EU energy policy - questions & answers
19 September 2007by eub2 -- last modified 19 September 2007
The European Commission on 19 September adopted a third package of legislative proposals to ensure a real and effective choice of energy supplier and benefits to every single EU citizen. The Commission's proposals put consumer choice, fairer prices, cleaner energy and security of supply at the centre of its approach.
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What are currently the problems of the energy market? Why do we need yet another package?
European consumers should all benefit form the liberalised electricity and gas market and new possibilities such as the right to choose their energy supplier. However, this is not yet the reality everywhere. The European Commission believes that the EU therefore needs new rules to solve some structural failings that are present in the electricity and gas market today. The current rules on the separation of network activities from supply and production of energy do not ensure proper market functioning, it says. Quite a large number of network operators may still discriminate against new users of the network in favour of incumbent supply and production companies. Therefore, new companies who wish to enter the gas and electricity markets and who have no choice but to use the existing networks, have difficulties trying to enter it. Furthermore, national regulators do not have sufficient independence to carry out their duties.
What is wrong with the status quo?
The second package was adopted in 2003 and implemented at national level. There are therefore several years of experience with the 2nd package. Together with energy regulators and other stakeholders, the European Commission has undertaken comprehensive studies, investigations and enquiries on the current electricity and gas market situation. A number of shortcomings were identified and these need to be addressed immediately. The benefits from earlier legislation will not materialize if these new measures are not taken. Otherwise the European energy consumers, citizens and industries, will not get what they need and what they deserve – or, for that matter, what has been promised. There are only some provisions in the 2nd package concerning distribution and market opening which entered into force on 1st July 2007. In these areas, the Commission does not propose any fundamental changes.
What will be the advantages for private and industrial consumers?
Consumers will benefit from the competitive energy market in many ways, says the Commission. The first one is freedom of choice. Europe's citizens have very different expectations on the energy market. Some focus only on prices. Others want to choose green electricity. Others want a more personalised service. Some may even wish to generate their own power and feed it to the grid. Whatever the expectations, consumers should have a choice. We have seen in others sectors that a competitive market has created more choice, specialised services, more offer, and in most cases, lower prices.
But consumers will also benefit in other ways. A competitive market with correct price signals will increase investments in new infrastructures. This will improve security of supply and reduce risks of blackouts or gas supply interruptions. And last but not least, a competitive market will help to fight climate change. Energy efficiency will improve in all parts of the supply – consumption chain. Finally, the Emissions Trading Scheme, an important measure for cutting emissions, will only function in a competitive market environment.
Consumer concerns
How can consumers use their freedom of choice? To what end?
In principle gas and electricity markets have been opened for all consumers since 1 July 2007. However, in reality many consumers have no choice, as the rules are implemented too late or insufficiently, or they are not strict enough. Therefore the Commission proposes to strengthen them.
Consumers can already choose between different suppliers of electricity and gas. In countries where the measures have been implemented correctly, consumers can choose to buy both electricity and gas from the same supplier or from two different ones. They can choose between competing suppliers who will try to make sure that their clients have the lowest prices and the best possible service, for example dealing with customers' complaints in a professional manner, making sure that switching to them as the new supplier is as easy as possible, etc. Consumers can also choose to fix their price for a few years or not, depending on their own estimates of market developments.
Consumers will still be connected to the same network, operated by a company that is regulated by the national regulatory authority. They will also still need to pay taxes on their energy bills.
Will prices be cheaper?
The Commission cannot guarantee that energy prices will go down. However, studies indicate that in liberalised energy markets the difference between production- and end-consumer prices is smaller than in non-liberalised markets. This demonstrates that consumers pay less for energy in liberalised markets than what they would pay in markets where there is no competition.
One of the reasons why market-opening is so urgent is that many factors may raise energy prices. The cost of energy is a combination of the cost of production, transport, service and taxes. Many power plants, transmission cables and pipelines will soon reach the end of their lifetime and will have to be either updated or replaced. This will demand huge investments. Market conditions make investors choose the most cost-effective plants, provided the price signals are right. Competition between suppliers ensures that they have lowest production and service costs. For electricity this means that generation should become increasingly efficient, which is also beneficial for the environment.
However, the liberalised energy market cannot influence two important price components: energy source and taxes. The price of energy is very much related to the global price of fuels, mainly oil. Oil hit a high record price of $80 per barrel on 14th September. This price is determined by many factors on which European suppliers have no influence, such as increasing demand in China and India. Taxes are also part of the energy price, and governments are becoming more and more aware of the fact that energy users need to pay for the costs of the negative effects of energy consumption on the environment, most prominently climate change.
Will the State be able to decide energy tariffs?
Governments have the right, even the obligation, to ensure that all citizens have access to affordable energy. The current legislation provides the possibility to impose energy prices to protect vulnerable customers or to ensure public service obligations, provided they respect certain conditions, to ensure that they are clearly defined, transparent, non discriminatory, etc. However, such regulated prices should be the exception and not the rule in a competitive environment. Regulated tariff prices for all customers would prevent the benefits of competition from being reaped.
Some Member States have implemented regulated prices, which, in the view of the Commission, do not meet the conditions outlined above and are not in line with the EU legal framework. This is why the Commission has launched infringement procedures against them. To prevent these situations in the future and to clarify the possibilities provided by the framework, the Commission proposes to define binding guidelines to be attached to the current law.
What will happen to a "vulnerable" consumer (an unemployed, handicapped or retired person) who does not have enough income to pay market prices?
Vulnerable customers already have a high degree of protection in the current legislation to ensure that they have access to the energy they need to lead a decent life. This is for example guaranteed through the possibility of governments to have a supplier of last resort, or measures to avoid disconnection. To clarify the framework, the Commission proposes to define binding guidelines to be attached to the current law.
How is the Commission going to make sure that citizens who live in areas that are not interesting to the market also enjoy their right to energy at affordable prices?
The rules in the current Directive that apply to consumers with lower incomes or other difficulties, also apply to customers in remote areas. In addition to this, if countries want to build infrastructure to serve isolated areas, the possibility to be temporarily exempted from many of the requirements of liberalisation already exists.
How will the liberalised energy market increase security of supply? Will it help prevent blackouts or gas supply interruptions?
The new measures will mean big improvements for security of supply. The operators of the main gas and electricity transportation networks will have an obligation to cooperate, not only to make access to the European networks easier, but also to make the operation of the network less vulnerable to interruptions and emergency situations. The European networks of Transmission System Operators – one for electricity and one for gas - are required to cooperate and coordinate the operation of their networks, through the exchange of operational information and the development of common safety and emergency standards and procedures. Cooperation in emergency situations is more pertinent in electricity since it travels faster than gas, but coordination is needed for both. This should ensure that small local accidents as seen in the North East German electricity network in November 2006 do not create a major European supply interruption.
Climate change
How will the new measures help in the fight against climate change?
On the one hand, a real internal energy market stimulates fair and competitive energy prices and energy savings, as well as higher investments. Boosting investment promotes innovation, in particular in energy efficiency and renewable energy, which are important factors in the fight against climate change. Nevertheless, neither the internal market nor the introduction of competition alone will help in the fight against climate change (see below).
How will the internal energy market help in the development of Renewable Energy Sources?
The EU’s use of renewable energy should be 20% of its energy mix by 2020. This target cannot be met without a properly functioning energy market. Without unbundling integrated network operators have no reason to develop the network in the overall interest of the market. With unbundling though, the generators, the network operators, owners and the suppliers have an incentive to invest in the generation of renewable energy and to diversify energy generation methods. Secondly, the proposals give access to smaller companies - for instance those that invest in renewable energy - to the networks and thus to the energy market. Third, the national regulators together with the Agency should foster environmentally sustainable energy markets. They shall promote research and innovation to meet demand and the development of renewable and low carbon technologies, in both the short and the long term.
What is the connection between a fully functioning internal energy market and the emissions trading scheme?
Without a competitive and European-wide electricity market, the Emissions Trading Mechanism is hampered in its effectiveness. The present lack of effective competition goes a long way to explain why European electricity companies have increased their prices which include the carbon price, whilst at the same time gratefully accepting free emissions permits. On the contrary, in a competitive market with adequate carbon prices, low emissions will become a real competitive advantage and demand for efficient power plants, renewables energies, or Carbon Capture and Storage will increase, creating a market for these technologies.
How will the new measures stimulate energy efficiency?
One possibility for suppliers to be competitive is by ensuring that they have lower production costs than others. The fewer natural resources such as oil and gas are used in the production of electricity for example, the cheaper the electricity will be. Therefore competition stimulates investments in energy efficiency, especially in times when natural resources are becoming more expensive and the share in production costs is increasing in comparison to investment or operation costs, for example.
The other possibility for suppliers to be competitive is by providing better and/or cheaper services. These are for example services to make sure that consumers optimise their energy use, or supply contracts that are tailor-made to consumer needs. This would for example mean that if consumers stick with energy consumption in a predictive manner so that the supplier reduces his uncertainties, they can negotiate rebates on the energy price. Less uncertainty for suppliers means more efficient use of natural resources.
There are also significant gains in energy efficiency to be made in houses, for example in the light bulbs used. Energy efficiency starts with energy awareness. The Commission therefore proposes that all households are informed of the actually incurred costs of energy use per month, so that they are more aware of the impact of their behaviour on their bill. This will make energy-saving services more interesting for consumers. It will also enable suppliers to create tailor-made contracts for different types of customers.
Regulators
What is an energy regulator? Why is it necessary?
A regulator may be best compared to a "watchdog", independent from industry and political influence. Since it does not make economic sense to create an alternative gas or electricity network, the regulator will need to ensure effective and non-discriminatory access to the transmission and distribution networks for electricity and gas. The regulator controls tariffs in order to prevent unduly high tariffs. Regulators often also have other tasks which relate to the efficient functioning of the market and ensuring competition, as well as the protection of consumer interests.
Do you have other examples of markets where a regulator is necessary?
Most sectors of the economy only have a regulator in the form of the competition authority. For some sectors however competition authorities alone would not have the right tools and procedures to deal with the specificities of the sector, which means that a separate regulator is necessary in those cases. This is often seen in network industries, where competition for network services is usually not possible. This is why for example the telecoms sector has a specific regulator, but the railways and airline sector have their own regulators as well.
Member States already have National Regulators. What will the package change?
The current rules already require Member States to have a regulator. The package will make a number of significant changes, however. First of all, all regulators should be truly independent, not only from industry interests but - with respect to their day-to-day operational decisions - also from governments. Secondly, their statutory powers and duties will be strengthened. For example, regulators will be able to issue binding decisions on national gas undertakings and adopt the necessary measures to promote effective competition. Thirdly, regulators will be required to cooperate with regulators from other Member States. All regulators will have the same clear objective of promoting competition, effective market opening and an efficient and secure network.
Regulators must be independent to guarantee competition. What are you going to do to make sure they are independent?
In order to ensure the true independence of the regulatory bodies, each Member State must ensure that the regulator is an independent legal entity, which has authority over its own budget and which has sufficient human and financial resources to carry out its tasks. Furthermore, the regulator must have a management which is appointed for a non-renewable term of at least five years and we are introducing strict rules on the conditions under which management may be removed from office.
What are the powers of Energy Regulators? Can they fine companies if they do not respect their rules?
The new package gives stronger and better defined powers to regulators. They will be able to issue binding decisions on companies, take appropriate measures in cases where the functioning of the gas and electricity markets is insufficient and impose penalties on companies that do not comply with their legal obligations or with decisions from the regulator.
What are energy release programs? Will regulators be able to impose them on companies?
The national regulator will be able to impose gas or electricity release programmes to companies where there is no effective competition or where the market does not function properly. An energy release programme is used to remedy a situation where there is little or no access to energy sources for new companies entering the market. For example in the gas market, an incumbent company may have contracted all gas production (and accompanying network capacity) available there, due to which other potential suppliers cannot compete on the market, as they cannot secure a source of gas. A gas release programme would force the incumbent company to literally release part of its portfolio to its competitors, thereby allowing competition in the market to develop. There are many different ways in which energy release programmes can be organised; the auctioning of portfolios is a commonly used method.
What is a record keeping obligation? Why do regulators need to access this data?
At the moment regulators do not have guarantees that would allow them to check allegations of market abuse. If they would have this possibility then market participants can be sure that market abuse will be punished. This will enhance trust in the market, thereby encouraging energy companies to engage in trading activities and to improve the efficiency of the market.
National regulatory authorities therefore need to be able to act against market abuse. This means that they can check the behaviour of market participants in the past, to investigate if their operational decisions were based on sound economic reasoning or if their decisions tried to manipulate market prices.
The Commission therefore proposes that electricity generators, gas system operators, and supply undertakings keep record of all data that relates to operational decisions and trades respectively.
The obligations are placed on electricity generators and on gas network operators. However electricity network operators and gas producers have no such obligations. This is because generators have information on the electricity they put into the network and the operational decisions regarding how much electricity to produce. Gas network operators on the other hand have all the knowledge on gas that is put into the system, and all produced gas is registered by operators. The network operators already have obligations to publish this information according to the current legal framework, therefore it is least burdensome if the obligation is placed on the undertakings that already have the data anyway.
Agency for the Cooperation of European Regulators (ACER)
Is the Agency going to replace national regulators?
No, the work of the Agency will complement that of the existing regulators. The Agency should act as the responsible regulator especially in situations where there is a European wide interest. For example, where cross-border pipelines are concerned, the Agency will take the necessary regulatory decisions rather than the national regulators.
Why is the Agency necessary if the European Group of Regulators for Electricity and Gas (ERGEG) already exists?
ERGEG has delivered a very positive contribution to the development of the internal market since the second package in 2003. Nevertheless, as ERGEG itself has stated, the powers need to be formalised, in order to take decisions in cases where national regulators cannot agree. Since only an Agency could be entrusted with binding decision-making powers, an Agency has been created to complement the work done by ERGEG.
What exactly are the tasks of the Agency?
In order to solve the so-called regulatory gap, the Agency will first of all have to act in cases where pipelines and electricity lines are within the territory of more than one Member State. In addition to this, the Agency will monitor whether the cooperation between network operators works properly. Third, the Agency will enhance the cooperation between national regulators. Finally, in order to take advantage of the technical expertise available, the Commission may ask the Agency to provide advice on a range of technical issues, but the Agency will also advise the Commission upon its own initiative within its competence.
What will be the structure of the Agency?
The Agency will have an Administrative Board, a Regulatory Board and a Board of appeal. A Director, who is appointed by the Administrative Board after consultation with the Regulatory Board, will represent the Agency.
The Administrative Board, which consists of representatives of the Member States and the Commission, will be responsible for the administrative and financial aspects of the Agency. What makes the Agency unique is the independent Regulatory Board, which will be composed by national regulator and will be responsible for the regulatory affairs of the Agency. The Commission is a member of the Regulatory Board as well, but does not have a right to vote. The Board makes recommendations, gives opinions, and takes decisions specifically regarding cross-border infrastructures. It will also inform the Commission if in the opinion of the Regulatory Board certain issues should be solved or improved.
How much will the new Agency cost? Who is going to pay for it?
It is foreseen that the Agency will have a staff of about 40-50 people. The annual budget is around €6-7 million per year. This budget will be paid from the Communities' budget.
Do the benefits of the Agency compensate its cost?
The benefits of a well functioning European energy market are important. The Agency is essential to addressing one of the main problems of the existing situation, i.e. the regulatory gap in cross-border trade. Although it is difficult to assess the advantages of the Agency in financial terms, the Agency will solve the problems that prevent the existing internal market for energy from becoming a real internal market.
Unbundling
Why is the separation between energy production and energy networks so important?
It is very important to separate energy networks from energy production and supply. The energy transmission network, the high voltage or high pressure main network lines, should work like highways, permitting all travellers to pass. It is usually too expensive to build parallel networks. All energy suppliers, including new companies and small companies, should have access to network and access to markets, in the same conditions as the current market players.
What does unbundling mean?
The term "unbundling" simply refers to the separation of energy network activities from production and supply activities.
Companies are currently legally unbundled. Why is this not enough?
The experience in many Member States has shown that the current unbundling requirements do not guarantee independent network operation to the benefit of all market participants. Instead, a network operator who is part of a supply company group will often be influenced by the interests of the related supply company. Competition authorities across the EU have observed this problem. This means that other companies not related to the network operator, are at a disadvantage. Fair competition can only exist with a neutral and independent network operation. The ownership link between network operator and any supply companies therefore needs to be cut.
Why does the Commission consider ownership unbundling to be the best solution?
If a network operator is in the same group as a company that produces or supplies energy, it will naturally defend the interests of the group, and its decisions will take into consideration the commercial advantage of its sister companies. In such circumstances there is little incentive to build infrastructure that will allow new producers to enter. On the other hand, if the network belongs to a completely independent company, the main driver for the network operator will be the maximization of profit. Therefore, the more companies use its network, the higher the benefit. It will be in its own interest to allow as many companies to use the network and to build as many interconnections as possible.
Have some Member States already applied ownership unbundling? If so, what are their experiences?
There are numerous Member States in the EU which have, in recent years, introduced ownership unbundling for their electricity and gas networks. In electricity, about half of the Member States have ownership unbundled network operators; in gas there are seven Member States. The Commission has investigated the experience of these Member States in a detailed impact assessment. It appears that ownership unbundling has a favourable influence on investment incentives, energy prices and the degree of market concentration. At the same time, there was no indication that ownership unbundling would harm the companies concerned. Neither their share prices nor their credit ratings were negatively affected on average.
Is there more than one way to achieve ownership unbundling?
The principle of ownership unbundling applies across the board, no matter whether the companies concerned are privately owned, state owned or whether they are located inside or outside the EU. However, the Commission's proposals include an alternative to ownership unbundling - the so-called independent system operator (ISO). According to this option, the supply company can still own the physical network assets, but it has to leave the entire operation, maintenance and investment in the network to an independent company. This option may be considered by companies that are reluctant to sell their network assets.
How can a State owned company achieve ownership unbundling?
The objective is to strictly apply the same ownership unbundling rules for both privately and publicly owned companies. In practice, this means that the same person, whether public or private, cannot have influence on a network operator and influence on supply activities at the same time. Where the State is the owner of an integrated company a possible solution is to transfer the shares and/or rights of either the network operator or the supply company to a foundation which is a separate legal person. In any case, where state-owned companies are concerned, the outcome must be that the decision processes of network operators and supply companies are entirely separate.
Can the Commission legally demand to a private company to sell their assets?
There are several possibilities for private companies to comply with the requirements of ownership unbundling. The appointment of an independent system operator (ISO) is one option which relieves private companies of the need to sell their networks. Where the ownership of an integrated energy company is widely dispersed the ownership unbundling requirement may also be complied with by splitting the shares of the integrated companies into shares of the network company and of the remaining business. The shareholders may than keep both shares of both companies as long as it does not give them control over any one of them. Since there are these two possible alternatives to the sale of assets, the forced sale of assets can be avoided.
Why would an Independent System Operator be as effective as "ownership unbundling"?
To ensure that the ISO solution is as effective as ownership unbundling, the Commission proposes detailed conditions with which the ISO has to comply. In particular, the independence of the ISO has to be guaranteed and the ISO has to have wide-ranging powers to operate the network and to decide on necessary investments. Moreover, the regulators have to be able to closely monitor the tasks and obligations of both the ISO and the network owner to ensure that the network functions properly and that all customers have fair access.
Are there any examples of an Independent System Operator model in Europe?
The best known example of an ISO in the EU is the Scottish ISO for electricity. Since 2005 National Grid operates the networks of the two vertically integrated electricity companies Scottish Power and Scottish & Southern Energy. Very recently, Poland and Switzerland have established an organisational structure in the electricity sector which also resembles the ISO model.
If you make rules that allow everybody to use the same infrastructure under the same conditions as its owner, you remove an important incentive to make new infrastructure. How are you going to make sure that multi-billion energy investments have enough incentives?
A network operator is in principle remunerated by the regulated fees for the use of the network. The more networks are built and the more efficiently the network operator operates the networks, the higher its remuneration. The incentive of the network operator is therefore in principle independent of who uses the network.
Many energy companies are large corporations that have made huge profits even at times of high energy prices. What impact will this package have on such companies?
Several measures in the package aim to make market entry for newcomers easier. In particular, ownership unbundling and the creation of independent system operators have the objective to achieve non-discriminatory access to networks for all market participants. With easier market entry, customers will have more choice, which will put pressure on energy prices. It has been observed that in countries with ownership unbundling, electricity prices have increased less than in countries where the networks are still part of supply companies. Moreover, the measure in the package will help to overcome the segmentation of energy markets along national borders. National champions will then have to compete with each other to offer customers the best prices and services. They will therefore have to face competition in markets that they dominated. However, unbundling measures also open important business opportunities for them, since they will be able to sell their energy to a European market of nearly 500 million consumers.
Third country aspects
Will foreign companies still be able to operate in the European market?
Yes. Non-EU companies still have ample opportunity to be active in the EU energy market. It is only in the case of the ownership of transmission networks that some restrictions are being introduced. Non-EU companies cannot own a controlling stake in an EU network unless international agreements are in place which explicitly allow for this situation. In contrast, there are no restrictions on investments in generation, production and supply activities.
Should unbundling rules apply to foreign companies operating in the European market under the same conditions as to European companies?
Yes. The rules on unbundling apply in the same manner to EU companies and to non-EU companies. However, the package contains safeguards to ensure that in the event that foreign companies wish to acquire a significant interest or even control over an EU network, they will have to demonstrably and unequivocally comply with the same unbundling requirements as EU companies.
Are these measures conceived to protect the EU companies against foreign take-overs?
The measures in the case of takeovers by non-EU companies have the objective to ensure effective unbundling of transmission networks. The measures are clearly not motivated by a general intention to prevent foreign investments in the EU energy sector. On the contrary, such investments are welcome as long as they do not undermine competition in the internal market.
Is this protectionism?
No, to protect the openness of the market, conditions are placed on ownership of assets by no EU companies to make sure that all companies play by the same rules. The goal of the current proposal is to promote competition in the European energy markets and to promote the proper functioning of these markets.
Are these proposals aimed against one specific foreign company?
No, External suppliers are vital to the European Union's energy future. The Commission is simply seeking to ensure fair competition. The conditions placed on third country companies will be without prejudice to the international obligations of the Community and in particular WTO rules.
Transmission Network Operators
What are transmission network operators? Are they distribution companies?
Transmission network operators operate the electricity lines with the highest voltage levels, and the gas pipelines with the highest pressure, capable of transporting electricity and gas over long distances. These lines also connect different Member States. That is why problems in one country can cause problems in neighbouring countries and even further, as was shown by the electricity black-out that took place in Central Europe in November 2006.
Distribution companies run local lines which operate at lower voltages and pressures. Incidents in these networks normally remain local, but can still affect entire cities.
Is the Commission harmonising voltage, frequency and pipeline pressures everywhere?
In technical terms, transmission networks are already quite similar regarding voltage, frequency and pipeline pressures and gas qualities for example. The Commission proposal aims at improving the operation of the networks and the functioning of the markets. The idea is that the transmission network operators themselves will cooperate to prepare the detailed rules necessary for the efficient and secure operation of the networks, under the scrutiny of the Agency and the Commission.
Will there be one centre to manage the whole European network?
The electricity and gas networks are so big that technically it does not make sense to centralise everything. However, we expect that some central tools will be developed, for example for efficient monitoring of what is happening in the entire network and for the exchange of information.
What will be in the European investment plan?
The investment plan should look at the investment needs for the electricity and gas networks from the European perspective, not only at the individual requirements of each Member State. These commonly agreed projects will then be implemented by one or more network operators, depending on where they are situated. Projects included there would be similar to the priority projects under the Trans European Networks policy, such as the Poland-Lithuania electricity link, the France-Spain electricity interconnector, the Nabucco- gas pipeline from Turkey to Austria and new gas routes from Russia to North West Europe.
Transparency rules
What sort of transparency rules is the Commission thinking of?
The Commission proposes measures to enhance the transparency of the physical operations that take place in the market, meaning the way TSOs operate their networks, the way gas storage and liquefied natural gas (LNG) system operators operate their facilities, and the way electricity producers operate their generators. This data provides market participants with information on the balance between supply and demand and consequently information on how efficiently the market uses its resources, i.e. that nobody abuses the market by hiding away generation or storage capacity. In short, this data enables market participants to supply customers efficiently.
The Commission has also considered proposing transparency rules for trading. However, it concluded that more research is needed to identify the problems more closely and propose adequate solutions. Trading touches both energy market and financial market regulation. Therefore Commissioners Piebalgs and McCreevy have agreed to investigate the matter further in the coming months.
Why are transparency rules necessary?
Supplying cheap energy to customers is all about making the most effective use of the resources at the disposal of supply companies - the so-called supply portfolio. These include for example gas and electricity production, imports, gas storage and supply contracts with other companies. In order to optimise the portfolio, market participants need to have an overview of the whole market. This means in particular that they need information on the overall supply to the market and the demand by consumers.
Therefore measures are proposed that provide information on the electricity that is produced, the available and used capacity on the electricity cables and gas pipelines, and how LNG- and storage facilities are operated. This information gives market participants insight into how the resources are used and how individual market participants can use their own generation capacity, import possibilities and gas in stock most efficiently to supply their customers.
By creating insight into supply and demand, transparency measures will prevent artificial price hikes because gas or electricity is hidden from the market, or because artificial demand is created.
EU energy policy - further information
