- Joint stock company
At the heart of the Franco-German plans, outlined in a set of amendments to the Commission's proposals on energy market liberalisation, is the issue of ownership and control over transmission system operators (TSOs), which control access to power grids and manage the flow of electricity at national level.
Rather than stripping ownership or control of TSOs from firms as proposed by the Commission, France and Germany propose that companies are transformed into joint stock companies, whereby a separate management and board is established for the subsidiary (the TSO), with clear limits to the influence of the parent company (the energy producer).
Under the scheme, the parent company would not have any control over the day-to-day operations of the TSO, which would be run under a separate management with "effective decision-making rights, independent from the integrated electricity undertaking [parent company], with respect to assets necessary to operate, maintain or develop the network", the draft says.
This is similar to an option outlined by the Commission, whereby legal ownership over TSOs could be maintained under the condition that an Independent System Operator (ISO) is established to prevent conflicts of interest and to ensure infrastructure investments and fair grid access to competitors.
But the Franco-German plans do away with the ISO option, in an apparent effort to eliminate third party oversight and control.
- Free to invest, within limits
In rejecting the Commission's ISO option, which would remove control of the parent company over the investment decisions of the TSO, France and Germany want to give the parent company the right to "approve the annual financial plan, or any equivalent instrument, of the [TSO] and to set global limits on the level of indebtedness of its subsidiary", the draft says.
The parent company shall not "give instructions regarding day-to-day operations, nor with respect to individual decisions concerning the construction or upgrading of transmission lines", but only under the condition that these decisions "do not exceed the terms of the approved financial plan".
TSOs would have the right of initiative on ten-year investment decisions, elaborated in cooperation with the parent company on the basis of a "reasonable hypothesis about the evolution of generation, consumption and exchanges with other countries".
The plans would be then submitted to national authorities who would begin a public consultation process, whereby "all relevant network users" would have the opportunity to suggest changes to the plan.
National authorities would reserve the right to force TSOs to make certain investments deemed necessary during the consultation process.
- Hooking up
In an apparent effort to respond to concerns about fair grid access, the plan stipulates that TSOs shall not refuse new power plants access to the grid on the basis of lacking infrastructure or capacity, implying that operators would need to upgrade grids in order to accomodate new entrants.
- Who regulates whom?
The plan suggests that TSOs draft a 'compliance programme' and appoint an 'independent compliance officer' to ensure that "discriminatory conduct is excluded" from the decisions of TSOs. TSO compliance programmes would be subject to the scrutiny of national regulatory authorites.
But the independence of national regulatory authorities has been repeatedly called into question by proponents of unbundling, who say that newcomers are discriminated against by the regulators in favour of incumbent energy firms.
The Commission has proposed more powers and greater independence for national regulators, along with the establishment of a new European agency to oversee compliance in national and cross-border energy exchanges.
But the limited powers of the agency have come under scrutiny by European regulatory authorities, many of whom propose that an effective EU energy market cannot be created without a strong European regulator to police national authorities (see EurActiv 25/01/08).
A strong EU regulator is not yet considered politically viable by the Commission, however.