Swiss fuel exports spark row with EU row

Date: 15/10/1998

By Chris Johnstone

SWITZERLAND'S delicate relations with the EU risk being further complicated by the question of how to treat the country's electricity exports.

With the first stage of liberalisation in the Union fast approaching, Europe's electricity giants are questioning whether traditional exporters like Switzerland should be free to supply energy direct to large EU customers while equivalent access to their domestic markets is denied.

The issue of how generous the EU rules should be has provoked a difference of opinion within the European Commission, with Sir Leon Brittan's Directorate-General for trade (DGIA) arguing for an open approach while the Directorate-General for energy (DGXVII), led by Christos Papoutsis, is taking a much more cautious line.

Electricity is covered by World Trade Organisation rules and is defined as a 'good' under the General Agreement on Tariffs and Trade.

The EU's staged electricity liberalisation will, as a first step, guarantee 25&percent; market opening by allowing the biggest customers to shop around. “Trade used to be between electricity companies but the EU laws allow you to deal direct with large customers,” said a spokesman for the Union of Swiss Electricity Producers and Distributors.

For the past 30 years, Switzerland has been a net exporter of electricity to the EU, mostly selling its surplus in the summer and importing a smaller quantity of EU electricity in the winter. Swiss exports totalled 9,146 gigawatts in the rather lean year of 1996 compared to 11,800 gigawatts in 1994.

Although the Swiss are working on new laws which could allow EU electricity companies reciprocal access to their domestic market, these will not be in place until the start of 2000 at the earliest. This could leave an awkward hiatus during which Switzerland will have greater access to the EU market than it offers to its own.

Swiss electricity firms say a protocol on energy trade between the EU and the European Free Trade Area (EFTA), of which Switzerland is a member, could resolve the problem.

But electricity experts point out that the EU also has to draw up a new framework for energy trade with central and eastern European power exporters.

This was limited in the past as there was no grid interconnection in place. However, former East Germany has now been linked with the West and Poland, the Czech Republic, Slovakia and Hungary are being joined up to the UCPTE high-power electricity grid which allows transfers between EU countries.