Drop long-term contracts or face sanctions, Commission tells energy firms

EU competition authorities have told energy firms they can in future avoid certain anti-trust cases by limiting long-term gas and electricity supply contracts, following a ‘blueprint’ deal between the Commission and Belgium’s Distrigas.

Distrigas, a subsidiary of Suez, on Thursday (11 October) promised to relax its grip on the Belgian gas market by not signing any gas supply contracts longer than two years with new retail customers, and no longer than five years with industrial customers. However, the agreement foresees that new gas-fired power plants can be granted exemptions in order to ensure their viability in the long term. 

In return for the assurances, EU regulators agreed to drop a pending anti-trust case against Distrigas. Should Distrigas fail to comply, the Commission can fine the company 10% of its annual global turnover.

As part of the deal, announced by the Commission on 11 October, the company also promised to return to the market 70% of the gas it contracts each year. Over 80% of Belgium’s gas imports and supplies are currently controlled by Distrigas.

EU Competition Commissioner Nellie Kroes’s spokesman, Jonathan Todd, told reporters that “If [other EU energy firms] were to behave in a way similar to Distrigas with its commitments then they would normally not be subject to an antitrust case by the Commission”. Such a deal would apply to the electricity sector as well, Todd said.

Although Todd declined to comment on which energy firms he was referring to in particular, the Commission has opened anti-trust cases involving long-term supply contracts with EDF of France and with Electrabel, Belgium’s main electricity provider, which is also a member of the Suez group.

On 4 September, Suez and Gaz de France announced the conclusion of a merger deal that will create the world’s third-largest utility, in a move that some say contradicts the Commission’s objective of opening up the EU’s energy sector to greater competition.

Read more with Euractiv

Nuclear and CO2 storage 'key' to future EU energy mix

Renewable energies alone will not be sufficient to deliver the ambitious CO2 reduction targets agreed by EU leaders for 2020, warned a top Commission official speaking to EURACTIV. Nuclear power and 'clean' fossil fuels using carbon sequestration and storage will be needed if Europe is to make up for the shortfall, said Matthias Ruete, Director General of the Commission's Transport and Energy directorate.