Speak Up Energy

In an unofficial paper, the Commission condemns an alternative proposal on energy liberalisation for not going far enough to ensure energy firms keep their supply and production activities separate from network operations (so-called ‘ownership unbundling’).The ‘non-paper’ obtained by EurActiv welcomes the proposal, led by France and
Germany and supported by six other member states, “as a useful contribution to efforts to improve the status quo”.But the EU executive adds that the proposal “does not appear to go beyond the principles established already” under existing EU legislation. “Overall, the Commission’s analysis concludes that the Third Option would not lead to effective separation of supply and production activities from network operations.”In particular, it expresses the view that the alternative option “does not appear to ensure the structural independence of decision making of the TSO [Transmission Network Operator], and would not sufficiently remove the conflict of interest within the vertically integrated company.””As a consequence, in its proposed form, it would not create the incentive for the TSO to invest in a non discriminatory manner, and to generally promote the market, a fair and efficient operation of the grid, and transparency.”The so-called ‘Third Option’ for energy market liberalisation was put forward in a letter dated 29 January and signed by Austria, Bulgaria, France, Germany, Greece, Luxembourg, Latvia and the Slovak Republic.The letter came in response to Commission proposals, tabled on 19 September 2007, to break up large integrated energy firms as a way to bolster competition in the European energy market, a move which France and Germany fear will weaken their national energy champions in the face of foreign suppliers such as
Russia’s Gazprom.However, the Commission rejects this argument, saying that unbundling needs to be seen “in the light of the full range of [other] measures” contained in its September package. This includes a reciprocity clause on foreign investments designed to shield European firms from potential hostile takeover bids from companies which have not themselves unbundled their activities – a proposal quickly dubbed the ‘Gazprom clause’ by EU officials in Brussels.

According to the EU executive, “the third package must represent a decisive step” towards the creation of a European energy market. This step, it concludes, “must include the removal of the conflict of interest between network management and production/supply within the vertically integrated company.”

From Eur Activ

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