EU News - Sectoral inquiry into the energy sector

The Commission has announced an investigation into competition in the energy sector. The inquiry will particularly focus on the gas sector and the electricity market. The results of the probe may lead to investigations against individual companies.

The Commission has announced an investigation into competition in the energy sector. The inquiry will particularly focus on the gas sector and the electricity market. The results of the probe may lead to investigations against individual companies.

For the electricity sector, the Commission will collect information on and investigate the following:

- how company conduct, the organisation of the trading system and transparency of wholesale markets influences the price formation mechanisms in the wholesale market and, consequently, prices paid by final consumers;

- electricity generation and supply, notably information on merit curves, prices, market transparency and other factors determining generators' dispatching and bidding strategies.  Information gathered on costs will also be analysed with a view to identifying implications on EU state aid policy in the sector;

- barriers to entry, notably into wholesale or retail markets, especially the impact of long-term agreements, and their effect on electricity supply and customer acquisition, barriers to building and exploiting optimally new generation capacity as well as barriers resulting from balancing arrangements;

- legal and operational regimes for inter-connectors, including particularly their impact on access, risks and costs for electricity importers, and on capacity reservations;

- relations between network operators and their affiliates and the effects of their interactions on the markets.

The inquiry into the gas sector will focus on:

- the terms of long-term import contracts and swap agreements, particularly their interactions with network operations and hub liquidity, operational practices in these relationships, transparency of wholesale markets, and the market impact of these factors;

- legal and operational regimes for networks, with particular focus on cross-border transit, including in particular the extent of available capacity, transparency, and the market impact of these factors;

- legal and operational regimes for balancing and storage and their market impact, including justification for the delineation of balancing zones, transparency, and market requirements for flexibility products;

- the existence of long-term downstream contracts, and other contractual mechanisms or incumbent conduct that may increase switching costs or deter market entry;

- relations between network operators and their affiliates and the effects of their interactions on the markets.

Where necessary the Commission can require companies or trade associations to supply information, documents or statements.  As a first step, detailed questionnaires will be sent to gas producers, electricity generators, gas importers, electricity and gas wholesalers, transmission system operators and customers, gas storage system operators, gas and electricity retailers and industrial customers.  The forms will have to be returned after the summer.  The Commission will then present the preliminary findings of the investigation and give stakeholders an opportunity to submit comments.

If the inquiry confirms the existence of anticompetitive agreements or practices or abuses of a dominant position, the Commission can be expected to initiate focused investigations against individual companies.  This is what happened in earlier sectoral inquiries, such as the inquiry into excessive mobile phone roaming fees led to investigations against Vodafone, Deutsche Telekom and O2.