Consensus is growing among a wide range of stakeholders to reinforce the powers of a proposed new European agency to regulate energy markets, it emerged from a Parliament hearing. But opinions still differ sharply in Brussels about the need to break up the EU's largest energy firms as a means of boosting competition.
MEPs, regulators, consultants, legal experts and industry representatives debated the Commission's liberalisation proposals during a 13 February hearing organised by the Christian Democrats (EPP-ED group) in the European Parliament.
Panellists discussed two of the main elements of the third package: the proposed new Agency for the Cooperation of Energy Regulators (ACER) and the notion of breaking apart large, vertically integrated energy firms through ownership unbundling.
MEP Renato Brunetta, rapporteur for an Industry (ITRE) Committee report on ACER, stressed that the Parliament was practically in "complete consensus" in calling for more powers for the agency.
In particular, the Parliament wants the agency to have the power to approve both the ten-year grid investment plans and the cross-border electricity transmission codes developed by national Transmission System Operators (TSOs).
The Commission's proposal only gives the agency advisory powers in these areas.
Sue Harrison of the UK Government department for business enterprise and regulatory reform backed the Parliament's recommendations and argued that TSOs should develop codes under the "strict supervision" of ACER.
And in a rare showing of near complete agreement between British and German energy regulators, Klaus-Peter Schultz of Germany's grid regulation authority Bundesnetzagentur argued that a stronger EU-level agency could lead to a smoother functioning of markets.
Schultz pointed in particular to concerns about 'comitology congestion' if numerous technical decisions concerning regulatory cooperation between national TSOs have to be taken by specialist committees in Brussels.
MEPs and panellists also agreed that potential legal restrictions on the ability of the EU to create a new regulatory agency with strong intervention powers at national level could be circumvented if proper safeguards are in place.
Calls for an increase in ACER's powers were also made during a 24 January hearing on the issue organised by the ITRE Committee.
The issue of ownership unbundling revealed more diverging views between panellists, however.
Luigi de Francisci of Terna, Italy's national electricity grid, refuted the findings of a study by the consulting firm A.T. Kearney, which concludes that "there is no empirical evidence that ownership unbundling leads to more competition".
Francisci argued the study is skewed as it fails to document the increase of liquidity flows (through energy trading on stock markets) and the higher presence of operators from other EU member states in national energy markets where ownership unbundling of electricity transmission and distribution assets has been carried out.
But A.T. Kearney's Florian Haslauer, who asserted that the study was not ordered by any client but was 'self-initiated' by his firm, argued that increased competition depends on many factors, including the level of price signals. Markets with higher energy end prices for consumers tend to attract more competition and more investments, regardless of whether or not ownership unbundling has taken place, he said.
On 19 September 2007, the Commission put forward its 'third package' of proposals to further liberalise the EU's energy market in a bid to simultaneously increase competition, lower prices and boost energy security in the EU (see EurActiv's LinksDossier and related coverage).
