Global Economics

Brussels Energy Dereg Plan Draws Fire


Opponents to the plan, which will break up ownership of energy assets, says it will inhibit badly needed investment in the EU's energy sector

A group of nine EU states is continuing to oppose the new energy liberalisation rules recently drafted by the European Commission, with the political hot potato now passing to Slovenia, which takes over the EU presidency in January.

"It was a quite intensive council", said EU energy commissioner Andris Piebalgs on Monday (3 December), after all 27 EU energy ministers had discussed a report on where member states stood on the controversial issue.

Austria, Bulgaria, Cyprus, France, Germany, Greece, Latvia, Luxembourg and Slovakia are firmly against the core of Brussels proposal, known as full ownership unbundling.

This means splitting up energy firms' production and transmission wings.

The same group of countries has also been reluctant to give the green light to an alternative scenario which would see the setting up of an independent system operator (ISO).

Under this proposal, big energy companies would hand managing control over transmission networks to an entirely separate operator, but retain ownership of their network assets.

According to the report -- seen by EUobserver -- the group of nine states "questions the proportionality of the proposed provisions for ownership unbundling or ISO that they see as infringing property rights".

"They call for the acceptance of another alternative ensuring a more effective unbundling without interfering with property rights and in line with the European Council conclusions", the paper continues.

Berlin and Paris -- home to energy giants EDF and E.ON, which both supply energy and control transmission networks -- have already been working on the third alternative, one EU diplomat said.

This is expected to be tabled in early 2008.

"No one's going to invest in a grid he's going to sell in the near future", Joachim Wuermeling from German ministry of economy was cited as saying by Reuters, adding "why are we so willing to take this risk? Do we want to stop people from investing in the grids at the very time when we need a high level of investment?"

Mr Piebalgs, for his part, said that he was "ready to discuss with those who still have doubts". But he added that any alternative should bring a "real structural change similar to that proposed by the European Commission".

The EU's executive body is hoping for a broad political agreement between all three institutions -- the commission, the parliament and the council, representing the member states -- by the end of Slovenian EU presidency in June.

"The commission has no intention of withdrawing the proposal", commissioner Piebalgs said of Brussels' flagship draft legislation.

The asset break-up is seen in Brussels as key to introducing competition and cutting prices in the energy sector, as control of both supply and transmission makes it harder for new companies to enter into the market.

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