meet clearly set down investment targets in order to avoid speculation in this area;

10. Believes that the regulators should be independent, strong and have well-defined competences in order to ensure the law is fully implemented in practice and is adhered to by market players and that the necessary investments and transparency levels are in place; believes, furthermore, that their competences should be harmonised at EU level via the establishment of common rules on transparency, disclosure and accountability in order to ensure the regulators are fully independent of national authorities and industry;

11. Believes that national energy regulators should be given the role of penalising an operator who does not respect their decisions or a transmission operator who fails to meet his network maintenance obligations, of ensuring that energy companies have a statutory obligation to give energy saving advice to customers, as defined in Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use efficiency and energy services(12) and of imposing electricity and gas release programmes; believes further that the mutual cooperation between regulatory authorities and the relevant competition authorities should be strengthened at both national and EU level;

12. Calls on the Commission to provide a solution to the problems of independence/conflicts of interests and transparency with regard to transmission system operators (TSOs); calls on the Commission to put forward proposals that enable TSOs to fulfil their responsibility as market facilitators and to harmonise the international regulations for TSOs so as to improve cross-border transport;

13. Criticises the excess interventionism of some governments in the decisions taken by national regulators as this undermines their role as independent authorities;

14. Notes the development of some regional markets; points out that appropriate measures will be required to prevent the creation of bigger ‘energy islands’ and demands that these regional structures must not endanger the completion and implementation of the European single market;

Regulated tariffs

15. Urges Member States to gradually end the application of generalised regulated tariffs – with the exception of last resort tariffs, as defined in Directive 2003/54/CE – whilst ensuring that there are adequate measures to protect vulnerable customers, particularly in terms of fuel poverty, including non-market based mechanisms; regrets the lack of reference in the abovementioned Commission Communication (COM (2007)0001) to price mechanisms; recalls that intervention on prices should only be allowed, as a last resort, where national regulators seek to control artificially created soaring prices in order to prevent harm to consumers, business and new entrants, but also that prices should in any case cover the real costs;

16. Considers that subsidies for non-renewable sources of energy should be eliminated thereby ensuring a level playing field, that external environmental costs should be internalised in the price of energy and that market-based instruments should be used to achieve environmental and energy policy objectives;

17. Notes that targeted high-standard universal service obligations and public service obligations should comply with State aid rules and that competition law applies with respect to price discrimination and restrictions on re-sale; stresses that it is of crucial importance to assess the impact of the remaining regulated supply tariffs on the development of competition, and to remove market distortions.

Social impact and consumer protection

18.  Asks the Commission to present full impact assessments including the evaluation of the social effects of its different proposals and to support the industries in developing mechanisms for training and redeployment;

19. Believes that supplying consumers with energy to meet basic needs is indispensable and that energy poverty must be combated using all available means, in particular by encouraging energy savings and energy efficiency; moreover, calls for appropriately targeted and transparent social measures which, while not impeding fair competition, are needed to protect the vulnerable and disadvantaged consumers;

20. Urges the Commission to present its proposal for an Energy Consumers' Charter by the end of 2007;

Interconnections

21. Welcomes the indicative objective of achieving interconnection levels of 10% in Member States;

22. Calls on Member States to increase their efforts, including through the strengthening of bilateral cooperation, to remove technical, administrative and political barriers to the completion of existing and upcoming projects, in particular the four projects identified by the Commission as projects of EU interest; asks Member States to facilitate authorisation procedures for the building of interconnection lines and to limit the duration of the procedures; considers, however, that considerations of general interest should always be taken into account;

23. Reaffirms the need to increase the budget allocated to trans-European energy networks for, in particular, removing environmental obstacles;

24. Calls on the Commission to accelerate the appointment of EU coordinators for projects of EU interest which are experiencing problems with implementation;

25. Emphasises that decentralised energy infrastructure and generation can help to bring about a higher level of security of energy supply and should be encouraged when energy policy strategies are drawn up;

Long-term contracts

26. Recognises that upstream long-term contracts, in particular in the gas sector, are necessary to provide a positive investment climate, contribute significantly to security of supply and do not harm the integration of the internal energy market, provided that new entrants are not excluded;

27. Believes that balanced, effective application of the 'use-it-or-lose-it' principle must be ensured so that new entrants may access the networks where capacity is not utilised;

28.  Believes downstream bilateral long-term contracts allow, as long as they do not take up a significant percentage of the market and do not prevent customers from switching suppliers, energy intensive industries to negotiate more competitive and stable energy prices with the supplier of their choice and should therefore be allowed, assuming that they are properly supervised by the relevant authorities, and as long as they do not create additional costs for the networks, close the market to new entrants or hamper market development;

29. Requests the Commission to propose a definition of what constitutes a high energy user; also requests the Commission to give special consideration to high energy users in the EU that are competing in the global economy;

30. Asks the Commission to provide clear guidance on downstream bilateral long-term contracts in order to reduce uncertainty in the market and to move towards standardisation of contracts;

31. Recalls that energy generation, transmission, storage and distribution facilities are critical infrastructures the safety and security of which must be fully preserved and ensured under all circumstances;

Electricity grid and gas networks

32. Reiterates its concern over the investment needs in the upgrading of the electricity grid and gas networks to ensure the security of supply in EU; insists on the stability, coherence and transparency of the regulatory framework in order to create an investment-friendly environment and therefore calls for the development of such a regulatory framework for the shared benefit of EU consumers and businesses;

33. Regrets that many obstacles still remain in Members States that cause disproportionate delays in the creation of new energy import infrastructures and in the connection of new generation to the main electricity grid; therefore calls on national, regional and local authorities to take all the necessary steps to ensure that these delays are reduced to the strict minimum and that every inhabited remote and inaccessible area (including islands and mountainous areas) is connected to the main electricity grid;

34. Urges Member States to facilitate an increase in grid capacity in order to allow the incorporation of new massive onshore and offshore renewable energy generation; calls on the Commission to assess the feasibility of creating a EU smart-grid taking full advantage of the latest information and communication technologies available; such a grid would accommodate a wide variety of generation options, empower the consumer and should be able to rapidly detect and analyze perturbations and to respond to and remedy their effects; urges Member States to favour investments and to give their regulators an explicit mandate to favour the achievement of these goals;

35. Emphasises the need for technical harmonisation of European networks;

36. Calls on the Commissions to draw up a road map for the creation of a single European electricity and gas network;

37. Welcomes the recent technological progress in feeding biogas into gas grid; urges the Commission to propose concrete measures to exploit this potential more extensively, so as to contribute to the security of supply of gas;

Strategic stocks

38. Agrees with the Commission's assessment that, in relation to gas, considering the present technology, it is better to diversify supply routes and technologies, such as degasification plants and liquefied natural gas terminals, than to create massive gas stocks; calls on the Commission to make a concrete proposal for making better use of existing gas stocks without disturbing the balance between security of supply and favouring new market entrants;

39. Stresses the complementarities of the electricity grid and the gas network; in this context, points out that storage is an integral part of the gas network and should be managed in national and European solidarity; also believes that storage could support stand-by generators of electricity and thus aid security of supply;

40. Notes that strategic gas stocks may be proposed and developed by individual Member States according to their economic and technical feasibility;

Transparency

41. Believes that transparency is a prerequisite for the development of competition and that information should always be disclosed in a timely, clear and easily accessible way and on a non-discriminatory basis;

42. Notes the difficulties that household consumers encounter in benefiting from liberalised markets; urges the Commission to put forward concrete proposals on how to enhance transparency for consumers; to make consumer information complete and clear (including the various tariffs available, the company's energy mix and other useful information such as labelling as defined in Directive 2003/54/EC), and to strengthen the role of consumer organisations in the EU energy market;

43. Agrees with the Commission on the need to introduce binding transparency guidelines for both the electricity and the gas markets; believes that a high, harmonised level of transparency promotes efficient competition and new entrants to the markets;

44. In this respect, welcomes the Commission's commitment to ensuring better transparency in the markets;

Implementation of EC legislation

45. Is concerned at the number of Member States who are still to transpose Directives 2003/54/EC and 2003/55/EC and those who have failed to implement them properly; calls on Member States to transpose and fully implement these directives without delay;

46. Believes that Directives 2003/54/EC and 2003/55/EC contain sufficient provisions that, if properly applied, would ensure a competitive scenario and the completion of the single energy market;

47. Agrees with the Commission that there is no alternative to the liberalisation process and calls on Member States to ensure full and effective transposition of existing liberalisation directives; moreover, endorses the Commission proposal to address the malfunctioning of the market by applying both competition-based and regulatory remedies;

48. Calls on the Commission to publish all the results of and the answers received in its impact assessment study and to inform it thereof before presenting new legislative proposals;

49. In this respect, welcomes the Commission’s initiative to open infringement procedures against the abovementioned Member States which have failed to transpose or correctly implement Directives 2003/54/EC or 2003/55/EC;

50. Warns against excessive market concentration and considers that this would be best addressed via further progress in market integration and in regulatory measures as there should be consumer choice of supplier in an open competitive environment and reiterates its call on the Commission to take further steps to address concentrations in the energy market in cases of abuse of market dominance;

51. Draws attention to the fact that, although developments in the field of the coordination of the distribution of cross-border capacity are encouraging, the low degree of transparency of the calculation of the net transfer capacity required for auctions and of the determination of the available transfer capacity constitutes a serious obstacle to competition, which needs to be tackled by introducing stricter regulations concerning the concerted practices which have been found to occur at auctions and by stepping up anti-trust monitoring;

52. Urges the Commission to closely supervise the impact of concentration on competition, both at national and at European level, taking also into consideration the current consolidation process that is giving rise to new, large, multinational energy undertakings active in a significant number of Member States and with a high degree of vertical and gas-electricity integration;

53. Invites the Commission in all its actions and proposals to take account of the importance of the role of small and medium-sized energy companies to the functioning of competitive energy markets;

54. Calls on national governments to stop the promotion of the so-called national champions and to refrain from passing protectionist legislation preventing the development of a truly integrated European energy market; calls for the establishment of active gas and electricity release programmes and more liquid balancing markets in order to favour new market actors;

55.  Considers it essential that a future, modified Emissions Trading Scheme be fully integrated into the liberalised energy market in a transparent way subject to the regulators so as to avoid causing distortion in market mechanisms;

56. Reiterates the importance of achieving a fully liberalised European energy market as soon as possible and insists on the Commission presenting its package of additional measures for the internal market in late September 2007, as announced;

57. Instructs its President to forward this resolution to the Council, the Commission and the governments and parliaments of the Member States.

(1)

Texts Adopted, P6_TA(2006)0603.

(2)

OJ C 292 E, 1.12.2006, p. 112..

(3)

OJ L 262, 22.9.2006, p. 1

(4)

OJ C 272 E, 9.11.2006, p. 404.

(5)

OJ L 33, 4.2.2006, p. 22.

(6)

OJ L 289, 3.11.2005, p. 1.

(7)

OJ L 127, 294.2004, p. 92.

(8)

OJ L 176, 15.7.2003, p. 37

(9)

OJ L 176, 15.7.2003, p. 57

(10)

OJ L 176, 15.7.2003, p. 1

(11)

7 OJ L 296, 14.11.2003, p. 34.

(12)

OJ L 114, 27.4.2006, p. 64.


EXPLANATORY STATEMENT

1. Background

In response to the European Council call and priorities defined in its March 2006 Conclusions, the Commission adopted a so-called Energy Package on 10 January 2007, so as to contribute to the three objectives of the Energy Policy for Europe: security of supply, competitiveness and environmental sustainability.

Following a long-term process of liberalisation of the energy markets - through the adoption of two series of directives creating an internal market, in 1996-1998 and in 2003 for achieving complete liberalisation by 1st July 2007 - these communications constitute a major step since the Commission advocates a new direction for the internal energy market and announces precise proposals and mechanisms for its operation.

This Report will assess how the different measures identified by the Commission can ensure the completion of the Internal Market for electricity and gas and remedy the obstacles to creating a single European energy market. The Rapporteur will take due account of the implementation of the current rules, which to his mind, partly gave a sufficient legal basis to ensure non discriminatory access of the third parties to the networks, to create powerful national regulators and to set up a framework enhancing investments. Taking into account the last conclusions of the Spring Council on 8-9 March, the intention of the Rapporteur is to consolidate the objectives pursued by the Commission and to analyse the practical measures proposed.

2. Specific issues

Implementation of existing legislation

The Rapporteur is concerned about the number of Member States who are still to transpose the European Directives 54/2003 and 55/2003 as well as by those who have not done it appropriately. A correct transposition at EU level is essential if we are to fully assess the validity and effectiveness of the measures adopted by the European Parliament and by the Council.

Furthermore, non compliance by some Member States puts those who have properly and fully transposed EU legislation on the internal energy market into national law in a difficult position thus causing in some cases unfair price competition, takeovers of private companies by publicly owned undertakings, barriers to entry in other Member States as well as disproportionate delays in the development of interconnections. Moreover, Governments who are suffering these consequences have to face a disapproving public opinion of the measures taken and of the EU institutions as a whole.

For all these reasons, the Rapporteur welcomes the Commission’s initiative to start infringement procedures against those Member States who are not complying with the legislation in force.

However, while welcoming the Commission’s third liberalization package expected in September of this year and realising that some Member States’ resistance will only be tackled with concrete actions, the Rapporteur cannot help but wonder if the solution to this problem is indeed further, and more stringent, legislation seeing as the second package is obviously still in its early stages.

Recent takeover initiatives and mergers within the European Union’s markets have given rise to some concerns about such issues as public participation in undertakings, reduced choice for consumers due to market concentration as well as excessive interventionism by some Governments in what are supposed to be purely market operations. The Rapporteur believes that such operations should be further controlled by the Commission, especially when public participation in some companies taking over others is considerable.

Unbundling

Unbundling has been a key issue in the energy debate in the European Parliament in past reports and is likely to be this way for this report. The Rapporteur believes that the current level of unbundling in some Member States is insufficient and therefore welcomes the Commission’s initiative to increase obligations in this field.

The two main options proposed in the Commission’s Communication – Independent System Operator properly regulated and ownership unbundling – should be properly assessed.

Ownership unbundling would increase transparency, ensure proper investment conditions in the infrastructures and remove barriers to entry to new market players.

The Independent System Operator model, even though it would need further regulation, would also achieve these goals and would probably be a more feasible option for those Member States heavily lagging behind.

The Rapporteur wishes to debate this issue further and expects the Commission to come forward with a clear but flexible position on unbundling that could serve as a basis for discussion in Council and Parliament, avoiding the frontal rejection of some Member States.

However, the problems related to interconnections will not be solved by either system and will require additional solutions. Furthermore, questions of transparency and investments could also be answered by increased powers to national regulators or through national legislation aimed at imposing specific requirements in this respect. Finally, the gas and electricity sectors are of a very different nature which makes the unbundling options more complicated for gas. This issue will be explored further in this document.

Investments

The Rapporteur would like to stress the importance of new investments at a massive scale in the development of new and upgrading of current infrastructure. While he is concerned about the gap between current investments and those estimated to be required, he does not agree with the Commission in their statement that investments have stopped. Indeed, overall investments in maintaining and development of gas networks have had a consistent, albeit slow, increasing trend in the past years.

This concern also applies to the lack of investments in interconnections derived of the disparity between standards, lack of an independent regulatory authority to oversee cross-border transmission and reduced availability of mechanisms to recover trans-border costs.

There is, however, much room for improvement and measures have to be taken such as further unbundling – whether ownership or ISO+ -, more efficient regulation and better cross-border cooperation.

New Massive Generation from renewable energy sources

Europe enjoys vast quantities of renewable energy sources including hydro, wind, solar, biomass, tidal and geothermal.  Renewable energy sources by their very nature are concentrated in specific locations, e.g. hydro resources in mountainous regions, or wind resources in offshore, coastal and highland regions.  With a few exceptions these resources are not transportable in their primary form and so need to be converted to electricity in the location where the primary resource exists.  If, therefore, these vast primary energy sources are to contribute to the European Union’s electricity requirements, they need the sufficient grid infrastructure to allow for the bulk transport of electricity from these regions to centres of demand.

For example there is a large commercially exploitable resource of wind energy above the seas of north Western Europe.  Large sub sea grids are therefore required to bring this power to shore and onshore grids to take the electricity further to centres of demand.

It is important therefore that these grids are maintained where they already exist and established where they do not.  Transmission companies must be incentivised to develop and build such grids and must not have competing interests which may hinder their development.

Regulators

Currently, the European Union’s internal energy market has to adjust to 27 different national regulations that can differ greatly from one to another. The procedure for the definition of actions to be taken on cross border transmissions consists in a consultation between national regulators based on technical proposals by the Transmission System Operators and where the decisions are taken generally on the basis of consensus. If no agreement can be reached, the Commission launches a commitology procedure in which not only acceptable outcomes are very slow to come, but where those deciding are Member States who refer back to their national regulators for advice. This brings the situation back to square one.

If the EU is to have a fully integrated internal market some actions will have to be taken to provide a more formal approach to the process explained above. The Rapporteur suggests making the Regulators’ forum a formal body in which decisions would have to be taken – by vote if necessary – and where, in case of a deadlock, the Commission could decide. The decisions should derive from proposals by the TSOs who, in turn, should also have a formal framework for their decision-making processes.

It is important to point out that Regulators would be dealing exclusively with cross-border technical and trade issues such as harmonisation of technical standards and promote coordination of the development of interconnections and cross-border transmission.

National Regulators’ decision should remain sovereign over their respective Member State and their responsibilities and powers should be independent, strong and well defined.

Regulators could play a decisive role in ensuring the necessary investments, equal playing field for all market players and transparency. Regarding investments, regulators could be given, for example, the power to open investment to third parties should incumbent undertakings pose barriers for the development of the grid.

Interconnections

The Rapporteur welcomes the Commission and Council’s latest position regarding the achievement of 10% interconnections in all Member States. Nevertheless, he would like to point out that this objective was set years ago in the Barcelona Summit and hopes that, given that the completion of the energy internal market has acquired renewed importance in the European Union, Member States will take decisive steps in the removal of all barriers to their development.

The new cooperation between regulators at EU level should provide the necessary regulatory framework to overcome some of these barriers but public authorities should strive to remove political obstacles as well.

This point is of particular importance for peripheral Member States who, at present times, remain energy islands.

Regulated tariffs

The Rapporteur strongly believes that generalised regulated tariffs for commercial customers should disappear as they cause serious distortions in the market and can sometimes be used by vertically integrated companies to force newcomers out of the market.

3. Additional comments

Gas market

Unlike the electricity market, most gas undertakings make their profits from distribution activities rather than generation capacity. For this reason, the different proposals put forward by the Commission on unbundling would be difficult to apply to this sector, or at least to those companies that import their product into the European Union.

Some measures, such as those proposed in this document, could help tackle the problems of investments, transparency and access to the grid.

The Rapporteur is concerned mainly by the lack of harmonised standards regarding natural gas. This situation causes uncertainty in the market as companies do not know if the gas they buy in one field would be allowed access into the different national networks. The Commission should strongly look into this problem and find a solution in a timely manner.

These companies also face the problem of dealing commercially with third countries in which the reciprocity principle cannot be applied. Indeed, they do not have access to upstream production capacities, nor do they have access on similar terms to their markets. The gas sector has voiced its wish to the Rapporteur of having a stronger political backing by the European Union institutions as well as by Members States when negotiating with third country producers.

ETS

The Rapporteur is concerned about some claims made by some market players regarding Emission Trading rights. They believe that consumers are being charged the additional price of ETS in their energy bill when the majority of these rights have been obtained for free, under the current ETS directive that states that at least 95% of emission rights should be awarded for free in this first phase.


OPINION of the Committee on Economic and Monetary Affairs (*) (18.6.2007)

for the Committee on Industry, Research and Energy

on the Prospects for the internal gas and electricity market

(2007/2089(INI))

Draftswoman (*): Sophia in 't Veld

(*)       Enhanced cooperation between committees  Rule 47 of the Rules of Procedure

SUGGESTIONS

The Committee on Economic and Monetary Affairs calls on the Committee on Industry, Research and Energy, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

A. Whereas the new European energy policy for sustainable, secure and competitive energy needs to be ambitious and aimed at long-term benefits, with the main focus on combating climate change, limiting the EU's external vulnerability to imports, and promoting growth and jobs;

B.  Whereas an adequate legislative framework in accordance with the principle of sudsidiarity has to be established in a timely manner in order to achieve these ambitious and long-term benefits;

C. Whereas the Commission communication on the prospects for the internal gas and electricity market (COM(2006)0841) and the DG Competition report on the Energy Sector Inquiry (SEC(2006)1724) conclude that the present rules and liberalisation measures have led to efficiency improvements in energy supply and delivered savings to customers, but that markets have not yet been opened fully and barriers to free competition still remain; whereas, moreover, the existing legislative framework has not yet been fully and duly transposed by the Member States into national law and further steps are therefore necessary in order to achieve market liberalisation;

D. Whereas few Member States have opened their gas markets; whereas lower prices and a quality service in the supply in the gas market are key for the whole system, both for consumers and enterprises;

E.  Whereas in its resolution of 14 December 2006 on a European strategy for sustainable, competitive and secure energy - Green Paper(1), Parliament stressed that transmission systems in the energy sector should undergo full ownership unbundling as soon as the Commission has concluded that existing legislation is ineffective;

F.  Whereas following the sector inquiry and in light of the economic evidence, the Commission considers that ownership unbundling is the most effective means to ensuring choice for energy users and to encourage investment;

G. Whereas the current regulatory cross-border gap cannot be remedied by the application of competition rules alone; whereas reinforced coordination between national energy regulators, by enhancing the competences of the European Regulators' Group for electricity and gas (ERGEG), with a stronger role for Community oversight to enforce internal market principles, should be ensured;

H. Whereas the available data suggest that Member States have made only limited use of targeted public service obligations to address vulnerable customers;

1.  Reiterates that the Lisbon Strategy can be a success only if further efforts are made to establish a common energy policy based on a broader vision of the common European interest in the energy field by respecting national characteristics and allowing Member States to adhere to their energy mixes in order to diversify energy sources and energy producers as much as possible;

2.  Believes that a number of serious shortcomings identified by the energy sector inquiry call for urgent action to deliver a functioning internal market for energy by the effective unbundling of network and supply activities, plugging existing regulatory gaps, addressing market concentration and entry barriers, and increasing transparency in market operations; urgently calls for a full and proper transposition of Community law into national law without delay; requests in this context strict action to be taken in cases where Community law has been infringed;

3.  Agrees with the Commission that there is no alternative to the liberalisation process and calls on Member States to ensure full and effective transposition of existing liberalisation Directives; moreover, endorses the Commission proposal to address the malfunctioning of the market by applying both competition-based and regulatory remedies;

4.  Endorses the results of the energy sector inquiry indicating that legal and functional unbundling as currently required by the legislation is not sufficient to ensure the development of a real, competitive European energy market; reiterates that non-discriminatory network access should be ensured and fully endorses the Commission proposal for further action to ensure clearer separation of energy production from energy distribution;

5.  Calls on the Commission to present an analysis in which the expected costs of an ownership unbundling for the Member States, the expected effects on investments in the networks as well as the benefits for the internal market and the customer respectively demonstrated; points out that the analysis should also take account of the question whether and if so which problems or costs occur if no unbundling is carried out by the state as well as whether the negative consequences differ between state and private ownership; suggests that, furthermore, the advantages of ownership unbundling relative to the independent regional market operator approach as regards the achievements of objectives should be analysed;

6.  Insists on the need to give system operators proper incentives to operate and develop the network in the interest of all users; considers that as a stable regulatory framework is essential in order to ensure investment decisions future measures affecting the internal market have to be designed and implemented in a way that provides a positive framework for much-needed investment; stresses, however, that unbundling should be seen as a pre-condition but not the only condition for guaranteeing fair competition; believes that public ownership in the electricity and gas markets is one of the main elements leading to distortions at a European level and that the stimulus for competition in those markets is more reduced if there are public enterprises, because in most cases, by virtue of their company statute, there is a lower level of transparency and information for potential investors in regard to such companies, and they are dependent on political decisions taken by the Member State governments involved; insists that appropriate measures be put in place to prevent a situation in which public monopolies are replaced by private ones;

7.  Welcomes the Commission proposal to strengthen the national energy regulators' independence, to enhance their powers, to reinforce coordination between the regulators and the Transmission System Operators (TSO); considers that regulators' independence must not hamper the political action that Member State governments must take in order to foster competition, ensure security of supply and protect the environment in the internal gas and electricity markets;

8.  Stresses the need to harmonise the levels of powers and independence of energy regulators in order to enable strong coordination at European level and to discourage abuse of regulatory powers for national protectionist purposes;

9.  Shares the views of the Commission that the powers of national regulators need to be strengthened and that European coordination must be enhanced, particularly as regards cross-border issues;

10. Agrees that the European network of independent regulators (ERGEG+) approach is the most suitable for rapid and effective progress in harmonising the technical issues necessary to make cross-border trade work effectively; considers Commission involvement appropriate where necessary to ensure that due account is taken of the Community interest;

11. Welcomes the proposal to grant existing associations of TSOs an institutional role with formal obligations and objectives (the ETSO+\GTE+ solution); considers, however, that further thought has to be given to the setting up of independently owned cross-border system operators so as to make sure that competition is strengthened and not hampered; believes that efforts should also be made to bring about a gradual evolution towards regional system operators;

12. Stresses its deep concern regarding certain protectionist initiatives undertaken by some European governments, justifying their position by referring to the defence of strategic sectors, and alleged national general interest; underlines that protectionism within the single market goes against the European construction; in the energy sector, it impoverishes the security of supply, it reduces the efficiency, increases therefore the prices to be paid by consumers and damages sustainable development;

13. Encourages the Commission to take action against Member States that unduly protect national or European energy champions, including by the unjustified use of golden shares, and against Member States with regulated tariffs which hamper competition and market integration; requests that the same political standards be applied to the old and new Member States, taking into account the special role of the energy sector in the catching-up process of the economies in new Member States; emphasises that the promotion of national or European energy champions can damage the competitiveness of the companies, the level of competition in the energy market and the interests of the consumers; insists on the need of companies that provide a quality service for citizens and are able to compete not only at a national or European level, but also in the global market;

14. Stresses that access to market information should be further enhanced and welcomes the Commission's intention to introduce binding provisions on transparency; agrees that all the relevant market information should be published on a rolling basis in a timely manner and that proper monitoring should be ensured;

15. Considers that subsidies for non-renewable sources of energy should be eliminated thereby ensuring a level playing field, that external environmental costs should be internalised in the price of energy and that market-based instruments should be used to achieve environmental and energy policy objectives;

16. Notes that targeted high-standard universal service obligations (USOs) and public service obligations (PSOs) should comply with State aid rules and that competition law applies with respect to price discrimination and restrictions on re-sale; stresses that it is of crucial importance to assess the impact of the remaining regulated supply tariffs on the development of competition, and to remove market distortions.

PROCEDURE

Title

Prospects for the internal gas and electricity market

Procedure number

2007/2089(INI)

Committee responsible

ITRE

Opinion by
  Date announced in plenary

ECON

26.4.2007

Enhanced cooperation – date announced in plenary

26.4.2007

Drafts(wo)man
  Date appointed

Sophia in 't Veld

13.3.2007

Previous drafts(wo)man

 

Discussed in committee

27.3.2007

11.4.2007

8.5.2007

 

 

Date adopted

5.6.2007

Result of final vote

+:

–:

0:

25

2

11

Members present for the final vote

Gabriele Albertini, Zsolt László Becsey, Pervenche Berès, Sharon Bowles, Udo Bullmann, Ieke van den Burg, David Casa, Christian Ehler, Jonathan Evans, José Manuel García-Margallo y Marfil, Jean-Paul Gauzès, Robert Goebbels, Donata Gottardi, Dariusz Maciej Grabowski, Karsten Friedrich Hoppenstedt, Sophia in 't Veld, Guntars Krasts, Andrea Losco, Astrid Lulling, Cristobal Montoro Romero, Joseph Muscat, Joop Post, John Purvis, Alexander Radwan, Dariusz Rosati, Heide Rühle, Eoin Ryan, Antolín Sánchez Presedo, Manuel António dos Santos, Cristian Stănescu, Margarita Starkevičiūtė, Ivo Strejček, Sahra Wagenknecht.

Substitute(s) present for the final vote

Harald Ettl, Ján Hudacký, Werner Langen, Maria Petre, Andreas Schwab.

Substitute(s) under Rule 178(2) present for the final vote

Anne Ferreira

Comments (available in one language only)

...

(1)

Texts Adopted, P6_TA(2006)0603.


OPINIONOF THE COMMITTEE ON REGIONAL DEVELOPMENT (3.5.2007)

for the Committee on Industry, Research and Energy

on prospects for the internal gas and electricity market

(2007/2089(INI))

Draftswoman: Brigitte Douay

PA_NonLeg

SUGGESTIONS

The Committee on Regional Development calls on the Committee on Industry, Research and Energy, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

1   Notes that the aim in creating a genuine internal energy market is to achieve the best price for individuals and companies; calls for the revision of the gas and electricity market directive to be based on the following principles: security of supply, customer satisfaction, a high level of public service, consideration of vulnerable customers and environmental protection, energy efficiency and the pursuit of innovative energy technologies;

2.  Considers that the completion of the energy market is linked to the objective of economic, social and territorial cohesion, particularly in regions lagging behind, regions with natural disadvantages and the outermost regions;

3.  Points out that the border regions are the first to be able to benefit from an effective internal market and obtain supplies from the country of their choice, and therefore stresses the problems encountered in these regions stemming from the different national legal frameworks and the lack of information exchange between countries;

4.  Asks the Member States to simplify the licence procedures for the construction of new intrastate and cross-border transmission capacities since interregional and international market development can have a leverage effect on the development of the EU internal market;

5.  Believes that security of supply cannot be treated as an exclusively national problem and calls on the Commission to help create and strengthen regional networks and decentralised energy production;

6.  Stresses the necessity, given the international importance of the transmission of electricity and ever greater sensitiveness of the European energy plan as regards the reliability of individual schemes of Member States, to deepen cooperation, exchange of information and coordination of actions among individual transmission schemes; for this purpose it supports the creation of European coordination centre of transmission schemes of Member States;

7.  Welcomes the Commission’s intention to draw up an Energy Customers’ Charter which would tackle inter alia fuel poverty and consumer information, and calls on the Commission to complete this work soon, taking account of the needs and characteristics of energy customers in regions with inherent natural disadvantages;

8.  Considers that, to ensure more and better quality interconnections between Member States, true regional energy markets must be constituted; and that, after the launch of electricity markets, the initiatives of the Group of European Regulators on regional gas markets must be stepped up so that energy can be managed at the most appropriate level;

9.  In this respect, welcomes the option of establishing a European network of independent regulators (ERGEG+) which would enable the role of the current Group of European electricity and gas regulators (ERGEG) to be formalised;

10. Calls on the Member States to apply an effective level of regulation, ensure non-discriminatory access to networks, authorise national regulators to facilitate cross-border and trans-regional energy links and to adopt a coordinated regulatory approach;

11. Encourages investment to reinforce and adapt infrastructures for the production and transport of energy throughout Europe;

12. Believes that the debate on unbundling should take into account the specific characteristics of gas and electricity and of national and regional markets;

13. Calls on the Member States and regional authorities to provide the fullest possible information on the origin of electricity, particularly when it comes from renewable energy sources; stresses the importance of communication, in view of the full opening of the market in July 2007, and of the provision of reliable and transparent information on production in each country, on interconnections and on changes in real prices;

14. Calls also for strong support to be given to regional and local authorities in the area of energy efficiency, energy saving and sustainable development in the context of EU-supported projects, particularly with regard to policies on transport and housing.

PROCEDURE

Title

Prospects for the internal gas and electricity market

Procedure number

2007/2089(INI)

Committee responsible

ITRE

Opinion by
  Date announced in plenary

REGI
26.4.2007

Enhanced cooperation – date announced in plenary

 

Drafts(wo)man
  Date appointed

Brigitte Douay

12.4.2007

Previous drafts(wo)man

 

Discussed in committee

12.4.2007

 

 

 

 

Date adopted

2.5.2007

Result of final vote

+: 43

–: 2

0: 0

 

Members present for the final vote

Alfonso Andria, Stavros Arnaoutakis, Jean Marie Beaupuy, Rolf Berend, Wolfgang Bulfon, Antonio De Blasio, Vasile Dîncu, Gerardo Galeote, Iratxe García Pérez, Eugenijus Gentvilas, Gábor Harangozó, Marian Harkin, Jim Higgins, Alain Hutchinson, Gisela Kallenbach, Tunne Kelam, Evgeni Kirilov, Constanze Angela Krehl, Mario Mantovani, Miguel Angel Martínez Martínez , Yiannakis Matsis, Miroslav Mikolášik, Lambert van Nistelrooij, Jan Olbrycht, Maria Petre, Markus Pieper, Elisabeth Schroedter, Stefan Sofianski, Grażyna Staniszewska, Oldřich Vlasák, Vladimír Železný

Substitute(s) present for the final vote

Bastiaan Belder, Silvia Ciornei, Brigitte Douay, Den Dover, Riitta Myller, Zita Pleštinská, Christa Prets, Miloslav Ransdorf, Richard Seeber, László Surján, Károly Ferenc Szabó

Substitute(s) under Rule 178(2)
present for the final vote

Véronique De Keyser, Henrik Lax, Samuli Pohjamo

Comments
(available in one language only)

...


PROCEDURE

Title

Prospects for the internal gas and electricity market

Procedure number

2007/2089(INI)

Committee responsible
  Date authorisation announced in plenary

ITRE
26.4.2007

Committee(s) asked for opinion(s)
  Date announced in plenary

ECON
26.4.2007

REGI
26.4.2007

 

 

 

Not delivering opinion(s)
  Date of decision

 

 

 

 

 

Enhanced cooperation
  Date announced in plenary

26.4.2007

 

 

 

 

Rapporteur(s)
  Date appointed

Alejo Vidal-Quadras
27.2.2007

 

Previous rapporteur(s)

 

 

Discussed in committee

11.4.2007

3.5.2007

5.6.2007

 

 

Date adopted

18.6.2007

Result of final vote

+

-

0

32

0

3

Members present for the final vote

Jerzy Buzek, Jorgo Chatzimarkakis, Giles Chichester, Silvia Ciornei, Pilar del Castillo Vera, Den Dover, Nicole Fontaine, Norbert Glante, Umberto Guidoni, Fiona Hall, David Hammerstein, András Gyürk, Erna Hennicot-Schoepges, Ján Hudacký, Anne Laperrouze, Eluned Morgan, Angelika Niebler, Reino Paasilinna, Atanas Paparizov, Miloslav Ransdorf, Paul Rübig, Andres Tarand, Catherine Trautmann, Claude Turmes, Nikolaos Vakalis, Alejo Vidal-Quadras

Substitute(s) present for the final vote

Ivo Belet, Joan Calabuig Rull, Matthias Groote, Satu Hassi, Edit Herczog, Gunnar Hökmark, Esko Seppänen, Hannes Swoboda, Lambert van Nistelrooij

Substitute(s) under Rule 178(2) present for the final vote

 

Date tabled

26.6.2007

Comments
(available in one language only)

 

Last updated: 28 June 2007Legal notice