engleski

Current progress in creating EU internal electricity market : where is EU now?

The creation of the EU internal electricity market began in the early 1990’s. At that time, the EU member states started to organize their electricity sectors in accordance with concurrent political and economical developments since common rules for electricity market were not adopted until 1996 and the first Electricity Directive. This, in turn, formally marked the creation of necessary preconditions for the liberalization of the electricity sector within the EU. From the early phases of the European integration process, electricity has been an important issue and the creation of the internal electricity market still represents a significant objective. Looking back in time, the development of the EU electricity market can be divided into three periods. The first one refers to the introduction of electrical systems on densely populated areas. After that came the expansion and the completion of the electrification of rural areas. The last and still ongoing developmental stage is related to the European electricity sector integration on the supranational level which was initiated with the Single European Act and the introduction of competition on the European market. The latter is progressing slowly and unevenly across the EU which makes it necessary to analyse all the obstacles to the EU electricity market liberalization process, especially when it comes to economic effects that can be expected upon the final creation of the European energy market. Also, Croatia is no exception. Main obstacles to the EU electricity market liberalization process are the ones referring to limited existing and planned generation and transportation infrastructure, deliberate state interference motivated by a desire to support its “national champions”, varying electricity price levels among member states for both residential and industrial consumers, price regulation and lack of power of regulatory authorities. There is also a problem of high market concentration and low switching rates which leaves the consumers to choose between only few electricity suppliers. In other words, the general reason lies in the absence of real competition which can be evidenced by the fact that due to improper implementation of the required legislation (which is essential in order to make market opening fully effective) the European Commission initiated, up to now, over 60 infringement procedures. In order to finally achieve a competitive electricity market, new Directive on electricity (Directive 2009/72/EC) together with the Regulation (EC) No 713/2009 represent a possible final step on a way of improving and integrating the electricity market in the EU encompassed with the estimated effects on EU GDP, employment and inflation which are expected upon the final and full opening of electricity (and gas) markets. Restructuring of the electricity sector, in accordance with the overall (economic) interests is also an imperative for Croatia.

European Union, internal electricity market, liberalization effects, Directive 2009/72/EC, Regulation EC/713/2009, Croatia

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