A compromise deal is taking shape in Brussels that could see France and Germany win a six-year delay in opening their energy markets to full competition, according to Alejo Vidal-Quadras, one of the leading MEPs on the dossier.
Alejo Vidal Quadras is a Vice-President and Spanish member of the European Parliament and a member of the Bureau of the European People’s Party (EPP-ED).
The Parliament’s industry committee is set for an important vote on energy liberalisation on 6 May, including the key issue of ‘ownership unbundling’. Will there be a common position of the EPP-ED group for this vote?
Not at the moment. There is a will to reach some common position. But at the moment, and in view of this vote in the ITRE committee, I couldn’t say this agreement has already been achieved.
So what will happen most probably in the first vote in the ITRE committee is that those members that are in line with the Commission proposal and think that ownership unbundling is the best option to get what we want – that is to say free access to third parties, ensuring investments and good functioning of the market – will stick to this position.
There are some other members that have tabled amendments introducing the so-called alternative way, also called ‘efficient and effective unbundling’ (the ‘Third Way’). These members will vote according to these amendments. So we will have these two positions within the EPP-ED group.
So the voting will take place along national lines, is that right?
It’s a question of concept of how the market should work. It is also related to national circumstances, because in different member states this issue has evolved in different ways. There are member states where ownership unbundling is fully implemented, there are others where it is not, there are member states where the energy sector has been fully privatised, others not. So the national element will have considerable weight in this vote, yes.
In April, the Parliament’s internal market committee outlined a possible compromise on unbundling by agreeing on a transitional period of six years. Do you see this as a possible way out?
This is something that could be the element to find a final agreement with ownership unbundling. The Third Way has two possible options and fixing a period of time in which both options could coexist [could help].
After this period of time, there will be a review either by the Commission or by an independent external auditor and then, an analysis of the results of both systems. So, if there is, at the end, an agreement, it will be on the basis of this mix.
So you believe that it is also going to be the basis of the common EPP-ED stance?
That could be. I’m not saying it should be but it could be.
The Parliament’s internal market committee also chose two different approaches for electricity and gas. Is this something which, in your view, is desirable?
Yes, I think this is more or less accepted by everybody that there will be some differences between the treatment of the electricity market and the gas market.
Because of the very different situation upstream in both markets: in the case of gas, members that favour ownership unbundling will be more flexible. This is how things are.
Unbundling in the gas sector is probably also more appealing to some because it provides a ‘carrot’ for Russia to accept the ‘reciprocity clause’ on unbundling…
That’s it, yes. But introducing some differences in the case of gas could also be an element for negotiations on electricity.
In any case, we want in the end to have a common solid position in Parliament, a large majority. Because if we really want to influence a country’s position, we need to be as little divided as we can in Parliament. This is also a strategic element which is present in the mind of many members. Because if Parliament itself is divided, then our influence over the Council will be much smaller.
In a similar vote last year, the Parliament showed it was in favour of ownership unbundling. Would you see that repeating itself in this particular proposal?
The majority is in favour of ownership unbundling, this is clear, and it was clear in last year’s vote.
But since then, new things have emerged. One was the effective and efficient unbundling – the so-called ‘Third Way’. At that time, it didn’t exist, so this is new. The second thing is that those opposed to unbundling have accepted in principle this idea of a period where both systems would co-exist with a review at the end of the period and a final decision. This is also new.
So my impression, and that of many colleagues of mine, is that those who resist ownership unbundling are becoming more aware that they are defending a lost cause. They try to negotiate either something which is equivalent to ownership unbundling in the results it produces or a transition period in order to die in a sweet way. This is the impression we have.
So you think the transition period is a reasonable way forward that can be accepted by most parties in the debate?
I couldn’t say so with absolute certainty. But if there is in the end an agreement, it would be on the basis of this period of coexistence of both. It is well understood that the third way would need to be very much improved.
If you had one piece of advice for member states – those opposed to unbundling and those in favour – what would it be?
I am convinced that this third package, apart from the ownership unbundling question, which is the most apparent, controversial issue and the one that is attracting most attention, there are many other elements of the third package which are very interesting improvements for the energy market.
The independence of regulators for instance – this new agency where national regulators can co-operate – or the European Network of Transmission System Operators (ENTSO). There are many elements apart from ownership unbundling which would be a pity if they were lost – just because of ownership unbundling which would lead us to failure.
So my remark, not advice, to the Council would be that it’s better to reach an agreement on ownership unbundling, not to lose all the other important elements that are in the third package which are also essential for the good functioning of an integrated European market. So it would be a pity that because of ownership unbundling the whole thing would collapse in Council and we would lose the positive elements that the package contains.
What role do you think the Commission should play in that?
Well the role of the Commission is the usual one, they must be attentive to what is happening in the Council, to what is happening in Parliament and try to produce proposals that facilitate agreements and integrate different points of view. This is their role.
The Commission has recently been circulating a set of possible amendments to strengthen the ‘Third Way’ which have so far been rejected. What’s the game here?
Well, as always in European politics, you will not know the result of the game until the very last minute. So now everyone is taking strong positions and trying to put pressure on the other side, but at the end there is a European logic that normally would work.
If the third package in the end is blocked in Council it would be a pity, because we would miss a very good opportunity to progress in the implementation of an integrated European market.
But we will see. There are national interests there as well as economic interests which are very powerful and are putting pressure on the whole negotiation. But all these complex dynamics, normally in the EU institutions, produce a final result, which is better than what we had before. We must at least hope.
The Commission has been criticised for proposing measures to liberalise energy markets but failing to come up with any real industrial policy on energy. Is that a fair criticism in your view?
There is some truth in this criticism. There are asymmetries that are creating difficulties in the functioning of the European integrated market.
Imagine a country where most of the energy generation is in the hands of the state, where the regulator is also part of the state. Then compare it with another country where energy is shared by different private companies and where the regulator is really independent. This lack of symmetry can create considerable problems for the functioning of the European integrated market.
It seems that nobody has the political will or courage to address this in a frank way. This is the problem. We are trying to integrate things that are so different in conception. But, that said, the third package represents a step forward. There is no doubt about it.