By Francesca Ross - 24th March 2009
MEPs have reached an informal agreement on the third energy package, which will see the electricity market liberalised and consumer rights extended.
The deal, reached in Strasbourg on Tuesday, centres around "full ownership unbundling" which will cut ties between electricity generating companies and transmission networks.
Under the proposals, which still have to be agreed by parliamentary and council votes, a supply and production company could not hold a majority share in a transmission system operator.
Rapporteur Eluhned Morgan said the move would "create a long term framework for a one trillion [euro] investment in years to come" and "make the single market work better on electricity and gas".
The compromise gives member states the possibility to choose between three options for separating supply and production activities from network operations - both for gas and electricity markets.
Consumer rights would also be strengthened under the terms of the package. For example, citizens can change their gas and electricity suppliers within three weeks for free, or receive compensation if service quality levels are not met.
Explaining the importance of the deal, UEN MEP Antonio Mussa said there would now be "certainty of supply".
There would also be "a clear and more transparent price", which would "be difficult for council to say no to "due to its social, economic and political significance", he argued.
If approved, the package will come into force in 2011 and will set harmonised "network codes" for electricity generating and transmission companies as well as strengthening the role of national energy regulators.
EPP MEP Alejo Vidal-Quadras said the new package would "develop protocols for emergency situations and technical cooperation with third countries", which was vital following last year's energy blackouts in some member states.
All of the members involved in the negotiations described their admiration for the Czech presidency in the crafting of the difficult deal.
Socialist Atanas Paparizov said, "It's not just a compromise it is the most efficient solution for today's situation in Europe."
Other measures to be introduced include the establishment of a European network of transmission system operators for electricity and gas, which is to implement the network codes.
EPP MEP Giles Chichester said the agency would be accountable to the parliament and produce a framework for national agencies to cooperate. "Effective regulation is essential for efficient and fair markets," he argued.
There have been murmurs of disquiet regarding the final terms of the deal, as the original intention from the commission had been to totally dismantle the energy network.
However, Socialist MEP Morgan explained that moves on this issue were still afoot in the commission as part of its powers of enquiry into fair competition in the market.
She said, "The battle is not far from being won… the key thing was to make up on the full ownership unbundling by strengthening the powers of regulators - the direction of travel is towards full ownership unbundling."
If it is to be adopted, the informal compromise will now have to be endorsed by parliament's industry committee at the end of March.
It will also have to go before representatives of the full council (in Coreper) before being tabled to a second-reading plenary vote in parliament, planned for 21-24 April or 4-7 May.
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