The Single Energy Market: Europe takes a third step forward, we take another step back


Policy Memo No. 20 March, 2011

Author: Ana Otilia Nuțu

March 3, 2011 marked the expiration of the one and half year term within which EU members states were supposed to transpose into national legislation the directives of the EU Third Energy Package for the Single Market in natural gas and electricity. The goal of the Package is to accelerate the construction of a competitive energy market, first at a regional level, then at the level of the entire Union, even as many member states have difficulties with or even openly oppose the liberalization of their national energy markets. Ever true to form, Romania, rather than moving forward, is rushing backward, while its laws today are somewhat worse than they were yesterday.

The liberalization begun at the end of the ’90s met with steady resistance from member states dominated by national monopolies. The state of energy market transformation varies greatly from country to country, which made necessary this third package of directives, which will push forward the reform of the electricity market and, even more so, the natural gas market.

This study explains clearly the main lines of action sought by the legislative package, such as increasing the independence of transport operators, increasing nondiscriminatory access by consumers and electric and natural gas retailers, increasing the independence of regulators, and adequately defining what constitutes a vulnerable consumer in order to avoid social distortions in the energy markets.

Within all of these categories, not only has Romania not made progresses, but it has even regressed to its pre-EU accession performance: privatizations have been abandoned in favor of creating integrated electricity winners and the continuation of price liberalization has been excluded out of social protection considerations, while the well-connected “clever kids” of various industries benefit from natural gas and electricity at below market prices.

The report can be accessed here. A summary of the report is here

This report has been published as part of “Romania Active in European Debates II”, a project coordinated by the Romanian Center for European Policies and financed by the Soros Foundation as part of its Foreign Affairs Initiative. The content of this report do not necessarily represent the official position of the Soros Foundation.