Energy regulator wants ‘bold and competitive’ market policy

The head of the European energy regulators’ group has called on EU politicians to be as bold as possible in agreeing new measures to give the Union a truly competitive energy sector.

Speaking to European Voice about the Commission’s energy package due out in January, John Mogg said: "A demonstration of political will by heads of state and government and the Commission is essential."

He added: "Failure to take tough decisions will be a major missed opportunity. Energy is the lifeblood of our societies. It’s difficult but it’s crucial that the Commission and member states retain ambition."

Mogg, currently chairman of the European regulators’ group for energy and gas (ERGEG) and head of the UK energy regulator OFGEM, said there had been a "lack of progress" in creating a genuine EU internal market for energy. The problem stemmed from "vertically integrated" companies which combine power generation with transmission and distribution infrastructure. This allows them to carve up the market by using their control over access to energy supplies to fight off would-be competitors along the supply-chain.

For example firms attempting to sell to households would find it hard to compete against a retail supplier owned by a vertically integrated energy company. "If you are a vertically integrated company, you’ll favour where you stick your pipes and wires, depending on where you’ve got your companies," he said.

Mogg, formerly director-general of the Commission’s internal market department, said that measures on legal unbundling in the existing liberalisation directive had not been as effective as hoped. He said that ERGEG’s preferred way to address the problem was through ownership unbundling, where energy companies are forced to sell off their transmission and distribution assets. "If you don’t own [the network] you don’t have the information [to discriminate against competitors]," he said.

The OFGEM chairman added that whichever approach the Commission ended up taking in January, there was a need for stronger powers for national regulators.

"You need independent regulation because in a lot of countries there is no independence. As the debate has proceeded there is far more recognition that the lack of independence of regulators is bad for efficiency of national markets. There’s also the question of whether the regulator has sufficient powers to exercise and to stop abuses," he said.

While he was sceptical about the need for a new pan-European regulator, he was adamant that the current EU regulators’ group should be given more formal powers, especially over cross-border issues. "With a single regulator, the problem is who will it be and are we ready?" he said.

Mogg highlighted the need for ERGEG to win new powers over interconnection so there was a single European grid for gas and electricity. The group should also have powers over transmission system operators, such as introducing new standards to deal with blackouts as occurred in Germany in November and in Italy in 2003, he added. The power cuts left millions without electricity across Europe.

The head of the European energy regulators’ group has called on EU politicians to be as bold as possible in agreeing new measures to give the Union a truly competitive energy sector.

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