Kroes told: back off from energy

By Anna McLauchlin

Date: 17/11/05

Europe's electricity industry has warned the European Commission against an over-hasty recourse to competition law to advance liberalisation.

On Tuesday (15 November), EU Competition Commissioner Neelie Kroes announced that her department, DG Competition, had identified "worrying distortions" in the energy market and "would not hesitate" to remedy these distortions via competition rules on monopolies or state aid.

Kroes will present her ideas, as well as a report on the current state of energy markets to EU ministers on 1 December. A preliminary report on the competition inquiry is expected in February 2006.

But Paul Bulteel, secretary-general of European electricity association Eurelectric, said that the competition authorities were reacting prematurely.

"If DG Competition is judging us against a benchmark where full competition is established, then by definition we will not come up to scratch," he said. "But our industry is still in the transition period between the former monopolies and a fully liberalised market, and the authorities should take into account the dynamics of this process."

Bulteel also warned that the electricity industry was subject to specific difficulties such as transportation constraints and problems obtaining permits for new lines, plus specific needs such as the sett- ing up of international power exchanges.

"If the authorities were to judge electricity like any other commodity then that would be wrong," he said.

But he welcomed the pressure the Commission announced that it would put on member states to implement the latest package of liberalisation laws.

So far, Spain, Luxembourg, Estonia, Portugal, Ireland and Greece have struggled to open up either their gas or electricity markets or both and all are currently under attack from the EU's internal market infringement procedures.

"I hope ministers will make a pledge to implement the second package and act quickly on that pledge," he said.

Energy Commissioner Andris Piebalgs announced on Tuesday that a consultation with energy companies and consumers had revealed a lack of market integration at EU level, no price convergence between member states in the gross market and low levels of cross- border trade.

The Commission is to carry out a country-by-country review - to be finalised by the end of 2006 - and is also considering launching a third liberalisation package, although Piebalgs said that he was not in favour of this.

If implemented properly, the current rules should achieve the necessary market integration and benefits for consumers, he said.

Dominique Forest from BEUC, the European consumers' organisation, welcomed the Commission's intention to publish a charter for consumer rights in the gas and electricity markets. He said he hoped that the Commission would delve deeper into the issue of consumer protection.

"It is often difficult and time-consuming for people to compare different offers and so they don't bother, and there are often restrictions on exiting contracts too," he warned. "This charter is still quite vague about what it will actually mean for consumers."

Article reports on opposition from the electricity industry to European Commission plans to use competition law to advance liberalisation in the sector.

• Primary Source

European Commission: DG Energy and Transport: Energy: Electricity http://ec.europa.eu/comm/energy/electricity/index_en.htm

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