French power bill fails to end court threat

Date: 17/02/2000

By Renée Cordes

THE European Commission is considering pressing ahead with legal action against France over its implementation of EU electricity liberalisation rules, amid continuing concern that Paris is not doing enough to open up its market to competition.

The warning comes just weeks after France's national assembly approved a bill aimed at averting the threat of court action. Although the Commission did not respond by dropping the case immediately, as Paris might have hoped, it had been assumed that it would do so eventually.

However, a Commission spokesman said this week that the institution still had reservations about the liberalisation plan. It is concerned, in particular, that a provision in the French bill which would tie

consumers to three-year contracts with electricity suppliers could contravene EU law.

The spokesman also warned that the Commission would have to ensure that there was a genuine separation of the functions of network managers and generators to ensure that state utility Electricité de France could not retain a stranglehold on the market.

Industry experts believe that the Commission will have to take Paris to court eventually to pry open its market. "The French will need some kind of force," said Stefan Singer, an energy expert at the World Wide Fund for Nature. He predicted that Paris would try to keep liberalisation to a minimum and this could prompt a flood of complaints from customers to the Commission, leaving it with no choice but to launch proceedings against France.

The latest warnings come two months after the Commission set an end-of-January deadline for France and Luxembourg to pass the necessary market-opening legislation or face legal action in the European Court of Justice.

While Paris responded by introducing its liberalisation bill, Luxembourg continued to drag its feet and the EU executive finally lost patience this week and decided to take the Grand Duchy to court.

All of the Union's member states except Greece, Belgium and Ireland were supposed to have put the Union directive, which allows Europe's largest power users to choose their suppliers freely, onto national statute books by last February. Dublin and Brussels were given until this month to follow suit, with Greece allowed to delay implementation of the market-opening measures for a further year.

The foot-dragging by France and Luxembourg has angered other member states and some - including the Netherlands, Germany and the UK - have taken matters into their own hands by blocking French electricity imports, claiming that this is justified under EU law.

All these countries have gone beyond the level of market-opening required by Union law. But Commission officials are examining whether it is lawful for member states to invoke this 'reciprocity clause', amid concerns it constitutes a trade barrier.

The European Commission is considering pressing ahead with legal action against France over its implementation of EU electricity liberalisation rules, amid continuing concern that Paris is not doing enough to open up its market to competition.