Sufficient Exposure to Competition and Its Implications for Energy Entities in EU Public Procurement

Abstract

Utilities operating in the water, energy, transport and postal services sectors are in principle bound to the EU/EEA rules on public procurement concerning the purchases of goods, works or services, regardless of whether they are public or private. The reasons for this are historical and technical. These entities were and still are under State influence – either because they remain publicly owned or are controlled and/or supervised by it – and because they tend to operate in network industries with “bottlenecks” in which competition is limited.

Subjection to the procurement utilities rules implies that these contracting entities will have to carry out tender procedures when purchasing goods that are intended for the pursuit of their activities. This applies either when they operate on the basis of especial or exclusive rights (if they are private) or when they qualify as a contracting authority.

For energy entities this means whenever an actor that provides or operates energy services such as the production, transport or distribution of gas or heat or electricity, as well as the supply of gas or heat or electricity to such networks, all their purchases will have to comply with the Utilities Directive. ‘Supply’ includes generation/production, wholesale and retail markets. Also, the procurement regime applies to activities relating to the exploitation for the purpose of extracting oil or gas and exploring for or extracting coal or other solid fuels. Thus, generators, distributors, TSOs, and even energy traders could be under the scope of this Directive.

Keywords: procurement, energy, exposure to competition, utilities

JEL Classification: K23, K21, H40, H44, H57