EU-Commission - Ownership unbundling TSO's
The commission's practice in assessing the presence of a conflic of interest including in case of financial investors
The Electricity Directive and the Gas Directive of the Third energy package have introduced
a structural separation between transmission system operator activities on the one hand, and
generation, production and supply activities on the other hand. The aim of these provisions on
"unbundling" of networks is to avoid conflicts of interest and to make sure that transmission
system operators ("TSOs") take their decisions independently, ensuring transparency and non-
discrimination towards all network users. This is not only relevant for the day-to-day
operational decisions of TSOs, but also for their strategic investment decisions.
The present document highlights the Commission's practice in dealing with certain aspects of
the rules on unbundling of TSOs, as laid down in the Electricity and Gas Directives. The
focus is on the application of the rules on ownership unbundling. In particular, the issue is
addressed how the rules on ownership unbundling as set out in Article 9 of the Directives are
to be appliedin situations where a shareholder in a TSO also has participations in generation,
production and/or supply activities, while it can be demonstrated that in the specific
circumstances of the case there is no incentive for this shareholder to influence the decision
making in the TSO with the intention to favour his generation, production and/or supply
activities to the detriment of other network users.
According to the Commission's experience in the application of the ownership unbundling
rules this issue may arise, for instance, in case a holding company of a TSO at the same time
has participations in certain generation, production and/or supply activities. Also different
types of investors could be confronted with this question, for example financial investors such
as pension funds, insurance companies and infrastructure funds with participations in the
energy sector. Such financial investors often have diversified portfolios including
participations in energy transmission, generation, production and/or supply activities, located
in different places.
The aim of the present paper is hence to illustrate how the rules on ownership unbundling of
the Electricity and Gas Directives have been interpreted and applied by the Commission in the
context of the certification procedure of TSOs. However, it is noted that the present document
is not legally binding. Giving binding interpretation of European Union law is ultimately the
role of the European Court of Justice.