Luxembourg, 07/06/2007 (Agence Europe) - The main lessons to be learned from the political debate on the internal market for gas and electricity, that fuelled the work of the Energy Council in Luxembourg on Wednesday, show that, on one hand, the EU27 are far from a consensus on the thorny issue of unbundling and, on the other, that, according to Energy Commissioner Andris Piebalgs, a majority of them are opposed to the Commission's proposal on ownership unbundling. This solution must lead to the complete break-up of the groups holding not only the electricity or gas power plants but also a transport and distribution network. “The majority of member states are not on the Commission's side”, the energy commissioner told the press, somewhat vexed. “The Commission has not changed its opinion that ownership unbundling is the best solution (Ed.: for strengthening competition on the internal energy market), but it would now have to consider EU member states' opinions”, he added. This is a difficulty for the Commission that has already had to come to grips with the reticence expressed by heads of state and government on this matter during the European Council in March (EUROPE 9383).
Led by France, several member states said they were opposed to the option of total unbundling. The small insular member states - Cyprus and Malta - feared that total separation of production/transport/distribution activities would weaken the companies on their markets. They also stressed the need to take their small size and their isolated situation into account. Its small size is also an argument used by Luxembourg which said it was totally opposed to ownership unbundling, as did Latvia and Slovakia. “Ownership unbundling seems to us to be something that would endanger a number of operators, especially in the gas sector”, Alain Juppé, French Energy Minister, told the press, stressing that powerful Russian and Algerian actors were ready to penetrate the European market with enormous acquisition means. “Competition, even when it is intensive, does not always make it possible to bring prices down”, he added, stressing that the regulation could also have “its merits, its advantages”. For France, other methods are possible for obtaining unbundling of production and distribution. It can, according to France, be done by creating an entirely independent operator that would allow the traditional operator to remain the owner of its network assets while receiving compensation for the use of its infrastructure. It is also possible by maintaining the system in force in France where unbundling is legal and where a regulator is responsible for having competition conditions respected.
During the debate, Germany, which holds the Council presidency but has not hidden the fact that, since January, it has been against total unbundling, said it was necessary to move forward with the analysis on this question while saying that the Commission's radical proposal was “not a solution”. Speaking before the press, the German minister for the economy, Michale Glos, was more in line with French claims. He explained that, in future, one must think of the managers of independent networks, and spoke of a “road somewhere in the middle” which seems to correspond more to the second solution proposed by the Commission in its January package, the ISO+ option that would allow a traditional operator to remain the owner of its infrastructures but would entrust piloting to an independent network manager.
The failure of the Commission, which gave preference to its more radical option, is after all relative and it is difficult to really make out the “majority” of member states against it that Mr Piebalgs mentioned to the press. Headed by the United Kingdom and Belgium, Denmark, Portugal, Romania and Sweden said they were unconditionally in favour of total ownership unbundling; with the United Kingdom placing emphasis on transmission. Also, many member states totally rejected the idea of ownership unbundling or politely said “yes, but” to the most radical Commission proposal. Thus, Bulgaria, Spain, Finland, Hungary, Ireland, Italy, Lithuania, Portugal, Czech Republic, and Slovenia were in favour of unbundling for transport but not for distribution. A position also adopted by Poland which had hitherto been totally opposed to ownership unbundling.
In favour of this option to date, the Netherlands was more mitigated, stressing that this was not a solution to all problems. Rather reticent so far, Austria was in favour of effective unbundling not to be extended to distribution but stressed the importance of the current legislation. A last point also stressed by Greece, while Estonia did not give a clear response.
We note that most member states have made a distinction between the gas and electricity markets because of their different nature. EUROPE will come back to the other elements of the debate tomorrow. (eh)