Paper discusses issues regulations in the energy sector. Better regulation remains an important instrument contributing to the policy for strengthening competitiveness and supporting sustainable growth and employment in the European Union. The Energy Policy for Europe (EPE) will pursue the following three objectives, fully respecting Member States' choice of energy mix and sovereignty over primary energy sources and underpinned by a spirit of solidarity amongst Member States: (1) increasing security of supply; (2) ensuring the competitiveness of European economies and the availability of affordable energy; (3) promoting environmental sustainability and combating climate change. The first electricity and gas directives were adopted in the late 1990s, with the objective of opening up the electricity and gas markets by gradually introducing competition. The European Commission has made clear that it favours splitting up energy firms' production and distribution activities as the best way to ensure fair competition and lower prices for consumers. The European Commission has made further legislative proposals, including controversial plans to separate the production and distribution arms of large integrated energy firms.