IME Directive changes - a Single Market at last?

On Monday 25 November 2002, the EU Council reached agreement on the proposed amendments to the Directive concerning common rules for the internal market in electricity (also known as the IME Directive). The text must now be agreed by the European Parliament.

The most significant amendments proposed are as follows:

• Freedom of choice of supplier for all European non household consumers by July 2004 and all customers by no later than July 2007
• Legal separation of transmission activities from those of generation and supply by July 2004
• Legal separation of distribution activities from those of generation and supply by July 2007.

Legal separation of transmission and distribution into separate corporate entities from those carrying out generation and supply would not prohibit any of these entities being part of the same group of companies. Interesting operational issues are raised, particularly at the distribution level.

To meet unbundling concerns voiced by France and Germany, who were concerned at the possible bureaucratic complexity, the EU Council has agreed that the European Commission should submit a report to the EU Council and the European Parliament in 2006, giving an account of the experience acquired in implementing the Directive as well as the independence of network operators in integrated companies. Alternative measures may then be considered on unbundling.

In general, the agreement, subject to European Parliament approval, of the amending Directive is an important step in the progress of creating an integrated electricity market, and will give rise to a number of issues in Member States. It has also achieved a timeline which is more ambitious than may have been thought possible given the recently expressed views of the French and Germans, and the achievement is therefore even greater than it at first seems.

Similar amendments are proposed to the equivalent Gas Directive.

Further details of these proposed amendments will be posted on Law-Now as they develop.

For further information on this topic, please contact Robert Lane at [email protected] or on +44 (0)20 7367 2021.