3.3 Independence of regulatory authorities
In principle, a regulatory authority may be part of the ordinary public administration, such as a Ministry of Energy. This has, in practice, been the case for the Norwegian upstream oil and gas resources, where the Ministry of Petroleum and Energy acts as regulator. However, given the fundamental need for a transparent, non-discriminatory and predictable regulatory scheme, international development has gone in the direction of requiring the establishment of independent energy regulatory authorities. This development is clearly stated in EU energy law.
The overall aim of the Electricity and Gas Directives is to promote the development of secure, sustainable and competitive internal electricity and gas markets, where free movement between Member States is ensured. In order to achieve this goal, both Directives establish common rules for transmission and distribution systems. Requirements relating to the organisation and conduct of national regulatory authorities are among the means introduced by the Directives in this respect.
The second Gas and Electricity Directives required the establishment of one or more regulatory authorities that were wholly independent of market interests.(1) See the Gas Directive 2003/55/EC, Article 25 and the Electricity Directive 2003/54/EC, Article 23. These regulatory authorities were to be responsible for at least a minimum set of tasks, including tariff regulation. The third generation of Gas and Electricity Directives then introduced a much more stringent approach, where the Member State must designate a single regulatory authority, which shall be legally distinct and functionally independent from both public and private entities. The regulatory authority shall, inter alia, have budgetary autonomy and cannot be instructed by other public bodies.(2) See the Gas Directive 2009/73/EC, Article 39 and the Electricity Directive 2009/72/EC, Article.
The EU’s efforts to strengthen the independence requirements for national regulatory authorities must be seen in light of the fundamental aims of the regulatory institutions. The more restrictive approach to independence included in Electricity Directive 2009/72/EC and Gas Directive 2009/73/EC was essentially introduced for two reasons: first, to avoid the regulatory authorities acting in favour of publicly owned utilities to the detriment of other market participants, and, second, to avoid market distortion through short-term political decision-making.(3) See Henrik Bjørnebye, Investing in EU energy security (Kluwer Law International, 2010), p. 178 with further references. This underlines the importance of ensuring non-discrimination, transparency and predictability in the decision-making of energy regulatory authorities.