Brussels, 21/09/2007 (Agence Europe) - Presenting the 3rd legislative package for the internal energy market to the European Energy Institute on Wednesday 19 September, Competition Commissioner Neelie Kroes highlighted how important she felt it was to resolve distortions resulting from the failings of the first two legislative packages on liberalising the energy market.
The problems raised by the sectoral investigation launched in 2005, the results of which were published in January 2007 (see EUROPE 9341) were many, she noted, referring to five major problems: - the dominant positions of former monopolies; - the partitioning of the markets due to the fact that the former monopolists continue to own the energy infrastructure; - low levels of cross-border trade and investment; - lack of transparency in the wholesale energy sector which makes access difficult for new entrants; - lack of confidence in energy prices. It is the consumers - both individuals and businesses - who, first and foremost, pay the price for these problems, Kroes pointed out.
She said that the current legislation on unbundling production and distribution activities were not adequate to address the distortions caused by the relations between Transmission System Operators (TSOs) and affiliated production/distribution companies. With figures to prove her point, Kroes quoted several examples where TSOs, by including their subsidiaries in internal discussions on price strategies, for example, or by granting them more favourable access to the network, prevented fair competition on the market.
Welcoming the measures already taken by several member states to ensure effective unbundling through ownership separation on the electricity and/or gas markets (13 member states have already introduced ownership unbundling in electricity and 7 in gas), Kroes highlighted the major challenge of the Commission's new legislative proposal: filling the gaps in the current internal market legislation by achieving effective separation of the activities of energy operators through ownership unbundling. If they do not wish to use this option, member states can go for the ISO option, which allows large vertically integrated groups to retain ownership of their transport infrastructure, but sees them constrained to give over the management of this infrastructure to an Independent System Operator. This system will be more administratively heavy for those member states which opt for it, Kroes pointed out.
Combined with measures to increase transparency, this initiative will mean that the Commission can ensure that the energy market functions better, Kroes said, adding that she was convinced that it will deliver the results the EU needs. (cd/eh)