Bloomberg News

EU Needs a ‘Stiff Back’ on Energy Policy, EON CEO Says

September 29, 2011

(Updates with Citigroup in fourth paragraph, EU commission in fifth, GDF Suez in eighth.)

Sept. 29 (Bloomberg) -- The European Union needs to object more stridently when member states propose energy policies and subsidies that work against single power and natural gas markets in the bloc, said Johannes Teyssen, chairman and chief executive officer of E.ON AG.

“You need to get a stiff back,” Teyssen said today at a conference in Brussels. “You need to fundamentally intervene.” Plans for single markets in power and natural gas were struggling because many lawmakers are conflicted between national and regional interests, Teyssen said. “Implementation is derailing.”

The bloc will work harder to make energy rules more consistent across its 27 members, said Philip Lowe, director general of the EU commission’s energy department, who was speaking on the same panel. “We have a job with governments and regulators to give them that predictability,” Lowe said.

The imposition of a 170-million-euro ($232 million) tax on nuclear and hydro generation in Finland, as well as Germany’s decision to introduce a levy on nuclear fuel rods, has drawn attention to the political risks for investors in EU energy, Peter Atherton, an analyst at Citigroup Inc., said last month. European government intervention has cut 200 billion euros from utility share values since January 2009 and may depress them further as states impose climate-protection rules, the bank said Sept. 13.

The European Commission will give formal warnings to the U.K., France and 16 other countries for failing to submit full details of plans to open up energy markets to competition, a person familiar with the EU’s decision said today.

18 Warnings

The U.K., France, the Netherlands, Spain, Sweden, Finland, Belgium, Austria, Ireland, Cyprus, Slovakia, Slovenia, Bulgaria, Romania, Luxembourg, Lithuania and Estonia will receive the warnings for failing to adopt national rules to liberalize electricity markets, said the person, who couldn’t be identified because the EU process isn’t public. Those countries and Denmark will also be warned for failing to notify rules concerning gas markets, the person said.

EU Energy Commissioner Guenther Oettinger said today the commission is warning 18 nations for delays that “seriously risk undermining” EU efforts to trade more gas and electricity within its borders, according to the prepared remarks of a speech today in Brussels. He didn’t name the countries.

The EU is “not a stable political environment” and energy utilities will struggle to raise the money needed to help the region upgrade its energy assets to meet climate-protection targets, said Jean Francois Cirelli, president of GDF Suez.

“It is unimaginable it will be financed easily,” Cirelli said today at the conference, citing figures from the International Energy Agency that 2 billion euros a week is needed for energy investments in the bloc. Energy markets need to be more open in many nations, including the French power market, he said.

--Editors: Alessandro Vitelli, Rob Verdonck.

To contact the reporters on this story: Mathew Carr in London at m.carr@bloomberg.net; Aoife White in Brussels at awhite62@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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