Internal Market in Electricity Directive is the Directive 2003/54/EC of the

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and the

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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 The Treaty of Rome, or EEC Treaty (officially the Treaty establishing the European Economic Community), brought about the creation of the European Economic Community (EEC), the best known of the European Communities (EC). The treaty was sign ...

, and in particular Article 47(2), Article 55 and Article 95 thereof. Important: Directive2003/54/EC has been replaced by Directive2009/72/EC and then by Directive2019/994. 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 In economics, competition is a scenario where different economic firmsThis article follows the general economic convention of referring to all actors as firms; examples in include individuals and brands or divisions within the same (legal) firm ...

. 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 commerce, a level playing field is a concept about fairness, not that each player has an equal chance to succeed, but that they all play by the same set of rules. In a game played on a playing field, such as rugby, one team would have an unfai ...

generation A generation refers to all of the people born and living at about the same time, regarded collectively. It can also be described as, "the average period, generally considered to be about 20–⁠30 years, during which children are born and gro ...

and to reduce the risks of

market dominance Market dominance describes when a firm can control markets. A dominant firm possesses the power to affect competition and influence market price. A firms' dominance is a measure of the power of a brand, product, service, or firm, relative to c ...

and

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, ensuring non-discriminatory

transmission Transmission may refer to: Medicine, science and technology * Power transmission ** Electric power transmission ** Propulsion transmission, technology allowing controlled application of power *** Automatic transmission *** Manual transmission ** ...

and

distribution Distribution may refer to: Mathematics *Distribution (mathematics), generalized functions used to formulate solutions of partial differential equations *Probability distribution, the probability of a particular value or value range of a varia ...

tariffs, through access to the network based on

third-party access Third party access policies require owners of natural monopoly infrastructure facilities to grant access to those facilities to parties other than their own customers, usually competitors in the provision of the relevant services, on commercial ter ...

rights and on the basis of tariffs published prior to their

entry into force In law, coming into force or entry into force (also called commencement) is the process by which legislation, regulations, treaties and other legal instruments come to have legal force and effect. The term is closely related to the date of t ...

, 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 Environmental issues are effects of human activity on the biophysical environment, most often of which are harmful effects that cause environmental degradation. Environmental protection is the practice of protecting the natural environment on t ...

. 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 The term open market is used generally to refer to an economic situation close to free trade. In a more specific, technical sense, the term refers to interbank trade in securities. In economic theory Economists judge the "openness" of markets a ...

, 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 Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as title, which may be separated and held by different ...

unbundling Unbundling is a neologism to describe how the ubiquity of mobile devices, Internet connectivity, consumer web technologies, social media and information access in the 21st century is affecting older institutions (education, broadcasting, newsp ...

. 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-maker In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. It could be either rati ...

s responsible. To facilitate the conclusion of contracts electricity undertaking established in a Member State the supply of electricity to eligible customers in

Member State A member state is a state that is a member of an international organization or of a federation or confederation. Since the World Trade Organization (WTO) and the International Monetary Fund (IMF) include some members that are not sovereign sta ...

, 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 A public service is any Service (economics), service intended to address specific needs pertaining to the aggregate members of a community. Public services are available to people within a government jurisdiction as provided directly through pub ...

guarantee Guarantee is a legal term more comprehensive and of higher import than either warranty or "security". It most commonly designates a private transaction by means of which one person, to obtain some trust, confidence or credit for another, engages ...

s, in particular with regard to

security of supply Energy security is the association between national security and the availability of natural resources for energy consumption. Access to (relatively) cheap energy has become essential to the functioning of modern economies. However, the uneven d ...

and reasonable tariffs, for reasons of

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, 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.

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and

certainty Certainty (also known as epistemic certainty or objective certainty) is the epistemic property of beliefs which a person has no rational grounds for doubting. One standard way of defining epistemic certainty is that a belief is certain if and ...

in the implementation of the Directive should be ensured. 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

through the launching of a

tendering An invitation to tender (ITT, otherwise known as a call for bids or a request for tenders) is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business ...

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 Environmental protection is the practice of protecting the natural environment by individuals, organizations and governments. Its objectives are to conserve natural resources and the existing natural environment and, where possible, to repair da ...

and the promotion of infant new technologies, of tendering for new capacity on the basis of published criteria. New capacity includes inter alia

renewables Renewable energy is energy that is collected from renewable resources that are naturally replenished on a human timescale. It includes sources such as sunlight, wind, the movement of water, and geothermal heat. Although most renewable energy ...

and

combined heat and power Cogeneration or combined heat and power (CHP) is the use of a heat engine or power station to generate electricity and useful heat at the same time. Cogeneration is a more efficient use of fuel or heat, because otherwise- wasted heat from elec ...

(CHP). The construction and maintenance of the necessary network infrastructure, including

interconnection In telecommunications, interconnection is the physical linking of a carrier's network with equipment or facilities not belonging to that network. The term may refer to a connection between a carrier's facilities and the equipment belonging t ...

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

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d (see no-carbon renewable energy economy – NCREE). The respect of the

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.

External links

EU legislation summaryText of directive with headers (html)Text of the directive (pdf)

References

{{reflist Energy economics Electric power in the European Union Energy policies and initiatives of the European Union Economy of the European Union Politics of the European Union European Union directives 2003 in law 2003 in the European Union

See also

External links

References