EU transmission moves

22 June 2007

The European Parliament's Industry, Energy and Research Committee has voted in favour of a report that supports the full liberalisation of electricity markets.

This rejects an earlier proposal against unbundling that called for continued ownership of distribution networks.

The new report also makes a distinction between liberalisation of gas and electricity markets.

The European Commission (EC) has been complaining since 2004 about what it sees as competition deficiencies in the gas and electricity market, which were supposed to have been addressed by 2003 directives.

The UK, Ireland and the Netherlands support further liberalisation but Germany, France and others are against unbundling as they think the enforced separation of transmission and supply will affect security of supply and lead to price instability.

Competition commissioner Nellie Kroes promised action on liberalisation in January 2007, and the EC then put forward an alternative proposal: to let existing energy suppliers keep ownership of distribution networks, while network management was overseen by independent system operators.

Germany and France won more support for their position in June, when a majority of energy ministers opposed complete unbundling.

The parliament's new report is intended to provide the EC with further input to a market liberalisation proposal later this year.

Because gas sector profits are usually made from distribution rather than generation capacity, the report argues that unbundling of the gas sector is not straightforward, particularly for those companies that import from third countries.




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