Liberalization of Electricity Sector and Competition Law

Extract

[...] In fact, the concept of liberalization of electricity was introduced mainly by European directives that imposed a progressive opening of the markets. Three directives known as the 'energy package', composed of Directive 96/92/CE followed by those of and 20094, have set the basis for this liberalization by asking member states to allow competition in a sector previously dominated by public monopolies. The European directives establish the principle of dissociation of electricity production, transport and distribution activities, a separation necessary to avoid abuses of dominant position of historical operators. [...]

[...] Furthermore, with liberalization, many suppliers offer varied offers that can lead to abusive commercial practices and market distortion risks. Competition law remains a crucial element to regulate the practices of electricity suppliers and prevent large players from abusing their position. The CRE, in France, ensures that consumers have transparent information and fair tariff options, a position supported by the CJEU's case law on consumer protection It also regulates contracts and tariff conditions to prevent deceptive practices. These rules ensure a balance between consumer protection and fair competition. [...]

[...] However, the law also imposes strict rules for the separation of activities (production, transport, distribution) to avoid conflicts of interest, thus ensuring regulated competition. These rules are set out in European directives and transposed into the Energy Code, which preserves a regulated competitive framework (Directive 2009/72/CE, art. art. L 311-5 and following of the Energy Code). For example, at the production level, a permit is required to operate any installation, issued based on strict criteria defined in the Energy Code (articles L311-5 to L311-10). [...]

[...] In addition, administrative authorization ensures the selection of reliable actors in the electricity trade. This limits the risks of speculation and non-transparent practices. By ensuring compliance with this authorization, the State protects consumers from the potential effects of market practices that could lead to price fluctuations or artificial shortages, thus compromising access to the service. In addition to the security of supply, liberalization must ensure that access to electricity is preserved for all citizens, constituting the 'universal service'. The law of competition has therefore been adapted to meet the requirements of this fundamental principle. [...]

[...] This regulation ensures adequate investments for the maintenance and development of the networks. The exclusive nature of each area aims to avoid network duplication and ensures economic efficiency compatible with public service objectives. The functioning of these monopolistic infrastructures also raises the question of interconnection with foreign networks. The establishment of cross-border interconnections is a challenge, as it requires coordination between different regulatory and technical frameworks. Although these interconnections can strengthen competition by facilitating international exchanges, they require massive investments and remain dependent on the political will of the Member States of the European Union. [...]