The European Commission is taking action against Ireland and 15 other member states over their failure to implement internal legislation governing the energy market.
The commission has sent legal letters to all the countries concerned giving them two months to respond before it takes the case to the European Court of Justice.
Ireland is accused of maintaining regulated supply tariffs for eligible clients, which blocks the arrival of newcomers to the energy market.
The EC says dominant operators also get preferential access to the market, while third parties are discriminated against.