The term "Third Package" refers to a package of EU legislation on European electricity and gas markets that entered into force on the 3rd September 2009. The purpose of the Third Package is to further liberalise European energy markets.
The core provisions of the Third Package focus on:
- Ensuring that Transmission System Operators (TSOs) are effectively unbundled, or separated, from generation, production and supply interests. The rationale being that without this effective separation there is an inherent risk of discrimination, not only in the operation of the network but also in the incentives for vertically integrated undertakings to invest adequately in their networks.
Ofgem is responsible for the certifying TSOs as being in compliance with the unbundling requirements set out in the Third Package. Please follow this link for a timeline of the certification process.
- Designating a single, National Regulatory Authority (NRA) that is responsible for regulating the energy market within the Member State. Crucially NRAs must have regulatory independence in order to act independently of market interest and to ensure its power is exercised impartially and transparently.
Ofgem is the NRA for GB. The provisions of the Third Package have added to Ofgem's principal objective of protecting consumer interests, such that it now also includes the promotion of an internal energy market and the removal of restrictions to trade between Member States.
- Ensuring consumers are protected - the Third Package stipulates that it should take a consumer no more than 3 weeks to switch its electricity or gas provider. It also sets out new obligations on suppliers relating to customer bills and the contents of supply contracts, as well as the time for which supply data must be retained.
- Providing for the co-operation of NRA’s via a new Agency for Cooperation of Energy Regulators (ACER). The Agency is to oversee and co-ordinate cross-border co-operation for gas and electricity transmission between Member States. Follow link for further information on ACERs responsibilities.
- Formalising co-operation between TSOs by establishing two European Networks for Transmission System Operators – one for electricity and one for gas (ENTSO-E and ENTSO-G respectively).
- Creating a regulatory framework to support a single, European Energy Market by developing Network Codes and Framework guidelines. The former being a legally binding set of common technical and commercial rules and obligations that govern access to and use of the European energy networks. Under the Third Package, network codes are developed by the European Network for Transmission System Operators (ENTSOs).
Framework guidelines are non-legally binding principles and objectives with which the European Network codes must comply. Ofgem, together with other European regulators, is involved in the development of these guidelines.
Please follow this link for a timeline of the Network Code development process.
- Encouraging long-term investment by requiring ENTSOs to publish non-binding Ten-year Network Development Plans (TYNDPs) every two years. National TSOs will also be required to individually publish national ten-year network development plans.