Case no c-17/03, VEMW, APX en Eneco vs DTE (Notes from Leonardo Meeus's publications of EU electricity markets)

VEMW- the organization representing the interests of large energy consumers in the Netherlands

Amsterdam Power Exchange (APX)

ENECO- a large Dutch utility

DTE- the Dutch regulator

SEP- the former national vertically integrated utility, the rights of which were assumed by NEA with effect from 1 January 2001

ECJ- European Court of Justice

The above parties challenged the decision of DTE, which had reserved a significant proportion of the  rights to trade across the border for SEP. SEP used these so-called transmission rights to execute its existing long-term contracts with utilities across the border. In 2000, 1500 MW of the  available 3200 MW of the rights were reserved for SEP contracts, which would reduce to 900 MW in 2001 and to 750 MW from 2005 to 2009. 

The ECJ decided that allowing such priority access undermined the potential access to the market by new players and protected  the position of the incumbent. Although the First Directive allowed the Member States, in particular in Article 24, the possibility of applying for a derogation from Articles 7(5) and 16 ("transitional exemption") with regard to operating commitments or guarantees granted before the Directive entered into force, Netherlands did not avail itself of that possibility.

Thus the Dutch regulator’s decision was found to be incompatible with the First Directive and annulled. It was also noted that along with the technical rules, any other rule for discriminating the access will also seen to be contradicting the directives. Other national regulatory authorities (NRAs) used the ECJ decision to take steps to remove transmission right privileges. 

Thus, the following points of judgment- 

- Articles 7(5) and 16 of Directive 96/92/EC and concerning common rules for the internal market in electricity are not limited to covering technical rules but must be construed as applying to all  discrimination.

- The above articles preclude national measures that grant an undertaking preferential capacity for  the cross-border transmission of electricity, whether those measures derive from the system operator,  the controller of system management or the legislature, in the case where such measures have not  been authorised within the framework of the procedure set out in Article 24 of Directive 96/92.

The judgment seems relevant in the context of the markets evolving in India and thus the notes.

Ref: The Evolution of Electricity Markets in Europe, 2020, Leonardo Meeus, EUI Working Papers RSCAS 2011/09 Robert Schuman Centre for Advanced Studies, Loyola de Palacio Programme on Energy Policy.