How to Write Law Essays & Exams

Here is an example of a first-class law essay that was written by a post-graduate student reading LLM at a top UK university.

Is there a European Union model of energy regulation?

The development of a single European energy market began in 1996 with the Directive 96/92/EC1 which set out the common rules or an EU model for the creation of an internal market for electricity. In 2003, Directive 2003/54/EC2 was adopted in order to deal with shortcoming and to improve the functioning of the market. In 2009, Directive 2009/72/EC3 was adopted to further open and integrate the EU energy market. Directive 2009/72/EC3 is commonly known as the Electricity Directive and is part of the EU’s “third energy package”. The objective underlying the package was to create harmonised markets, independent regulators, and more separation between production, transmission, and distribution of electricity and gas. The Third energy Package comprises three Regulations and two Directives. This is important because the two Directives introduced what is known as unbundling in the EU. Under Article 9 of the Third Electricity Directive (2009/72) and Third Gas Directive (2009/73), all Transmission Systems and its operators were required to unbundle by 3rd March 2012 at the latest. Unbundling means separating operation and control of gas pipelines and electricity networks from producing gas or generating electricity. The 3rd Energy Package unbundling regime offered three unbundling options for Member States depending on their circumstances. These were the full ownership unbundling model, the Independent System Operator (ISO) model and the Independent Transmission Operator (ITO) model.

The overarching objective of the “third energy package” is to make the energy market effective and to create a single EU gas and electricity market. The aim of this single energy market is to achieve reductions in energy prices to their minimum and bolster standards of service and security of supply.

Electricity and Gas supply are part of EU's internal market, but as electricity and gas are quite different commodities, they have their own, regulation, describing how electricity and gas providers should act. To put it simply, the consumers should be in the position to choose their own energy supplier, whilst remaining connected via the same gas and electricity lines to the network. Therefore, different suppliers must have access to send electricity and gas to the consumers on equal terms via the same network. With the regulation it is now much easier than before to buy gas and electricity from different suppliers, the fully integrated markets were not in place by the end of 2014. The market regulation is both good and bad for renewable energy, with easier grid access is a benefit while the limits to support renewable energy and the increased network costs are problems.

The EU gas and electricity markets are regulated by two EU-directives that tells the countries how to make the national legislation for their gas and electricity markets and two EU regulations on access to electricity cross-border exchanges and gas transmission networks. They are together called the “Third Energy Package”. Even though the directives are from 2009, they were not fully in force as intended by the end of 2014.

The main elements of the regulations include 1) all consumers shall have a choice to buy electricity and gas the different suppliers they choose, via the existing networks as well as via direct lines; 2) Energy companies shall separate production/supply activities from network (transmission & distribution) activities, either with full unbundling or with transmission activities carried out by an independent operator of the transmission system; 3) The transmission system operators shall be responsible for the long-term ability of the electricity and gas systems to meet reasonable demands for the transmission with due regard to the environment; All countries must have independent electricity regulators for electricity and gas. They shall ensure competitive, secure and environmentally sustainable internal markets in electricity and gas and shall not take instructions from the government. Among others, they shall help to achieve the development of systems that are in line with general energy policy objectives, energy efficiency as well as the integration of large and small-scale production of electricity from renewable energy sources and distributed generation. Further, the regulators shall facilitate access to the network for new generation capacity and remove barriers of electricity from renewable energy sources; 4) More harmonisation of technical standards, access to networks and others; 5) Increased cooperation among transmission operators with the creation of organisations (called “networks” in the directive text) for electricity and gas transmission operators; 6) A European “Agency for the Cooperation of Energy Regulators” was established with competences to oversee many parts of the legislation; 7) EU countries can impose on electricity (and gas) companies public service obligations relating to security of supply, quality and price of supplies and environmental protection, including energy efficiency, energy from renewable sources and climate protection. In this way countries can use a levy on electricity to support activities to promote energy efficiency and renewable energy; 8) Consumer protection for vulnerable consumers. Each country shall ensure that there are adequate safeguards to protect vulnerable customers, including the non-disconnection of electricity in “critical times”. It shall also provide benefits in social security systems to ensure the necessary electricity and gas supply to vulnerable customers, or provide for support for energy efficiency improvements, to address energy poverty where identified, including in the broader context of poverty; 9) Countries shall ensure the implementation of intelligent electricity and gas metering systems for consumers, but the implementation is subject to an assessment of which forms of intelligent metering is economically reasonable and cost-effective and which timeframe is feasible for their distribution; 10) Countries shall ensure that network charges shall be non-discriminatory and not set according to (historic) contract paths. In conclusion, as can be seen from the series of regulations in the EU and their content, there is an evolving single EU model of energy regulation. However, in order for there to be a single EU energy market, it is important that the directives and regulations are transposed into national law of the member states seamlessly and without much divergence from the key principles and aims of these directives, which is proving to be a real challenge.

However, regulation in the EU as a whole still remains fragmented with a patchwork of inefficient “energy islands” mostly in Baltic Eastern European states such as Latvia that are not connected to Western Europe and almost wholly dependent on Russian gas. It was only in 2007 that the Lisbon Treaty introduced measures to move towards a fully integrated EU energy market. Under Article 122, the Treaty acknowledged the EU to act in competence to ensure Member States stand in solidarity if “severe difficulties arise in the supply of certain products, most notably energy” The Treaty also dealt with the issue of energy transit under Article 170 that called for the development of much needed energy infrastructure between states to guarantee the security of supply.

Despite this, as of 2015 there have been calls by the European Commission to the European Parliament and Council to formally establish a EU Energy Union. This is due to the fact that energy regulation in the EU remains scattered with law on a regional level but with 28 different national regulatory frameworks. A fully integrated resilient Energy Union would ensure a secure supply and growth of sustainable and affordable energy and while maintaining a healthy competition energy market. The argument for an internal energy market is a simple enough one: greater integration of cross-border interconnections, the coupling of cross-border exchanges, as well as price liberalisation, will ensure improved security of supply and a smoothing of price differentials across the continent, leading to a reduction in prices. In reality, this objective is being undermined by the level of capital expenditure required, against the backdrop of an anaemic economic recovery and the necessary coordination of transmission operators across different states. In addition, market reality dictates that the price of energy is dependent upon a range of supply and demand conditions. This includes the geopolitical situation, import diversification, network costs, environmental protection costs, severe weather conditions, and levels of excise and taxation. In parts of Eastern Europe, meanwhile, Russia is able to maintain a stranglehold on the market and set prices.

Bibliography

A EURELECTRIC response paper, ‘ACER consultation on “European Energy Regulation: A bridge to 2025”’, May 2014. Accessed at

Yafimava Katja, ‘The EU Third Package for Gas and the Gas Target Model: major contentious issues outside and inside the EU’, Oxford Institute for Energy Studies, April 2013

Vasconcelos J., ‘Towards the Internal Energy Market: how to bridge a regulatory gap and build a regulatory framework’, European Review of Energy Markets, Volume 1, Issue 1,

Respectively directives 2003/54/EC and 2003/55/EC of the European Parliament and of the Council, both of 26 June 2003.

“Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity”, published in the O.J. No. L 27 of 30 January 1997.

“Directive 98/30/EC of the European Parliament and of the Council of 22 June 1998 concerning common rules for the internal market in natural gas”, published in the O. J. No. L 204 of 21 July 1998.

Regulation (EC) No. 1228/2003 of 26 June 2003, published in the O.J. No. L 176 of 15 July 2003.

Official Journal No. L 296 of 14 November 2003, pp. 34-35

Commission Work Programme for 2005, Communication from the President in agreement with Vice-President Walstrom, COM (2005) final, Brussels, 26 January.2005.

Commission decision of 11 November 2003 establishing the European Regulators Group for Electricity and Gas, Article 1, No. 2.

Philip Lowe, Applying EU Competition Law to the new liberalised energy markets, Brussels, 13 May 2003,