Single interconnectors and congestion management challenges – the legal framework?

This article explores the impact of an important ruling from the ECJ in Baltic Cable AB v Energimarknadsinspektionen on 11 March 2020 in which that court narrowly avoids giving the referring Swedish court a green light to interpret a key provision of the EU internal energy market legislation contra legem. Invoking instead the principle of non-discrimination, the ECJ relies on a classic remedy to recognise that a company owning and operating an electricity interconnector should be entitled to earn a reasonable profit. Although the interconnection of energy networks is an objective enshrined in Article 194(1) TFEU, the realisation of this objective has spawned a dense and highly technical web of regulation. This article explains the Court’s reasoning and its potential legal as well as economic impact in this complex and evolving regulatory space. We explain that while valuable progress has been made on technical harmonisation, classic fundamental principles of EU law, such as the non-discrimination principle, remain pivotal for resolving modern and central issues of electricity market integration.