Energy is a good subject to the rules of the internal market. Energy is also much more when it comes to the wideness of the sectors it impacts, the strongness of this economic activity, and the political dimension of it. My intention here is not to encompass all these dimensions, but to try to understand which changes may bring the "re-launch of the single market" in the energy sector, as it is proposed by president Barroso in his Political Guidelines for the next Commission. Defining the internal energy market is to that respect a narrower exercise than defining European energy policy.
The "EU 2020" vision defended in the Guidelines is enshrined in the values of the internal market and contains two dimensions:
"Internally, it is based on a staunch defence of the internal market, and the competition and state aid rules, which provide a level playing field guaranteeing access and opportunity for all, irrespective of size or might - namely consumers and SMEs. Externally, it is based on the rejection of all forms of economic protectionism, whilst defending the European interest firmly and without being naïve." (p.3) (my underlying)
Applied to the energy sector, a reading of president Barroso's vision allows the following interpretation:
- The objective is not to reinvent the European Union, but to "bring the different strategies and instruments (developed in recent years) together, adapting them where necessary" (p.3). The policy line will be "smart regulation for open markets", in order to ensure "transparency, fair play and ethical behaviour." This will be supported by the use of existing instruments, i.e.: EC treaty provisions related to Community action, both those in force and those provided by the forthcoming Lisbon Treaty; competition rules, and in particular actions against market abuses; policy tools, such as market monitoring exercises, done on a more regular basis (e.g., Consumer Markets Scoreboard - the 3rd one relates to Electricity and gas (2009)). The challenge of smart regulation will be, on the one hand, to "focus on the essentials" (p.29), and, on the other hand, keep an eye on the details of implementation;
- The Political Guidelines announce a strong focus on the retail sector, for "an active consumer policy" (p. 28);
- The internal market rules must serve "the networks of the future", which requires massive investments. President Barroso is clear about the necessity to build "a new European supergrid for electricity and gas" (p.3). A major challenge will be the combination and necessary adaptation of state aid guidelines and exemption regimes to competition rules, and the application of competition law as the main legal tool to ensure fair, transparent and competitive access to markets.
- Strengthen an internal market able to compete and include itself in international markets. "Europe faces particular risk from the damage the crisis has done to world trade, so Europe must now take the lead in combating protectionism in all its forms" without being naïve (p.30).
To sum up, smart regulation of the internal energy market will need to balance support/exemptions regimes and full competition. It shall be able to act at all levels, from multinationals to customers, while avoiding centralisation and bureaucracy. Although the exercise is not new for the Commission, the innovation relies in the strong commitment expressed in the two objectives of support and competition to be pursued concommitantly. This might well lead to some prioritizations in practice, both in terms of support to investments (e.g. supply infrastructures, local energy efficiency measures) and a strict enforcement of antitrust rules (e.g. removal of long-term supply contracts, independence of energy regulators, retail competition through tariff regulation).
Because "the dream has not been achieved", president Barroso announces the adoption of a
"major package for tomorrow's single market", encompassing both new legislative proposals and actions able to "plug the gaps in today's single market" and to "ensure that the benefits of the internal market get through to the final consumer" (pp.28-29).
To do so, he recently entrusted Mr. Mario Monti (former Commissioner and curently president of the Bocconi University), to elaborate a report detailing options and recommandations for making "the re-launch of the single market" a reality.
The "EU 2020" vision defended in the Guidelines is enshrined in the values of the internal market and contains two dimensions:
"Internally, it is based on a staunch defence of the internal market, and the competition and state aid rules, which provide a level playing field guaranteeing access and opportunity for all, irrespective of size or might - namely consumers and SMEs. Externally, it is based on the rejection of all forms of economic protectionism, whilst defending the European interest firmly and without being naïve." (p.3) (my underlying)
Applied to the energy sector, a reading of president Barroso's vision allows the following interpretation:
- The objective is not to reinvent the European Union, but to "bring the different strategies and instruments (developed in recent years) together, adapting them where necessary" (p.3). The policy line will be "smart regulation for open markets", in order to ensure "transparency, fair play and ethical behaviour." This will be supported by the use of existing instruments, i.e.: EC treaty provisions related to Community action, both those in force and those provided by the forthcoming Lisbon Treaty; competition rules, and in particular actions against market abuses; policy tools, such as market monitoring exercises, done on a more regular basis (e.g., Consumer Markets Scoreboard - the 3rd one relates to Electricity and gas (2009)). The challenge of smart regulation will be, on the one hand, to "focus on the essentials" (p.29), and, on the other hand, keep an eye on the details of implementation;
- The Political Guidelines announce a strong focus on the retail sector, for "an active consumer policy" (p. 28);
- The internal market rules must serve "the networks of the future", which requires massive investments. President Barroso is clear about the necessity to build "a new European supergrid for electricity and gas" (p.3). A major challenge will be the combination and necessary adaptation of state aid guidelines and exemption regimes to competition rules, and the application of competition law as the main legal tool to ensure fair, transparent and competitive access to markets.
- Strengthen an internal market able to compete and include itself in international markets. "Europe faces particular risk from the damage the crisis has done to world trade, so Europe must now take the lead in combating protectionism in all its forms" without being naïve (p.30).
To sum up, smart regulation of the internal energy market will need to balance support/exemptions regimes and full competition. It shall be able to act at all levels, from multinationals to customers, while avoiding centralisation and bureaucracy. Although the exercise is not new for the Commission, the innovation relies in the strong commitment expressed in the two objectives of support and competition to be pursued concommitantly. This might well lead to some prioritizations in practice, both in terms of support to investments (e.g. supply infrastructures, local energy efficiency measures) and a strict enforcement of antitrust rules (e.g. removal of long-term supply contracts, independence of energy regulators, retail competition through tariff regulation).
Because "the dream has not been achieved", president Barroso announces the adoption of a
"major package for tomorrow's single market", encompassing both new legislative proposals and actions able to "plug the gaps in today's single market" and to "ensure that the benefits of the internal market get through to the final consumer" (pp.28-29).
To do so, he recently entrusted Mr. Mario Monti (former Commissioner and curently president of the Bocconi University), to elaborate a report detailing options and recommandations for making "the re-launch of the single market" a reality.
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