Brussels, 22/04/2009 (Agence Europe) - In its adoption, at second reading and by a large majority, in Strasbourg on Wednesday 22 April, of each of the reports amending the five texts of the legislative package on the liberalisation of the internal market for electricity and gas, the European Parliament has given its blessing to new rules to unbundle the production and transport activities of vertically integrated energy operators, guarantee more investment in transport network infrastructures, ensure greater independence of the national regulatory authorities, improve their cross-border cooperation and reinforce consumers rights. This vote validates the informal compromise returned on 23 March by the five rapporteurs of the Parliament on the third package of liberalisation - they are Eluned Morgan (PES, UK) for the "electricity directive", Italy's Romano Maria La Russa (UEN) for the "gas" directive, Alejo Vidal-Quadras (EPP-ED, Spain) for the "electricity" regulation, the Bulgarian Atanas Paparizov (PES) for the "gas" regulation and Giles Chichester (EPP-ED, UK) for the regulation on the Agency for the cooperation of regulators - with the Czech Presidency of the Council and the Commission (EUROPE 9868). The member states now have 18 months to implement most of the provisions of the third package.
General satisfaction of the rapporteurs and of Commissioner Piebalgs
The Parliament has good reason to be proud of its work, stressed Eluned Morgan, opening the debate preceding the vote on Tuesday 21 April, because it has succeeded in putting consumers at the centre of the debate, in order to assure them of the existence of a fairer and less discriminatory market. New protection measures are now possible (changing energy provider, smart meters for each family), including measures for the most vulnerable consumers, the British Socialist MEP pointed out. Nonetheless, Ms Morgan acknowledged that regarding the contentious issue of the effective unbundling of the supply and transport activities of the energy operators, the Parliament, which, like the European Commission, remains convinced that ownership unbundling remains the best solution to guarantee competition on the energy markets, had "somewhat unwillingly" agreed to the compromise concluded with the Council. In the view of her compatriot Giles Chichester, it is the work of the agency of the regulators which will be vital. He believes that the agency needs to be independent enough, have wider decision-making powers and have a concrete role, rather than just a consultative one. The Parliament/Council compromise will pave the way for the liberalisation, even if the Parliament would have liked more ambitious provisions, including regarding the powers of the regulators' agency. Alejo Vidal-Quadras also welcomed the fact that a compromise satisfactory to all parties had been reached. He believes that the position on unbundling adopted by the Parliament at first reading has given it leeway to negotiate better subsequently and has allowed it to obtain a stricter regulatory framework, particularly in the countries which have opted for the "ITO" (independent transmission operator) unbundling option, whereby the competences of the national regulators are reinforced and their independence from the governments and industry assured. According to Mr Vidal-Quadras, this new role will reduce the risk of anti-competitive behaviour, particularly in cases in which vertically integrated companies (VIC) abuse their dominant position in order to slow down investment in new infrastructural capacities. The Spanish Conservative also welcomed the fact that the package introduces a third-country clause to avoid a foreign stranglehold on the energy sector of the EU. Antonio Mussa stressed the novelties brought in by the "gas" directive, with the setting in place of the "ITO" option, which he feels is the best possible result the Parliament could have expected. Atanas Paparizov welcomed the fact that new infrastructure will be encouraged by means of the 10-year investment plan. As well as the improvements to competition and transparency, Mr Paparizov takes the view that the package also provides a more satisfactory balance of powers between the agencies for the cooperation of regulators and the Commission. Lastly, the five rapporteurs laid emphasis on the importance of the correct transposition into the national legislations and implementation of all the texts of the package.
The citizen is the main beneficiary of the creation of a genuinely integrated European energy market, stressed Energy Commissioner Andris Piebalgs, who put the third liberalisation package on the table in September 2007 (EUROPE 9505). He stated that the regulatory framework which is to be set in place brings improvements on a number of levels: - the facilitation of cross-border energy transport; - cross-border cooperation between the transmission system operators (TSO), with the development of network security codes; -clearer regulatory controls and increased powers for the national regulators; - increased transparency and fewer possible manipulations permissible by means of effective unbundling between the generation and transmission of energy. Mr Piebalgs also pointed out that merely presenting the package had had a concrete impact on the ground, as a number of VICs have opted to restructure in the wake of the proposals of the Commission and the amendments of the Parliament.
Legislation not enough to protect consumers from cartels, says Claude Turmes
Among the MEPs who took the floor, it is worth noting that the French MEP Anne Laperrouze (ADLE) felt that it would be "reductive" to bring the debate on the third package down to nothing more than the issue of ownership unbundling, "even though this is vital". Ms Laperrouze wishes to add to the positive results the technical cooperation between operators and the "third countries" clause which, even though it is "less sensational" than the one proposed by the Commission, constitutes a step forward.
On behalf of the Greens, Luxembourg's Claude Turmes appeared less optimistic, criticising the fact that "despite progress on a re-regulation level, the new legislation is not sufficiently binding to prevent the criminal acts of the oligopolies", in a context of new mergers in the European energy sector. Consumers will only win out if the whole of the market works, but, Mr Turmes stressed, company buyouts which are becoming more frequent now will lead to a situation of around 10 major groups, which would take a "more robust" anti-cartel legislation to control it. "It is incredible to note that the oligopolies still have an enormous influence on most of the governments and the right wing of the Parliament. This is allowing them to block necessary regulations such as ownership unbundling, regulated access to gas storage and the creation of a European regulators agency with real powers. A large coalition of environmental and consumer protection NGOs, independent regulators and progressive political representatives is needed today more than ever in order to curb the domination of the European 'big fish' on the market and the energy policies", added Mr Turmes, in a press release published after the vote (our translation).
The Polish member Jerzy Buzek (EPP-ED) called for the interests of the energy producers and suppliers not to be neglected, and to ensure that foreign investors may benefit from conditions which are just as favourable as those enjoyed by European energy companies.
Detailed overview of 3rd liberalisation package as amended at second reading
By rejecting ownership unbundling, the most radical solution favoured by the Commission but rejected by several Member States, as the only solution to separate the provision and network activities of the VICs and ensure increased competition on the electricity and gas markets, the Parliament has helped to break the deadlock in negotiations which have been at a standstill since the political agreement reached at the Council in October 2008 (EUROPE 5759), further to the stance of the Parliament at first reading in summer 2008 (EUROPE 9685 and 9700). Here is an overview of the compromise aiming to continue the liberalisation of the internal energy market and reinforce its human rights, in accordance with the compromise reached on 23 March.
Effective unbundling. The Member States will be able to choose between three options to separate the production/supply and transport activities of the energy operators: - the full separation of the ownership structures; - the independent transmission operator ("ITO" option); - the independent system operator ("ISO" option). These three separation options will apply to the transport networks - gas pipelines and high-voltage power lines linking the main electric power stations to substations situated in heavily populated areas or in another Member State. If a Member State decides to impose a system of ownership unbundling, all VICs will have to sell their gas and electricity networks, which will bring about a situation of separate transmission system operators, to be responsible for managing the whole of the network. Under this option, a supply and production company would not be able to hold a majority share in a transmission system operator. The new large gas infrastructures, such as the gas pipelines linking the various Member States or liquefaction and storage facilities for natural gas, could nonetheless be exempt from separation requirements. The alternatives to this first option, the "ITO" and "ISO" systems, would allow the energy companies to keep the ownership of their transport networks. Under the "ITO" option, the Member States would be able to oblige the VICs to entrust the technical and commercial management of their transport networks to a specific organisation appointed to this effect by the Member State, the independent network manager. With the "ISO" option, the VICs are kept in place, but obliged to comply with the rules to guarantee that these two branches of activity are genuinely independent in the way they function: - a supervision body made up of representatives of the gas companies, independent shareholders, representatives of the transmission system operator responsible for the decisions which may have a significant impact on the value of the assets; - a conformity programme including measures designed to prevent any discriminatory conduct and a conformity agent tasked with ensuring that it is correctly implemented; - the management personnel may not be employed by the supply and production company for three years before and four years after they have worked for the transmission system operator; - all commercial and financial agreements concluded between the integrated company and the transmission system operator must be approved by the national regulatory authorities. The Member States will have 18 months to transpose any one of these three options into their national law. As the capitals are allowed to choose between the three options, the new legislation will authorise them to take proportionate, non-discriminatory and transparent measures to guarantee equal competitive conditions for all companies operating on their territory. Furthermore, a "third-country clause" aims to ensure that the transport networks or their owners are not controlled by energy companies from third countries, unless they fulfil certain conditions. This means that a national regulator will have the right to refuse to certify a transmission system operator controlled by one or more nationals of third countries, if this company fails to comply with its unbundling obligations and if its entry onto the market could endanger the security of supply of the Member State or the EU. The Member States will have three and a half years to apply this clause.
Strengthened consumer rights. With the new legislation, consumers will have the possibility of changing their electricity or gas provider at 3 weeks notice and no charge, resort to mechanisms that ensure complaints are dealt with effectively (energy ombudsman) and also resort to compensation mechanisms if the quality of the service is not that desired. They will also benefit from better information on their rights. The Commission is expected to publish an aide-memoire for the energy consumer setting out practical information on consumer rights. The Parliament has also managed to ensure that member states guarantee a universal service to all residential customers and, if necessary, to SMEs with fewer than 50 employees. These customers will be entitled to a specific quality of electricity provided at affordable prices, easily and clearly comparable, transparent and not discriminatory. Member states should also take appropriate measures against energy poverty via national action plans or social allocations to ensure that even the least advantaged customers receive the energy they need.
Increased crossborder cooperation. For emergency situations, the 3rd package also aims to promote regional solidarity, calling on member states to cooperate in the event of serious cuts in gas supply, by coordinating national emergency measures or by developing and improving interconnections for gas and electricity. In order to strengthen cooperation between national regulatory authorities, the 3rd package provides for the creation of a Community agency that will be tasked with supervising the realisation of new interconnection projects and regional cooperation between transmission system operators (TSO), and ensure compatibility between the various regulatory frameworks from one region to the next. The agency may also take regulatory decisions in cases where different national regulators are not able to agree within six months on terms and conditions for access to crossborder infrastructure. The 3rd package also provides for TSO grouping to be formalised, for both electricity and gas, to ensure sound technical development of European transport networks. The agency will fix non-binding guidelines on the basis of which it and the TSO groups will finalise binding network codes on interoperability, operational procedures to be followed in the event of emergency, and the energy efficiency of the networks. These binding network codes should be endorsed by the European Commission, the regulation states.
Investment in infrastructure. The 3rd package makes it an obligation for all TSOs to submit, every year, a 10-year network development plan to the national regulatory authorities based on existing and projected supply and demand. The plan should indicate the main transport infrastructure to be built or updated over the next 10 years. In order to identify investment deficit, especially in crossborder capacity, TSO groupings should publish a non-binding plan every two years for the development of the network over 10 years, based on national development plans. The national regulator may call on a TSO to amend its 10-year plan for development of the network if it is not in line with the European plan. Furthermore, regulators may take measures to ensure that investment in network development plans is effectively carried out.
Increased independence of national regulators. The 3rd package also aims to ensure that all national regulators are independent of governments and of industrial interests. Each member state should guarantee that its national regulatory authority exerts authority in an impartial and transparent manner. In order to guarantee the independence of its national regulator, a member state should ensure that it has its own annual budgetary allocation and is able to implement its budget in a fully independent manner, and that the members of its administrative board are appointed for a fixed term of five to seven years, renewable once. The new legislative provisions also strengthen the powers and tasks of the national regulators when it comes to fixing or approving regulated transport or distribution tariffs, ensuring that there is no overlapping of subsidies between transport, distribution or provision activities, and taking binding decisions concerning energy companies and imposing effective, proportionate and deterrent sanctions on companies that are not in line with the demands set out in the third energy package, and especially fines of up to 10% of the company's annual turnover. (E.H. with L.G./transl. fl/jl)