Energy ministers agree to disagree on liberalisation

Earlier this month, Germany, France and six other EU member states outlined proposals for a 'third option' on energy liberalisation in a move aimed at preventing the break-up of vertically-integrated energy firms such as E.ON of Germany and EDF of France (EurActiv 1/02/08).

In response, the UK - which together with Sweden  and the Netherlands is leading the group of countries backing the Commission's plans - submitted a paper outlining key principles to achieve "effective unbundling of electricity and gas networks".

"Ownership unbundling is the only certain way of ensuring that the incentive for discrimination is removed and remains our ultimate objective," the paper reads, adding that the 'third option' proposed by France and Germany "falls short" of meeting those requirements.

"Chief among these", the paper goes on, "is the principle that the [Transmission System Operator] TSO must be truly independent from the vertically integrated company." Among the requirements needed to achieve this, the paper notes:

• Specific obligations for TSO not to discriminate between energy producers;
• measures to remove any conflict of interest such as a prohibition for TSOs to hold interests in businesses other than transmission;
• a strict enforcement regime, and;
• clear accountability rules for TSOs.

Speaking to journalists after the Council meeting, Jean-Louis Borloo, French minister for ecology and sustainable development, spoke strongly against the Commission's unbundling proposals, saying the EU was engaged in "an economic war" on energy.

Borloo in particular rejected the idea that market forces are appropriate to regulate an area as "vital" as energy. "The market does not tell the truth about prices," Borloo said, adding: "The weight of competition in the market today needs to be revised."

"Thinking that we are going to solve the energy problem only with market regulation in the short term - I don't believe in it."

Meanwhile, French diplomats claimed they managed to rally more countries against 'ownership unbundling', saying that a document prepared by the Slovenian Presidency, which attempted to summarise the discussion, was blocked only due to last-minute opposition from the UK, Sweden and the Netherlands.

"There were up to 24 member states which could live with that document," one diplomat said, adding that France's third-way proposal was "gaining ground" in the Council.

A British source confirmed that the UK had blocked the document because it failed to mention its own paper while making ample reference to the 'third option' proposal backed by the group of eight.

Speaking after the Council meeting, Slovenian minister of economy Andrej Vizjak said experts will discuss "all the proposals" which are on the table, although he stated his preference for the Commission's unbundling proposal as "the most effective method". 

"We cannot and we must not ignore reservations by member states," Vizjak said. "As [the current holder of the] EU Presidency, we have to take them into account."