France, Germany and Spain were among the 16 countries formally cautioned for dragging their feet on liberalising gas and electricity markets. In the Commission’s firing line is France’s cherished capped-price model.
The European Commission is losing patience with the slow liberalisation of energy markets. On 13 December, it sent “reasoned opinions” to 16 countries, including France and Germany, in the second step of infringement procedures launched earlier in the year (EURACTIV 5/04/06).
In the Commission’s view, “electricity and gas prices do not reflect costs,” leading to “under-investment and future supply crunches”. This, it added, “impedes real competition”, effectively blocking new suppliers’ access to the market.
“Obstacles to competition…damages EU citizens,” the Commission summarised, referring to the 4 November 2006 power black-out.
Of particular concern to Brussels are price caps, or regulated tariffs, which are still applied in France, Spain and to a lesser extent, Italy. In these member states, “the regulated tariffs are … set at a level so low compared with market prices that they fully prevent market opening”, the Commission said.
“In the end, only prices freely determined by the market can ensure the best price for customers and give the right signal for the huge investments needed to ensure our security of supply.”
Other issues highlighted in the infringements proceedings included:
- Discriminatory access to the distribution network by new competitors, a situation which continues to favour incumbent operators (Germany, UK, Italy…);
- lack of information on public service obligations that incumbents need to fulfil in contracts agreed with the government (France, Germany…);
- insufficient competences from national regulators to prevent vested interests from dominating the markets (Belgium, Sweden…), and;
- insufficient unbundling of distribution/transmission from supply/generation activities.