Third energy package: stakeholder reactions broadly positive

RWE and E.ON, Germany's two largest power producers, said the Commission's unbundling plans would fail to bring more competition. Christian Drepper, a spokesperson for E.ON, said unbundling "doesn't lead to lower prices," according to Bloomberg. RWE said it would "discourage investment and competition," according to the news agency.

BusinessEurope, the EU's main employers association, said the package presented "a positive step forward, in particular the plan to improve governance of the European gas and electricity market."

However, it said ihat it "failed to pay attention to (…) the framework conditions which play a critical role in guaranteeing the long-term supply of energy to energy-intensive industries at competitive prices. The Commission should give strategic consideration to the positive role that long-term contracts between producers and consumers can play in this respect."

On unbundling, BusinessEurope said it was "looking at the pros and cons" of this "radical new approach" but did not dismiss it outright. "A fundamental requirement is that EU policy on unbundling does not discriminate between private-owned and public-owned energy groups," it said.

CEFIC, the European chemicals industry council, said it welcomed the Commission’s proposals, notably on unbundling, but that "additional measures" were needed to break up market dominance of a few large players.

"Concrete measures to reduce the level of market concentration should be included in the legislation," says CEFIC Director General Alain Perroy. "These can take the form of measures to optimise the use of electricity grids and gas pipelines or the facilitation of new entrant investments."

In addition, CEFIC says more could be done to limit the influence of the EU's CO2-trading scheme, which it says, constitutes "up to one-third" of electricity prices for industrial consumers. "The solution lies in amending the ETS Directive and in particular the allocation mechanism for CO2 certificates," said Perroy.

Endesa CEO and Eurelectric President Rafael Miranda welcomed parts of the proposals but argued that they "provide no clear process and set out no steps towards market integration". Creating national Independent System Operators (ISOs) "will merely reinforce the prevailing national focus and delay the integration process," Miranda said, recalling Eurelectric's preferred position that "mandating regional ISOs ('RIOs') would 'kill two birds with one stone' - both promoting regional integration and ensuring the independence of TSOs that is vital to ensure fair grid-access and help create a level playing field for all players".

Speaking during a 19 September Brussels conference, Christopher Jones, Deputy Head of Cabinet for EU Energy Commissioner Andris Piebalgs, said that the Commission supports a regional market in which unbundled companies pool assets to create a joint transmission system operator (TSO). But, Jones qualified, if such a regional market is composed of several vertically-integrated firms with a joint TSO that gives strategic advice to members, then the status quo is maintained "except that you've just managed to create yourself a coordination mechanism," Jones said.

A Brussels energy specialist told EurActiv on condition of anonymity that the challenge the Commission faces with respect to moving Germany towards favouring ownership unbundling is strongly linked with shareholder rights: "The scale has to be defined another way to compensate shareholder of German companies for any 'loss' of assets," he said. 

The specialist also argued, in reference to the EU's emissions trading scheme, that the success of the internal energy market will also be heavily dependent on a predictable and stable carbon price, without which electricity producers across Europe will be unable to make correct investment and business strategy decisions. 

EFET, the European Federation of Energy Traders, called the Commission's legislative objectives as being "fundamentally sound", but slammed what it called an "almost complete ignorance of the functioning of wholesale energy markets, especially of the role of cross-border, forward and derivative transactions. [Commission] officials have in fact failed to consider, in drafting these documents, that without good liquidity at the wholesale level, there can be no hope of competition at the retail level", EFET Electricity Committee chairman Peter Styles said in a statement.  

The European Wind Energy Association (EWEA) gave a mixed reaction to the Commission's proposals, calling them "a good job, but half done". EWEA favours full ownership unbundling and is sceptical of the ISO option. "Allowing power generation companies to own the transmission grid makes as much sense as allowing an airline company to own the sky," the organisation said in a press statement.

The European Consumers' Organisation (BEUC) welcomed the package but lamented that the proposed measures will "fall short of enabling consumers to benefit from the opening of the energy markets". In a press release, BEUC said it "would have liked to see a clear commitment from the Commission to integrate and make legally binding the proposed Charter on the Rights of Energy Consumers".

ETUC, the European Trade Union Confederation, also evoked consumer issues in its critique of the package, which ETUC argues "runs counter to the objectives of protecting the most vulnerable consumers and fighting climate change". The organisation is against energy market liberalisation generally and against unbundling specifically, because the measure "does little to reduce prices but, on the contrary, undermines the maintenance of installations and their level of safety", ETUC said in a press statement.

UAPME, the European Association of Craft Small and Medium-Sized Enterprises, criticised the Commission for lacking "courage in not recommending a real European regulatory power" to accompany the ISO system.

Despite his organisation's general welcoming of the package, John Mogg, chairman of the European Regulators Group for Electricity and Gas (ERGEG), was also "profoundly disappointed" that the Commission did not call for the creation of a European regulator with strong powers to intervene in national markets.

Speaking on behalf of the EPP-ED group, UK Conservative MEP Giles Chichester welcomed the package as "a decisive and hopefully final step in the direction of full liberalisation of the gas and electricity markets". He said the EPP-ED "will fully support the Package as far as it means achieving more competitive and transparent energy markets".

The Alliance of Liberals and Democrats for Europe (ALDE) also welcomed the package but expects tough negotiations. The group argues that unbundling "is essential to ensure full transparency of information and non-discriminatory access. Without it we will deprive ourselves of a truly European energy market and encourage a rush to protect national champions,"  ALDE Leader Graham Watson said.

In a statement, Green MEP and energy spokesperson Claude Turmes said full ownership unbundling was "the only way to guarantee true market liberalisation," and said he "welcomed the Commission's attempt to address this". But he criticised the "fallback option" of an independent system operator (ISO) as "an attempt to appease the big energy oligopolies" and something that "could jeopardise the ultimate goal of liberalisation".  

"A truly independent ISO capable of guaranteeing equality in the realm of distribution would need massive regulatory control and could end up as a bureaucratic monster," he said. 

"It is unfortunate that [the Commission] has given in to the pressure from the French and German governments."

German Christian Democrat MEP Angelika Niebler, who chairs Parliament's Industry (ITRE) Committee told EurActiv on 18 September that "it doesn’t matter who actually owns the grid. The important thing is that you have instruments and strong regulatory entities that have the courage, and they can only have the courage if they are not dependant on the politicians or on other stakeholders and interest groups".

The MEP acknowledged that this is her personal view, and affirmed that a majority of MEPs in the ITRE Committee and in the Parliament as a whole support full ownership unbundling.