Power Engineering - European Commission stands by plan to open energy markets to competition

28 February 2008 - The European Commission will defend its plan to open gas and electricity markets from being watered down too much by a group of countries led by France and Germany, the commission's competition chief.

According to Reuters,European Union (EU) energy ministers will try on Thursday to bridge deep divisions over the proposal. EU officials say if they make progress a final deal could be reached at a meeting of the region's 27 leaders in June.

The EU executive body proposed last year that vertically integrated gas and electricity companies separate their production and supply operations from transmission activities to foster competition on the market and bring down prices.

The commission has said that utilities should either get rid of their transmission operations completely, or as a second option, retain ownership of the infrastructure, provided the networks were run by a totally independent service operator.

Eight EU countries, led by France and Germany, have proposed a watered down version of the second option, known as "a third way," under which utilities would put their transmission assets into a subsidiary overseen by an independent trustee.

This would defend vertically integrated companies like EDF and GDF, and E.ON of Germany, companies that Brussels says have no interest in increasing capacity or helping newcomers enter their markets.

The competition commissioner, Neelie Kroes, said the French-German proposal did not go far enough in making transmission operations independent, vowing to defend more liberal options during negotiations among EU governments and the European Parliament.

"The third option, while being a welcome and legitimate contribution to the debate, does in its present form not seem to meet the goals that we all seek to achieve," Kroes said.

EU officials have said the commission and Slovenia, the current EU president, have already made concessions to France and Germany by agreeing that their proposal could be a basis for a compromise as long as extra safeguards are agreed.

The commission proposed last week a compromise under which independence of transmission subsidiaries would be guarded by "regional system operators," a commission official said.

Such operators would be weaker than the pan-EU independent system operator but offer stronger independence guarantees than trustees.

"The commission will continue to insist on transmission system operators which are truly independent as regards investment decisions and management of the grid," Kroes said.

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