Vattenfall power grid sale buoys EU

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A decision by Vattenfall, Germany’s fourth electricity supplier, to sell off its high-voltage grid was welcomed in Brussels where the European Commission has been leading calls for companies to surrender their transmission assets as a way to bring more competition to the market.

Vattenfall Europe AG, the German subsidiary of the Swedish energy group, said it will contact potential acquirers “in the next few days” for its high voltage transmission system operator. The deal is to be completed “by the end of the first half 2009 at the latest”, the company said in a statement on Friday (25 July).

“The background to this decision is formed by the political debate that has been going on for months and concerns ownership unbundling of the power generators and the high-voltage grids,” the company said.

Vattenfall’s announcement was welcomed by Energy Commissioner Andris Piebalgs who said it was “perfectly in line with the letter and the spirit” of its proposals to further liberalise the energy market, put forward in September last year. “I am convinced that selling the transmission network will benefit both consumers and electricity companies with more competition and freedom of choice,” Piebalgs said.

The Swedish energy group said it was looking for investors which could “ensure substantial investments in network extension, and promote European integration of the electricity market by continuing to guarantee non-discriminatory grid access.”

Concerns about access to power grids for companies wishing to break into other European electricity markets were among the key arguments behind the Commission’s push for dismantling national energy champions. Integrated firms which simultaneously hold transmission networks and produce electricity have a natural “self-interest” in thwarting competitors from accessing their grid, the Commission argued.

Vattenfall’s move follows a similar announcement by German energy giant E.ON, made in February this year in exchange for a settlement of ongoing EU antitrust enquiries. It had infuriated Germany which was in the middle of a battle against the Commission’s plans to ‘unbundle’ energy firms (EURACTIV 29/02/08).

The debate over the Commission’s proposals has been raging on in Brussels since September last year, pitting tenants of full liberalisation such as the UK and the Netherlands against a group of eight countries led by France and Germany that wished to maintain stronger, vertically-integrated energy firms.

A compromise that takes onboard French and German concerns was struck in June and is currently being finalised by legal experts from EU member states in the Council of Ministers (EURACTIV 9/06/08). The final text of the agreement could be presented by early 2009, under Czech Presidency.

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