Speak Up Energy

Energy ministers from the 27 member states are meeting today (6 June) in an attempt to reach a compromise over plans to force more competition onto EU energy markets – otherwise they risk delaying any decision until 2010.

The ministers will try to agree a “general approach” to further open up EU energy markets, including a contested proposal to break up energy utilities’ production and transmission businesses, known as ‘ownership unbundling’.

Germany and France have fiercely opposed the Commission’s plans and formed a blocking minority with six other member states in the Council, threatening to derail the whole package if they are not offered an alternative.

Time running out fast

But the ministers will be running against the clock when they meet in Luxembourg. The French, who take over the rotating EU Presidency from 1 July until the end of the year, clearly said they would refuse to deal with the issue, arguing that they already have an extremely busy agenda.

According to EU diplomats, in practice, this means the whole package could be delayed indefinitely, since next year will be almost entirely dominated by the European elections, leaving Parliament in a de facto recess as of March 2009.

“If we lose six months, then we run out of time,” a British official said, adding that any agreement “will then probably be postponed to 2010”.

On the other hand, if energy ministers can agree a general approach at their Friday meeting, then the deal could be fine-tuned and transformed into a more detailed “political agreement” in October, the official said.

Compromise in sight

Central to the discussion on Friday is a compromise proposal tabled by the Commission and Slovenia, the current holder of the rotating EU Presidency, which aims to sooth Franco-German opposition to ‘ownership unbundling’.

“Honestly, we are not very far from coming to a close,” a French diplomat said, adding that the aim of the meeting will be to sketch the “broad outlines” and “the main balances” of the agreement.However, there are a number of remaining issues which could still sink the deal.

Third option: for gas only?

First among them is to determine whether the ‘Third Way’ compromise proposal will be applicable to gas only or whether it should also be applied to electricity.

The Commission, supported by the UK, argues that the electricity market is already mature enough and that the ‘Third Way’ should therefore only apply to gas. Once the gas issues are solved, the argument goes, finding a compromise on electricity will be “much easier”.

However, the French see things very differently. “The staunchest supporters of ownership unbundling are now saying there should be a differentiation between gas and electricity as a safety exit,” one official said. “But to go to the bottom of things, what they want is to attack EDF and E.ON”.

For the French, this would mean crossing a red line. “The Slovene Presidency has well understood that there will be no agreement without electricity,” the official said. “Otherwise, there will be no deal.”

From EurActiv

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