Single energy regulator threatens national pride

Date: 30/03/06

At last week's summit (23-24 March), EU leaders quashed suggestions that they should create a pan-EU energy regulator, but such a post might be inevitable if Europe is to achieve a fully competitive market.

The idea of having a single EU energy regulator has been around for a while but was strengthened when EU Competition Commissioner Neelie Kroes announced that the initial findings of an inquiry into the energy sector had uncovered the dismal state of competition in the EU's energy markets.

The pipelines or cables transporting gas or electricity between member states - known as interconnectors - are still largely controlled by the dominant players on those markets which are preventing new entrants from importing energy.

Capacity is also a problem. There are bottlenecks between Italy and the rest of Europe, the Netherlands and its neighbours and between France and Spain, and these shortages mean that companies cannot ensure a sustained supply to customers in neighbouring member states.

National energy regulators have not yet managed to co-ordinate their efforts to set up harmonised rules for accessing the European grid and as a result, competition remains limited and neither business nor private consumers can readily buy gas from a company in another member state.

In its Green Paper on EU policy, the European Commission touted the idea of a single European regulator on the grounds that an international body could reach those parts that national regulators cannot.

"If you move towards an integrated European grid then a natural next step is to have a European structure overseeing it," said Christian Egenhofer from the Centre for European Policy Studies. "In theory national regulators could have rules in place and co-operate with one another, but history shows that this doesn't work as efficiently as having one institution."

But energy is such a political issue that governments are reluctant to relinquish power to the EU. "It's not a question of establishing a new super authority...for energy," said Austrian Chancellor Wolfgang Schüssel at the summit. "The same effect could be the outcome if the existing bodies co-operated in a much more effective way."

John Mogg, president of the Council of European Energy Regulators (CEER) and chairman of the European Regulators' Group for Electricity and Gas (ERGEG), said that co-operation had been mounting over the past 18 months in any case.

National regulators have set up a group to analyse the problems and to give solutions to the lack of EU harmony on grid access, and ERGEG recently launched a regional initiative aimed at speeding up the response to competition issues at regional level.

"We have to be careful that in trying to solve a problem we don't create more problems by having several regulators - the national ones either side of the border and then a new body - trying to solve the same issue," said Mogg.

One solution, he said, could be to create an independent body of regulators that would have the power to oversee and enforce harmonised rules at national level, just as the Committee of European Securities Regulators does for the single market rules for financial services.

"These are big issues and any body would need to be entrusted with the legal powers that would enable it to carry out the job," he warned.

Author suggests that despite reluctance from Member States a single European regulator might be needed for a common energy grid. European leaders had not taken up the proposal made by the European Commission in its energy Green Paper when they discussed energy policy at the Spring European Council on 23-24 March 2006.
Article is part of a European Voice Special Report, 'A Common EU Energy Policy'.

European Commission: DG Competition: Sector Inquiries - Energy http://ec.europa.eu/competition/sectors/energy/overview_en.html

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