Energy guru warns against dangers of ‘industry squeeze’

Date: 14/06/01

ENERGY liberalisation in Europe is vulnerable to political interference in the wake of the crisis on America's West Coast, according to a leading industry player.

The warning comes from Jonathan Green, a director at Edison Mission Energy - one of the companies caught up in the California crisis which has seen millions of homes left without power as prices surge by up to 50%. "As a result of California, politicians are much more sensitive now about the possibility of things going wrong," said Green.

The London-based Edison strategist was speaking to European Voice after a conference of major pan-European power firms at the European Energy Millennium Forum in Brussels last week. The companies voiced their concerns over environmental and other political factors that could squeeze the industry, leading to the capacity problems seen across the Atlantic. "The danger will come if there is some sort of constraint on new capacity coming forward," Green added.

Both fuel price increases and 'stranded costs' - debt carried over from capital investments under previous regimes - can be passed on to consumers in the early stages of liberalisation, thereby making the process politically unpopular.

Industry maintains that environmental pressures contributed to the California crisis by imposing heavy costs on the building of new plants. "Equally in Europe you can see pressures for older plants to close down because of emissions," said Green.

Euro-MPs are currently in conciliation talks with EU governments over new emissions limits for large power plants that could force older generators to shut down for part of the year. Negotiations resume next week.

Energy liberalisation in Europe is vulnerable to political interference in the wake of the crisis on America's West Coast, according to a leading industry player.