By opening up European energy markets to competition - a process which started ten years ago - Europe's citizens and industries have gained many benefits: more choice, more competition to keep prices down, better service and improved security of supply. Since July 2004, small-business costumers in all EU countries have been free to switch their supplier for gas and electricity, in July 2007 all consumers gained the same freedom. They are also entitled to transparent conditions in contracts and be protected from misleading practices and misinformation by suppliers.

Independent national regulatory authorities have been established in each EU country to ensure that suppliers and network companies operate correctly and actually provide the services promised to their customers. Based on yearly reports by the national regulators, the European Commission is monitoring the market closely, identifying obstacles and shortcomings. Since 2003, heads of the national energy regulatory authorities meet in the European Regulators Group for electricity and gas. It acts as an advisory group, assisting the Commission in consolidating the Internal Market for electricity and gas.

As a number of shortcomings still exist in progress towards a truly open gas market, a third legislative package was adopted by the Commission in September 2007. This recommends, among other things, the effective separation of supply and production activities, harmonisation of the powers of national regulators, better cross-border regulation and effective transparency.

The EU is also working to improve the infrastructure required to transport energy as efficiently as possible to where it is needed. EU legislation aims to make the market accessible for all suppliers and eliminate barriers to cross-border trade. Further challenges include the harmonisation of market rules, as well as the creation of an environment for new investments.

On 12 April 2011, the European Commission has adopted the Communication "Smart Grids: from innovation to deployment"