On 19 September, the European Commission launched its most recent, and what it hopes to be its final, attempt to liberalise the EU's energy markets. It aims to have the package formally adopted by the end of next year - an ambitious objective not least because that will be during the French presidency!
Ownership unbundling/the ISO-model
Attention has principally been focussed on the Commission's unbundling proposals. While maintaining its drive, and preferred option, for ownership unbundling of transmission from supply and generation/production, the Commission has watered down its proposals to allow for the so-called ISO model. Under this model, networks are placed in the hands of separate system operators without full ownership unbundling - a good example of this being the electricity regime in place in Scotland. While the Commission has been keen to stress that its proposed ISO-model is tantamount to ownership unbundling, undoubtedly its introduction reflects the Commission's recognition that full ownership unbundling is likely to be unpalatable for many member states.
However, it is important to note that the third package contains a number of other important initiatives. In particular, it seeks to ensure that national regulators are free of political or other third party interference by requiring them to be functionally independent from any other private or public entity. Moreover, the package aims to promote greater transparency in, for example, supply contracts and gas/electricity derivatives. Further, a European Regulatory Agency is to be set up with a view to complementing at the European level the regulatory tasks performed at the national level. The Agency will also have the task of overseeing co-operation between transmission system operators with a view to ensuring an effective pan-European transmission network.
Further analysis of the Commission's energy package will be provided in future bulletins and publications.