The paper analyses the process of creating the single electricity market in the European Union. It examines supranational efforts for creation and integration of member states’ competitive electricity markets and identifies the key challenges that supranational authorities, member states and EU power supply companies face within the process of the single European electricity market development.

The process of energy market liberalization in the European Union, which began in the mid 1990-s, was accompanied by amalgamation of multiple national markets into a single European market. The problems, which the EU energy market faces at the current stage include uncertainty and regulatory risks, caused by increased competition between the energy companies; the need to modernize the national networked infrastructure, necessitated by the expansion of the cross-border power transmission lines; markets fragmentation, as a result of structural differences in the national electricity markets; and the need of the energy industry restructuring.

The author notes the recent initiatives by the European Commission aimed at resolving the current issues. Among them: implementing new legislative measures to finish the processes of liberalization and merging the national energy markets; strengthening cooperation between the national regulators and transmission operators through, inter alia, establishing the Agency for the Cooperation of Energy Regulators and the European Network of Transmission System Operators for Electricity; and adopting the target of creating the common European energy market within the framework of the Treaty of Lisbon.c