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EU – Eight member states oppose plan to split up energy giants

Published on 31/01/2008

   BRUSSELS, January 30, 2008  - Ministers from eight European nations, ledby France and Germany, have written to the European Commission criticisingits  plans to force energy giants to split in two and offering an alternative.   The letter, received by EU Energy Commissioner Andris Piebalgs on Thursday,speaks of "several crucial doubts... concerning the legality, opportunity,proportionality and efficiency," of the European Commission's plans.   Neither the EU's impact assessment, nor the policy debate over the last fewmonths have dissipated these "serious concerns," it added.   The letter was sent by the economy ministers from Austria, Bulgaria,Germany, Latvia, Luxembourg and Slovakia, as well as the French ecologyminister, and Greek development minister.   EU officials want to increase competition in the energy sector byseparating, or "unbundling" energy production and distribution activities,amid sharply rising prices.   The Commission's preferred plan of "ownership unbundling," forcing energycompanies to get rid of one sector of their activities in the supply chain "isnot compatible with constitutional law and with the free movement of capital,"the eight national ministers said in their letter.   They also said that it was not "a sufficient and appropriate tool todeliver additional opening of the European gas and electricity markets" toreach the agreed objective of guaranteeing adequate investment in the networksand fostering the integration of national markets.   Piebalgs said earlier this month that he saw wide support for thecontroversial proposals to split up big power and gas companies to boostcompetition.   However, the proposals have faced stiff opposition from a minority ofmember states, led by France and Germany, where energy giants such as EDF andEON could be forced to part with choice assets if the proposals go through.   In a move to appease such concerns, the Commission also proposed a secondscenario under which companies would be allowed to keep legal ownership oftheir transport networks as long as they are run by an "independent systemoperator."   However a European source close to the dossier said this alternative waseven less palatable to the energy majors as they would not be sure that theresultant company's value and profits would be sustained.   The eight nations in their letter proposed a third way which they called"Effective and Efficient Unbundling".   Under the plan, the power operators would be allowed to own both theproduction plants and distribution grids, but the management of the twosectors would be strictly separated.   In the letter the eight EU nations also propose "to foster regionalcooperation with the possibility to designate a regional coordinator in chargeof facilitating the dialogue between all national competent authorities" andthe power companies.   EU energy ministers are due to meet in Brussels at the end of the month todiscuss the issue.