Utilities Law Review - Volume 19 - Issue 5

The Internal Energy Market, the Unbundling of Electricity Transmission and Denmark's Road From Full Private Ownership to Full State Ownership
Bent Ole Gram Mortensen
Professor of Law, Department of Law, University of Southern Denmark
Thomas Andersen Thrane
Legal Advisor at E.ON in Denmark

Twenty years ago, the Commission presented its first package of sector-regulatory proposals for an internal market of electricity and gas. In 2009, the Council and the European Parliament adopted a third package of legal documents to develop Europe's energy market and infrastructure. A key feature of the package is the unbundling of electricity infrastructure from owners with commercial interests in the production of electricity and/or trading. Since 2009, the package has been implemented in the law and regulation of all Member States, with national variations. In 2012, 41 owners of the Danish regional high-voltage electricity transmission grid agreed to sell the grid to the state-owned national transmission system operator. The £600 million transaction marks the greatest degree of state involvement with the electricity sector in Denmark to date.

Unbundling and Certification: The Commission in Control
Leigh Hancher
Professor European Law, Tilburg University and Of Counsel, Allen & Overy

Structural unbundling of transmission system operators (TSOs) is an important principle introduced in the 'Third Package' of legislation on the internal electricity and gas market in the European Union. TSOs must be certified by national energy regulators to ensure compliance with the relevant unbundling provisions of the electricity and gas directives. The latter decisions must in turn be endorsed by the European Commission. The certification process, as reviewed in this article, has proved to be complex and time-consuming. Four different models or options for unbundling are available under the Directives, each with its own requirements. The overarching aim is to secure the independence of the TSO, and to ensure that it will act in a non-discriminatory manner towards all parties seeking access to its network. Furthermore, TSOs are required to have the necessary resources at their disposal to take independent decisions on new infrastructural investment. An examination of the Commission's opinions on national certification decisions reveals that it takes a particularly strict approach to ensuring that the detailed requirements of the Directives are met, but that at the same time considerable areas of uncertainty remain.

The certification process raises important legal issues as to the scope of national regulatory as well as Commission powers to impose conditions and restrictions on the structure, management and operation of national TSOs, especially if the latter are state-owned. It further illustrates some of the problems would-be entrants to the European energy market may face when seeking to acquire transmission or production or supply assets.