REBUNDLING OF ENERGY SERVICES LEGAL FRAMEWORKS

1. Introduction

Rebundling of energy services refers to the legal and commercial integration of services that were historically separated during electricity and gas-market liberalisation. Instead of treating generation, supply, energy efficiency, demand response, storage, mobility and digital energy management as isolated activities, rebundling permits them to be offered as an integrated service to consumers.

Examples include a supplier combining electricity supply + rooftop solar + battery storage + electric-vehicle charging + demand response + energy-management software under one contractual relationship. Ofgem has previously recognised energy-services offerings in which energy supply is linked with energy-efficiency goods and services and provided through a single package or bill.

The central legal challenge is to obtain the efficiency benefits of integration without recreating the discrimination, foreclosure and conflicts of interest that unbundling rules were designed to prevent.

2. Legal Distinction Between Unbundling and Rebundling

Unbundling separates network operation from competitive generation and supply activities. Its objective is to ensure independent network access, neutrality and competition.

Rebundling does not necessarily mean abolishing those protections. Modern legal frameworks can permit commercial integration between competitive services while retaining structural or functional separation of regulated monopoly networks.

EU jurisprudence emphasises that effective unbundling is connected with preventing conflicts of interest and ensuring non-discriminatory network access.

Consequently, a company may legally bundle multiple competitive services while remaining subject to rules preventing a network operator from using monopoly infrastructure or privileged information to favour its own competitive business.

3. Aggregation and Integrated Energy Services

Rebundling is particularly important for aggregators. An aggregator can combine flexible demand, distributed generation, batteries and electric vehicles and sell the resulting service into wholesale, balancing or local flexibility markets.

Ofgem has supported direct access by independent aggregators, while identifying market access, measurement, cost-reflective pricing, balancing responsibility and delivery risk as important regulatory issues.

Thus, rebundling law must determine who is legally responsible when several services are combined: the supplier, aggregator, asset owner, network operator or another intermediary.

4. Network Neutrality and Competition

The greatest legal risk arises when a regulated network business also participates in competitive rebundled services. A network operator could potentially use its control over connections, network information or infrastructure to disadvantage independent competitors.

Ofgem has expressly identified this concern in relation to storage and flexibility. It concluded that monopoly network operators participating directly in competitive flexibility activities could distort competition and potentially restrict third-party access.

Accordingly, rebundling frameworks should incorporate non-discrimination, accounting separation, information barriers, transparent procurement and independent decision-making.

5. Case Law

Citiworks AG v Flughafen Leipzig/Halle GmbH, Case C-439/06, EU:C:2008:298

Facts: Citiworks challenged arrangements concerning electricity-network access at Leipzig/Halle Airport.

Legal Issue: Whether electricity users could be excluded from ordinary third-party network-access requirements.

Judgment: The Court of Justice interpreted EU electricity-market rules as requiring effective third-party access to relevant electricity networks.

Legal Principle/Ratio: Open and non-discriminatory network access is fundamental to electricity-market liberalisation.

Significance: Rebunkled energy-service providers must not be disadvantaged through discriminatory network-access arrangements. Integration of services remains compatible with liberalisation only where access to essential network infrastructure remains fair.

Servizio Elettrico Nazionale and Others v Autorità Garante della Concorrenza e del Mercato, Case C-377/20

Facts: The case concerned conduct by ENEL during the liberalisation of the Italian electricity market. ENEL had historically operated as a vertically integrated electricity undertaking and underwent an unbundling process.

Legal Issue: Whether conduct by a dominant undertaking during market liberalisation could constitute an abuse of dominance.

Judgment: The Court clarified the conditions under which conduct by a dominant undertaking may constitute exclusionary abuse.

Legal Principle/Ratio: A dominant undertaking cannot exploit advantages derived from a former statutory monopoly in ways capable of excluding equally efficient competitors.

Significance: The principle is directly relevant to rebundling: integration of competitive services should not permit a formerly dominant or vertically integrated undertaking to leverage historical monopoly advantages into newly competitive markets.

6. Digital and Consumer Protection

Rebundled services increasingly depend on smart meters, automated controls and consumer data. Legal frameworks therefore need rules concerning data ownership and access, cybersecurity, informed consent, switching, billing transparency and interoperability.

Consumers should be able to understand which service they are purchasing and how individual components affect their total cost. Bundling should not make switching suppliers or individual services unnecessarily difficult.

7. Emerging Flexibility Framework

Great Britain's current flexibility architecture illustrates this evolution. Distribution licensees operate under licence requirements concerning procurement and use of flexibility, including coordination with other parties.

Ofgem's 2025 market-facilitator framework further seeks to coordinate local and national flexibility-market arrangements and reduce barriers to participation.

8. Conclusion

Rebundling represents a transition from the traditional separation of energy products toward integrated energy-service ecosystems. The legal objective is not simply to permit vertical integration, but to distinguish legitimate commercial integration from harmful re-concentration of monopoly power. A sound framework therefore combines consumer protection, interoperability, competition law, data governance, transparent network access and continuing independence of regulated networks. Properly designed, rebundling can integrate supply, storage, efficiency, mobility and flexibility while preserving the competitive safeguards created by energy-market liberalisation.