Italy thwarted in plan to end electricity deadlock

Date: 14/03/1996

By Fiona McHugh

THE EU's member states remain divided over how far electricity liberalisation should go, despite Italian efforts to bridge the gap between the bloc's liberalisers and its protectionists.

Italian diplomats had hoped to persuade their counterparts to agree to open electricity markets by a fixed amount - somewhere between 22 and 40&percent; - at meetings held over the last week to try to break the deadlock, but came away disappointed after France refused, saying the 'fixed' amount would inevitably increase over time.

“Germany and France still disagree about how much their markets should be opened, and I am afraid the whole dossier seems to be stuck,” said one diplomat.

By proposing to open markets by an agreed percentage, Rome had hoped to get around the sticky issue of whether or not distributors should be included in the deal along with the producers of electricity.

Germany and the UK have always insisted that a liberalisation pact which excludes distributors would not be worth the paper it was written on, while France, at the other end of the scale, refuses to countenance one which includes them.

Paris argues that a rapid opening of the market would jeopardise 'universal service', the principle that everyone should have access to electricity at a fair price regardless of where they live or how much they consume.

But German diplomats insist that France is more concerned about shielding its state-owned electricity company, EDF, from competition than it is about protecting its citizens.

Suggestions that member states could perhaps decide for themselves who should or should not qualify for liberalisation have also been shot down.

Keen to capitalise on the planned privatisation of Enel, its giant state-owned electricity company, Italy has shown an unflappable determination to break the electricity deadlock since it took over the EU presidency.

It has set a gruelling timetable for national negotiators, packing in scores of meetings on the subject since the beginning of the year.

“Perhaps they think that we will give in through sheer exhaustion,” commented one diplomat taking part in the talks.

Despite these intense efforts, agreement is not yet in sight. But Italian diplomats, displaying an admirable sense of optimism, say they are confident one will be reached before ministers meet again on 7 May.

It is not clear what their confidence is based on, but Rome is said to have yet another plan up its sleeve which will be presented to EU ambassadors shortly.

Energy Commissioner Christos Papoutsis, tiring of the seemingly endless talks, has warned that if ministers fail to see eye to eye at their May meeting, “higher authorities” will be called in to settle differences. That could mean the involvement of the European Court of Justice, or worse still for those trying to maintain the status quo, the EU's competition authorities led by Belgian Commissioner Karel Van Miert.

With monopolies in the telecoms sector all but broken, Van Miert is known to be keen to intervene. Given the crawling pace of electricity talks so far, he could easily justify the need to wade in bearing his powerful monopoly-busting tools.