The Council adopted on January, 12th 2009, the common positions and the statements on the package of legislative measures concerning the internal energy market, aiming to supplement the existing rules to ensure that the internal market operates smoothly for all consumers and to enable the EU to achieve a more secure, competitive and sustainable energy supply.

The common positions adopted by the Council on the five texts that make up the Third Package contain all the essential components of the Commission's proposal that are needed to ensure the proper functioning of the internal gas and electricity market and, more generally, to achieve the essential objectives set out, and can therefore be generally supported by the Commission.

Those common positions were prepared on the basis of the unanimous political agreement reached at the Council meeting on October 9th and 10th 2008, following the preparation works undergone on the June Energy Council, and will be forwarded to the European Parliament for second reading under the co-decision procedure.

The first reading focused on obtaining agreement within the Council. The amendments adopted by the European Parliament were therefore not formally incorporated into the common position. Negotiations to this end will take place during the second reading.

Some amendments adopted by the European Parliament are however taken into account in the common position. The Commission considers that a number of the amendments that are not covered should be taken into account in the second reading.

Elements of Council's common positions

• The Common position endorses three options for effective unbundling, for gas and electricity. The Ownership Unbundling option and the Independent System Operator (ISO) option are adopted. The Commission continues to regard ownership unbundling as the best solution. In its common position, the Council has included a third option, the Independent Transmission Operator (ITO), which allows transmission system operators (TSOs) to remain part of integrated undertakings but provides for detailed rules on autonomy, independence and investment, plus a specific revision clause which can lead to legislative proposals. The Commission considers that these detailed rules permit an acceptable degree of effective unbundling. The Commission can accept an ITO option as part of an overall compromise, but such option must not be weaker than the common position and contain the strongest possible features a political compromise will allow.
• The Commission generally supports amendments from the Parliament that strengthen the role and independence of the national regulators (e.g. approval and enforcement of TSOs’ annual investment plans, enforcement of consumer protection measures, monitoring of restrictive contractual practices, strong rules and intervention to restore competition on supply markets, autonomous financing of regulators). Long-term contracts are acceptable provided they comply with competition rules, but they will not be encouraged as they have a potential foreclosing effect on the market. Whilst price caps may be useful in exceptional cases and under clearly defined conditions, it is preferable not to include a specific legislative provision in the current context of regulated prices that will prevent market opening in many Member States.
• The Commission generally supports European Parliament amendments that increase consumer rights. This concerns in particular the extension of Annex A, the obligation on suppliers to set adequate prepayment bills, the cross-recognition of supply licences between Member States, the appointment of a single point of contact at national level to provide consumers with all the necessary information concerning their rights, and the appointment of an Ombudsman at national level. The proposal to roll out smart meters within a 10-year period can also in principle be supported although its precise scope and drafting would need to be carefully reviewed.
• The European Parliament calls for an obligation on Member States to take measures to address energy poverty in their National Energy Action Plans. These should ensure that the number of people suffering from energy poverty decreases, that pensioners and disabled people cannot be disconnected in winter, and that energy poverty has to be defined at national level, in line with an EC definition based on the capacity to heat houses to World Health Organisation standards. The Commission did not propose to change the current legal framework, which already includes an obligation on Member States to protect vulnerable customers.
• Parliament's amendments that underpin the access regime to storage in Article 19 can be supported, but not the deletion of legal and functional unbundling. Parliament's proposal to allow negotiated TPA for LNG cannot be accepted in its current form.
• Parliament wants to allow Member States to grant derogations to third-party access rules for industrial sites. The Commission supports in principle the derogation for industrial sites, which would also cover airports and railways. The proposed EP amendment goes too far, however, in exempting industrial sites from almost all obligations applying to TSOs and DSOs. An acceptable solution could be a derogation limited to the most burdensome administrative obligations, i.e. ex ante tariff approval by regulators.

The Commission takes the view that the common position maintains the key points of the Commission's proposal. The Commission finds that, on substantive issues, the common position generally strikes a good balance and makes a viable compromise, which will enable the internal gas and electricity market to operate smoothly. The Commission considers, however, that a number of amendments adopted by the European Parliament on first reading should be only be incorporated on second reading.

Third Legislative Package for an Internal EU Gas and Electricity Market

The third package of legislative measures concerning the internal energy market was submitted by the Commission on September, 19th 2007 at the behest of the 2007 spring European Council.

The main objective of the package is to put in place the regulatory framework needed to make market opening fully effective and create a single EU gas and electricity market in the interest of the citizens and of the industry of the European Union. This will help to keep prices as low as possible and increase standards of service and security of supply.