EU to tone down energy sector liberalisation

Neelie Kroes will on Wednesday announce new measures to speed up the liberalisation of the EU energy sector but is expected to refrain from excessive criticism of member states.

The final results of an enquiry launched by the competition commissioner into the current state of market liberalisation, to be unveiled as part of a wider package of measures on reducing energy consumption, are likely to make for interesting reading.

Speaking in Paris earlier this week, the Dutch commissioner said that there was “no transparency, a questionable pricing system, not enough cross-border activity and an extremely high level of protection” in the energy sector – an indication of the likely findings of the report.

Kroes has frequently expressed her frustration at the slow pace of reform in the energy sector, and has pledged to get tough on countries she suspects of protectionism.

Recent disputes between the commission and member states such as Spain and France over their attempts to block cross-border takeovers in the energy sector typify Kroes’ concerns.

But with strong opposition to breaking up state-owned energy companies in many countries, Kroes faces a dilemma.

The commission needs the support of all 27 member states to push through its ambitious plans for a common energy policy at the March EU summit, and Kroes is likely to have to tone down some of her criticism of national capitals as a result.

Rather than dragging member states through the European courts, Kroes is expected to suggest less controversial measures for improving liberalisation that should also keep capitals on side.

These include ‘unbundling’ energy production from distribution and allowing energy companies to retain control of their distribution networks and compensating them for allowing access to other firms.

The latter suggestion in particular is seen as a response to French concerns that full separation of network ownership from production capacity would hamper investment and threaten security of supply.

The commission will also suggest that national regulators be given a greater role in managing EU-wide energy markets, along the lines of the successful system already in place in the telecoms sector.

Kroes is also expected to propose giving more authority to the European regulators group for electricity and gas (ERGEG) and setting up an EU energy regulator – despite opposition from member states.

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