UK may be fined over failure to honour single market agreement

The Government has been threatened by Brussels with daily fines of a quarter of a million pounds for failing to comply with EU single market rules - the day after David Cameron claimed that Britain was “at the heart” of the policy.

In his landmark speech on the country's European future the Prime Minister insisted the single market was the core of membership "and must remain so".

He went on: "But when the Single Market remains incomplete in services, energy and digital - the very sectors that are the engines of a modern economy - it is only half the success it could be."

He also said: "I want completing the single market to be our driving ambition".

Today the European Commission announced legal action against the Government for failing to honour an EU leaders' agreement in February 2011 to "complete" the internal energy market by transposing EU electricity and gas directives into UK law by March 3 2011.

Despite two warnings, said the Commission today, Britain has still failed to comply with two measures designed to open up energy competition for the benefit of the European energy sector and its consumers.

The Commission said it was now asking the European Court of Justice in Luxembourg to impose daily fines of 148.177 euro (£125,000) for each of the two directives which have only been partially transposed into domestic law.

EU energy Commissioner Gunther Oettinger said: "The EU needs an internal energy market to tackle Europe's energy and climate challenges and to ensure affordable and secure energy supplies to households and businesses.

"Delays in implementation of the EU internal energy markets rules have negative effects on all players and are therefore not acceptable."

A Commission official said the UK Government had been given plenty of leeway to implement the rules beyond the March 2011 deadline, and failed to justify satisfactorily its failure to do so. While the rules have been transposed into national law in England, they have not been applied in Northern Ireland, it was claimed.

The UK finds itself in the dock alongside Bulgaria and Estonia, although they face relatively small fines of £14,000 a day and £7,500 a day respectively.

A Commission statement said the proposed fines for the UK "take into account the duration and the gravity of the infringement."

Justifying its action, a Commission statement said: "In February 2-11, the EU leaders declared a need to complete the internal energy market by 2014.

"To achieve this, timely and complete transposition of WEU legislation on the single market in gas and electricity into national law is crucial.

"The internal energy market package includes key provisions for a proper functioning of the energy markets, including new rules on unbundling of networks (breaking up monopolies), rules strengthening the independence and powers of national regulators and rules on the improvement of the functioning of retail markets to the benefit of consumers".

But the Government still has time to avoid legal proceedings, officials said - by fully implementing the rules before the case comes to court.

If the issue does reach the Luxembourg judges, it will be up to the court to decide the daily financial penalty, although it generally follows the recommendation of the Commission.

PA