EU Parliament Backs Plan for Breakup of Energy Companies

EU Parliament Backs Plan for Breakup of Energy Companies

Jul 11 - International Herald Tribune

The European Parliament urged the breakup of energy companies, putting it in direct opposition to France and Germany over planned legislation to increase electricity and natural-gas market competition.

The Parliament said that it would support a draft law due in September to split utilities like Electricite de France and E.ON into separate grid and supply businesses. The proposal, which the European Commission, the regulatory arm of the EU, is drawing up as a way to make networks accessible to companies without their own grids, will need the approval of the Parliament and national governments.

"It's a clear signal," said Alejo Vidal-Quadras, a Spanish Christian Democrat who steered a resolution on the matter through the 27-nation Parliament on Tuesday in Strasbourg. "It's an important step to ensure access for third parties to the network."

The commission is seeking allies to break up energy companies as France and Germany spearhead opposition to the campaign, the latest push to pry open Europe's 250 billion, or $341 billion, power and gas market. National barriers, which persist even after 2003 legislation gave customers the right to choose suppliers, threaten to increase prices, curtail supply and weaken the European economy.

The commission, which is based in Brussels, has said splitting companies into separate grid and supply businesses would prevent incumbents from favoring their own transmission units at the expense of new entrants. In a sign of how high the matter is on the political agenda, the commission president, Jose Manuel Barroso, and Neelie Kroes, the competition commissioner, are campaigning with the energy commissioner, Andris Piebalgs, for the plan.

France has said a better approach would be to establish stronger national regulators with the power to oversee investments and tariffs. Germany and most other member states joined France in opposing the commission's plan at a June 6 meeting of energy ministers.

At the time, Piebalgs said the commission faced an uphill battle and a "very uneasy situation" as a result of the opposition of EU governments to the breakup option, which is known as ownership unbundling.

In its resolution, the Parliament said it "considers transmission ownership unbundling to be the most effective tool to promote investments in infrastructures in a non-discriminatory way, fair access to the grid for new entrants and transparency in the market."