Germany and Hungary have been referred to the EU Court of Justice over their failure to ensure correct implementation of the third energy package.

The package consists of the gas and electricity directive and key provisions for the proper functioning of EU energy markets to the benefit of consumers.

The European Commission said Germany “has not ensured full respect of rules” concerning the powers and independence of the national regulatory authority.

In particular, the regulator does not get full discretion in the setting of network tariffs and other terms and conditions for access to networks and balancing services.

It adds Germany has incorrectly transposed into national law several requirements concerning the independent transmission operator (ITO) unbundling model.

A formal notice was sent in February 2015, followed by a “reasoned opinion” in April 2016.

The Third Energy Package requires tariffs applied by network operators for the use of electricity and gas networks are regulator to prevent anti-competitive behaviours.

The Commission said Hungarian law excludes certain types of costs from the calculation of network energy tariffs, in violation of the principle of cost-recovery of tariffs provided for in the electricity and gas regulations.

In addition, it found Hungary adopted amendments to its energy legislation “which jeopardise the right of market operators to a full judicial review of the national regulator’s decisions on network tariffs”.

Hungary was given a formal notice on these issues in February 2015 and two “reasoned opinions” in December 2016 and April 2017.

Since compliance with EU law is not yet in place, the Commission has decided to refer both nations to the court.