Proposals to be unveiled this week introduce a ‘softer option’ that would avoid breaking up major energy utilities in an attempt to ease tensions with France and Germany over market liberalisation.
The Commission is set to propose new policy options on how to proceed with the opening of Europe’s energy markets in an attempt to win backing from Paris and Berlin which have so far resisted moves towards further liberalisation.
The proposals, to be unveiled on 10 January 2007, are part of a wide-ranging set of measures described by the Commission as “the most important and ambitious energy package it has ever presented”.
Certain to attract attention will be the final results of a Commission competition inquiry into the gas and electricity sector opened by Commissioner Neelie Kroes in June 2005.
The probe looks set to confirm the Commission’s preliminary findings about high concentration in gas and electricity markets leading to restrictive business practices and abuse of dominant positions (EURACTIV 15/11/05).
In a separate report, obtained by EURACTIV, the Commission says that the probe “demonstrates that the present rules and measures have not yet achieved” the objectives of liberalisation, namely fair competition and “a genuine choice” for consumers.
However, the Commission refrains from proposing radical measures, stating that “two options might be considered to redress this”:
- ‘Ownership unbundling’ where the energy-generation business is kept fully separate from distribution activities over the network, and;
- ‘a full independent system operator’ where companies remain as owners of the network but receive a set price for allowing others to use it.
Currently, EU legislation only requires energy utilities to manage infrastructure and service provisions under two legal names and keep separate accounts. But they may continue to own the physical networks and continue energy-supply activities.
Although it favours ownership unbundling, the Commission has had to back down in the face of stiff resistance from Paris. Full unbundling would “dilute investment capacities” and would be “detrimental to supply security and to consumers”, said France in an official reply to the Commission’s Energy Green Paper.
The Commission therefore considers other options which have greater chances of being backed by Paris:
- Harmonising the level of powers and independence of national energy regulators, and giving them the task of looking after the interests of the EU internal energy market, not just their national market;
- reinforcing collaboration between national energy regulators and introducing a mechanism whereby the Commission would play a role reviewing some of their decisions based on an approach already used in the telecoms sector (article 7, directive 2002/21/EC);
- granting the European Regulators’ Group for electricity and gas (ERGEG) a binding decision making power on certain issues;
- setting up an EU energy regulator, an idea that was already rejected by EU leaders at a summit in March 2006.