Internal Market in Electricity Directive

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Directive 2003/54/EC
European Union directive
Title Internal Market in Electricity Directive
Made by European Parliament & Council
Made under Arts. 47(2), 55 and 95
Journal reference L176, 15 July 2003, pp. 37–55
Date made 26 June 2003
Came into force 4 August 2003
Implementation date 1 July 2004
Other legislation
Replaces Directive 96/92/EC
Replaced by Directive 2009/72/EC

Internal Market in Electricity Directive is the Directive 2003/54/EC of the European Parliament and the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC is based in the Treaty establishing the European Community, and in particular Article 47(2), Article 55 and Article 95 thereof. Note: The Directive 2003/54/EC has been replaced by the Directive 2009/72/EC.

Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity, has made significant contributions towards the creation of an internal market for electricity. Experience in implementing this Directive shows the benefits that may result from the internal market in electricity, in terms of efficiency gains, price reductions, higher standards of service and increased competitiveness.

However, important shortcomings and possibilities for improving the functioning of the market remained with the 96/92/EC directive, notably concrete provisions were needed to ensure a level playing field in generation and to reduce the risks of market dominance and predatory behaviour, ensuring non-discriminatory transmission and distribution tariffs, through access to the network based on third-party access rights and on the basis of tariffs published prior to their entry into force, and ensuring that the rights of small and vulnerable customers are protected and that information on energy sources for electricity generation is disclosed, as well as reference to sources, where available, giving information on their environmental impact.

The freedoms which the Treaty guarantees European citizens – free movement of goods, freedom to provide services and freedom of establishment – are only possible in a fully open market, which enables all consumers freely to choose their suppliers and all suppliers freely to deliver to their customers.

To ensure efficient and non-discriminatory network access, it is appropriate that distribution and transmission systems are operated through legally separate entities where vertically integrated undertakings exist. Independent management structures must be in place between the distribution system operators, the transmission system operators, and any generation/supply companies.

It is important however to distinguish between such legal separation and ownership unbundling. Legal separation does not imply a change of ownership of assets and nothing prevents similar or identical employment conditions applying throughout the whole of the vertically integrated undertakings. However, a non-discriminatory decision-making process should be ensured through organisational measures regarding the independence of the decision-makers responsible.

To facilitate the conclusion of contracts electricity undertaking established in a Member State the supply of electricity to eligible customers in Member State, Member States and, where appropriate, national regulatory authorities should work towards more homogeneous conditions and the same degree eligibility for the whole of the internal market.

The existence of effective regulation, carried out by one or more national regulatory authorities, is an important factor in guaranteeing non-discriminatory access to the network.

All Community industry and commerce, including small and medium-sized enterprises, and all Community citizens that enjoy the economic benefits of the internal market should also be able to enjoy high levels of consumer protection, and in particular households and, where Member States deem it appropriate, small enterprises should also be able to enjoy public service guarantees, in particular with regard to security of supply and reasonable tariffs, for reasons of fairness, competitiveness and indirectly to create employment.

Electricity customers should be able to choose their supplier freely and ensure they have a real and effective right to choose their supplier.

Progressive market opening towards full competition should as soon as possible remove differences between Member States. Transparency and certainty in the implementation of the Directive should be ensured.

A recommended Fuel mix disclosure display format, proposed in a note annexed to the Directive, EU, 2003 [1]

Nearly all Member States have chosen to ensure competition in the electricity generation market through a transparent authorisation procedure. However, Member States should ensure the possibility to contribute to security of supply through the launching of a tendering procedure or an equivalent procedure in the event that sufficient electricity generation capacity is not built on the basis of the authorisation procedure. Member States should have the possibility, in the interests of environmental protection and the promotion of infant new technologies, of tendering for new capacity on the basis of published criteria. New capacity includes inter alia renewables and combined heat and power (CHP).

The construction and maintenance of the necessary network infrastructure, including interconnection capacity between areas and decentralised electricity generation, should contribute to ensuring a stable electricity supply.

The Commission has indicated its intention to take initiatives especially as regards the scope of the labelling provision and notably on the manner in which the information on the environmental impact in terms of at least emissions of CO2 and the radioactive waste resulting from electricity production from different energy sources, could be made available in a transparent, easily accessible and comparable manner throughout the European Union and on the manner in which the measures taken in the Member States to control the accuracy of the information provided by suppliers could be streamlined (see no-carbon renewable energy economy – NCREE).

The respect of the public service requirements is a fundamental requirement of this Directive, and it is important that common minimum standards, respected by all Member States, are specified in this Directive.

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