The European Commission is taking Britain and Ireland to the European Court of Justice because inadequate gas infrastructure is limiting competition, the Commission said on Thursday.
The maximum interconnection capacity is not offered in the UK and Ireland as the pipeline connecting Northern Ireland and Ireland is not open to the market, the Commission said in a statement.
This means that gas companies in Ireland cannot directly trade gas with Northern Ireland or vice versa.
It also said the pipeline connecting Scotland to Northern Ireland did not allow short-term services and lacked options to nominate virtual gas transport in both directions as required by long-standing EU laws.
The gas pipeline connecting Northern Ireland and the Republic of Ireland is owned by incumbent Irish gas company Bord Gais, while the Scotland-Northern Ireland gas pipeline in question belongs to Premier Transmission Limited, owned by a mutual company.
The Commission is aware that the UK and Irish governments intend to introduce common arrangements for gas between Ireland and Northern Ireland, the statement said.
It welcomed this, but said the project had been delayed and the Commission was therefore going ahead with the infringement procedure.
Bord Gais said the regional regulators were addressing the infringements by developing arrangements for gas transport on the island.
Bord Gáis Networks is aware that the issues in relation to the infringements are being addressed by the Regulatory Authorities in Ireland and Northern Ireland, a spokeswoman said.
Premier Transmission also said it was working to resolve the infringements.
Premier Transmission is working with the Northern Ireland regulator to put in place solutions which will mean full compliance with the infringements issued, said company Director Paddy Larkin, adding the issues will be resolved by October this year at the latest.
EU energy policy, directed towards ensuring secure and sustainable supplies, aspires to achieve a single energy market, maximising available resources, allowing more companies to participate and increasing consumer choice.
According to EU gas rules, the maximum interconnection capacity between member states and between different gas transmission systems must be offered to the market so that consumers can fully benefit from competition on the market, the statement said.
The infringement process dates back to June 2009 and the Commission said some progress had been made, but not enough.
Britain and Ireland can still avoid a court ruling if they achieve the changes required by the EU, but if found to be in breach, they could be subject eventually to daily fines.
(Reporting by Barbara Lewis, additional reporting by Karolin Schaps in London, editing by Rex Merrifield)