The third legislative package, or IME 3, was published on Friday 14 August 2009 in the Official Journal of the European Union, and consists of the EU's latest legislative measures to further liberalise its gas and electricity markets. This follows the approval of the third package by the European Parliament in April and the Council of Europe in June. This latest development will be of interest to all stakeholders involved in transmission, supply or production activities in the EU's gas and electricity markets.

Timetable

The package consists of two directives (covering the gas and electricity markets separately), and three regulations. Both the directives and the regulations will enter into force 20 days after their publication, and the directives contain further details on when various parts are to take effect. Therefore the countdown to compliance with the terms of the package commences on 3 September 2009. Member States have until 3 March 2011 (i.e. 18 months) to bring into force the necessary laws, regulations and administrative provisions for nearly all of the measures contained in the directives. The regulations will largely apply from that date, except the gas regulation, which will apply from 3 September 2009. This is a tight timetable for many Member States and work will need to be done across the EU to meet this deadline.

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The third legislative package, or IME 3, was published on Friday 14 August 2009 in the Official Journal of the European Union, and consists of the EU's latest legislative measures to further liberalise its gas and electricity markets. This follows the approval of the third package by the European Parliament in April and the Council of Europe in June. This latest development will be of interest to all stakeholders involved in transmission, supply or production activities in the EU's gas and electricity markets.

Timetable

The package consists of two directives (covering the gas and electricity markets separately), and three regulations. Both the directives and the regulations will enter into force 20 days after their publication, and the directives contain further details on when various parts are to take effect. Therefore the countdown to compliance with the terms of the package commences on 3 September 2009. Member States have until 3 March 2011 (i.e. 18 months) to bring into force the necessary laws, regulations and administrative provisions for nearly all of the measures contained in the directives. The regulations will largely apply from that date, except the gas regulation, which will apply from 3 September 2009. This is a tight timetable for many Member States and work will need to be done across the EU to meet this deadline.

Main measures

The third package mainly consists of measures aimed at:

  • separating transmission network operations from supply and production activities
  • improving cross-border co-operation
  • improving investments in key electricity and gas infrastructure
  • reinforcing the independence of national regulators; and
  • improving consumer rights

Separating supply and production activities from transmission operations

Member States will have the choice between the following options to separate supply and production activities from the operation of gas and electricity networks:

  • full ownership unbundling – this will require integrated energy companies to sell off their gas and electricity grids
  • the independent system operator model (ISO) – this option would enable energy companies to retain the ownership of their transmission networks but Member States could oblige them to transfer the technical and commercial operation of their transmission networks to a separate body designated by the Member State (the "ISO")
  • the independent transmission operator model (ITO) – the ITO model would also allow integrated companies to retain ownership of their transmission networks but would require them to comply with certain rules, such as the putting in place of a supervisory body overseeing the operation of transmission networks, to ensure that the transmission operation business is run independently from supply and production activities
  • keeping existing arrangements: alternatively, where arrangements already exist in a Member State on the date the Directive comes into force which guarantee a more effective independence of the transmission system operator than the ITO model, then Member States may decide to keep these arrangements in place instead of implementing one of the above models

Improving cross-border co-operation

The third package sets out various measures to improve regional co-operation by, in particular:

  • requiring Member States to co-operate in the event of severe disruptions of gas supply and by co-ordinating national emergency measures
  • setting up an Agency for the Cooperation of Energy Regulators, which will in particular co-operate with national regulators and transmission system operators to ensure the compatibility of the different regulatory frameworks across the EU
  • setting up the European Networks of Transmission System Operators for Electricity and Gas (ENTSOs), through which all transmission system operators will co-operate at EU level in order to ensure the "sound technical evolution" of the European electricity and gas transmission networks
  • requiring that the Agency and ENTSOs develop binding network codes to ensure the "optimal management" of the European transmission network

Infrastructure Investments

The third package will require all transmission system operators to submit to national regulators a 10-year network development plan indicating the main transmission infrastructure which needs to be built or upgraded over the next 10 years.

Based on this plan, the ENTSOs will also be required to publish every 2 years a non-binding 10-year EU-wide network development plan to help identify investment gaps, in particular in cross-border interconnection capacities.

Independence of national regulators

The third package also contains measures to strengthen the independence of national regulators from governments and industry interests by, in particular, requiring that national regulators have separate annual budget allocations and can autonomously implement this budget.

Improving consumer rights

The third package also contains various measures aimed at improving consumer rights by, for instance, allowing them to change gas and electricity suppliers within 3 weeks and free of charge and by providing that, subject to an economic assessment, at least 80% of electricity consumers should have access to intelligent metering systems ("smart metering") by 2020.

For further information on the third package and its passage through the EU legislature, please see our previous law-nows:

Council reaches new political agreement on third package proposals

ERGEG consults on third package implementation

European Parliament adopts position on third package proposals

The Third Package - a fourth way?

To view the legislation, please click here.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 18/08/2009.