Speak Up Energy

Despite its initially cool reaction, the Commission has signalled it could accept an alternative proposal on energy liberalisation as long as further safeguards are introduced. The alternative, to be officially unveiled by France and Germany this week, would allow large power companies to maintain ownership and limited control over transmission assets.France and Germany’s proposal for a ‘third way’ on energy market liberalisation has become more appealing to the Commission as a workable alternative to the options set out in its third ‘package’ of reforms to further liberalise Europe’s energy market, according to press reports.The more positive assessment contrasts the Commission’s initial reaction to the ‘third way’ proposal, which Brussels argued “would not lead to effective separation of supply and production activities from network operators” since the safeguards set out in the alternative scenario “would not sufficiently remove the conflict of interest within the vertically-integrated company”.But the Commission appears to have softened its stance, according to a revised internal document obtained by the press last week (21 February). Providing certain safeguards are introduced, notably with respect to the investment decisions of electricity and gas transmission subsidiaries – also known as transmission system operators (TSOs) – the Commission may back off from its insistence on breaking up large energy-producing firms.In its third package, tabled on 19 September 2007, the Commission proposed that vertically-integrated energy firms, which own both the assets to produce and transmit power, must be broken up either through asset separation (‘ownership unbundling’) or by partially ceding control to an independent system operator (ISO) that oversees the investment decisions and day-to-day management of TSOs. Neither option appeals to France, Germany and six other EU member states, which have put pressure on the Commission to revise its proposals. Rather than stripping ownership or control of TSOs from firms as proposed by the Commission, France and Germany suggest that companies be transformed into joint stock companies, whereby a separate management and board is established for the TSO, with clear limits to the influence of the parent company.

EU energy ministers will debate the file this week (28 February) in Brussels during a meeting of the Energy Council, and the Slovenian EU Presidency hopes to see an agreement finalised in June.

From Eur Activ

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