European Parliament adopts position on third package proposals

Following its first reading, the European Parliament adopted on 18 June 2008 its position on the Commission’s third package proposals regarding the common rules for the internal market for electricity, the conditions for access to the network for cross-border exchanges in electricity and regarding the role of the Agency for the Co-operation of Energy Regulators (ACER). This will be of interest to stakeholders in the EU’s electricity sector.

The European Parliament adopted the following main positions in amending the Commission’s proposals:

Support for full ownership unbundling

The Parliament gave its full support to full ownership unbundling, which would require the break-up of large vertically integrated energy firms that simultaneously control the assets to produce and distribute electricity. In particular, the Parliament rejected the alternative option of “Independent System Operator” suggested by the Commission whereby vertically integrated companies could retain control of their network assets subject to various conditions.

Strengthening the role of ACER

In its amendments to the Commission’s proposals, the Parliament decided to give further decision-making powers to ACER by in particular empowering the Agency to:

• issue opinions and decisions to transmission system operators (TSOs) in relation to all technical matters pertaining to the good functioning of the internal electricity market
• provide a framework within which national regulators can co-operate
• supervise the execution of the tasks of the European Networks of TSOs (ENTSOE)
• establish economic and technical terms and conditions for the development of codes and rules drafted by ENTSOE and approve codes and rules to ensure the efficient and secure functioning of the internal energy market
• approve the 10-year investment plan of the European networks of TSOs for Electricity and Gas.

Facilitating network access for cross-border exchanges of electricity

The Parliament’s amendments also suggest that the Commission, in consultation with ACER, should establish an annual priority list identifying issues of primary importance for the development of the internal market in electricity and that ACER should subsequently prepare guidelines setting clear objectives for the harmonisation rules.

The Parliament also decided that within 6 months of the adoption of these guidelines, the Commission should mandate ENTSOE to develop draft network codes in full compliance with the principles established in the guidelines.

Other amendments

The Parliament also suggested that:

• TSOs should be required, when dispatching generating stations, to give priority to renewable energy generators
• the Commission should, in consultation with the industry, establish a charter listing the rights of energy consumers in the EU

Next steps

As part of the co-decision procedure, the Parliament’s proposed amendments will now be referred to the Council and the Commission for further review. In the meantime, the European Parliament is expected to adopt its position on the Commission’s proposals with respect to gas on 8 July 2008.

To access the European Parliament’s press release, please click here.

To read our previous law-now on the Energy Council’s broad agreement on the third package proposals, please click here.