But proposals to set up a permanent staff in the European Commission to oversee transnational energy regulation could be the foundation of a European energy regulator, according to analysts.

A submission from the European Regulators' Group for Electricity and Gas (ERGEG), the association of Europe's energy regulators of which CER is a member, has called for the creation of a new body with permanent staff and funding mooted as a nascent EU-wide energy regulator. It is understood a raft of proposals are currently under consideration, ranging from the creation of a full transnational regulator, to the Commission setting out minimum powers and degree of independence for national regulators.

Energy market analyst Anton Krawchenko of Datamonitor sees the establishment of the ESER as a building block for European regulation. He said the key to an integrated market is a fair and efficient transmission system, encompassing the exchange of power across borders, the integration of physical and financial energy markets, and the allocation and pricing of transmission capacity fairly amongst market participants.

"Given the current strong push at the EC to complete the project of pan-European energy market integration, it is highly likely that a third electricity Directive proposed in 2008 will establish a nascent energy regulatory body. However, it remains to be seen how far-reaching its powers will be."

Krawchenko believes many large power companies wish to avoid the creation of an EU regulator or improved transnational cooperation because of the mandatory rules that would entail. Cross border cooperation between energy regulators is well established in Scandinavia and between France, Belgium and the Netherlands, where the markets are 'coupled', and between the Commission for Energy Regulation in Ireland and British authorities.

A spokesman for the department for communications energy and natural resources agreed cooperation was a good idea.

"In general, the Irish Government welcomes the development of independent mechanisms for cooperation among EU regulators. " he said.

CER said it supported the ERGEG's proposals for the creation of a ESER if it had the cross-border powers necessary to oversee a secure and efficient EU grid.