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Thursday, July 17, 2008

More on energy liberalisation-will Europe use it or loose it

Ever wondered why EU is bothering so much with energy liberalisation? I read an interview that enlightened me on it. So, I'll share it as an introduction to the development of the struggle for energy unbundling in Europe. A small French energy operator try to sue the state for something I'm not very agree with, but anyway, it wants the state to give it more money to cover its expenses on the production of energy. The state checks the big companies that own production and transport and sees that the money are enough. The reason? For the big companies doesn't pay for transport (because they own it) and thus, their electricity or gas or whatever would be alway cheaper. And the smaller companies cannot be concurent to them. But if the energy was unbundled, the smaller and the bigger companies will pay the same. Kind of. Ok, here are the articles for today.
  • Brussels encouraged by RWE grid sale- 2.june
  • EU enters crunch talks on energy liberalisation-6.june (longer but important!)
My comment: I think it's essential to have it the Brussel way! Very very essential. In that second article, I see few bad trends- the UK's "we don't need Europe" song and the France's (and partly Germany) "we are Europe and we don't need the rest". Both cases are very dangerous. UK can't do it without the EU, no matter if it likes it or not. And France and Germany are not the whole EU anymore. And it's high time they face the truth, because with the energy crisis Eastern countries (closer to Russia) will play more and more essential role. And that's is not a threat. It's the reality and everyone should understand it and use it. I think energy unbundling is crucial stage of the EU development-it will either hold it together or loose it. Hopefully the European spirit will win, but still, I don't understand why we had to get to this point.

Brussels encouraged by RWE grid sale

2 June 2008

German utility firm RWE AG has announced it will sell off its gas grid within two years to avoid further anti-trust actions by Brussels over suspected abuse of market dominance. The move comes one week before a key ministerial meeting on energy liberalisation.

In May 2007, the Commission announced the launch of anti-trust proceedings amidst concerns that RWE "may have abused its dominant position in the regional markets for the transport and wholesale supply of gas in North Rhine-Westphalia by raising rivals' costs and preventing (new) entrants from getting access to capacity on gas transport infrastructure in Germany".

RWE, Germany's second largest electricity producer, says it wants to avoid "protracted litigation" and has therefore "decided in favour of a consensual settlement and would like to end the proceedings".

The Commission, which proposed its 'third package' of energy market liberalisation measures on 19 September 2007, is intent on further liberalising the EU's gas and electricity markets by 'unbundling', or separating, the production and distribution assets of large energy firms.

RWE's grid sell-off is likely to be considered a further victory for the EU executive, following a similar move by German energy giant E.ON in February (EurActiv 29/02/08).

The Commission welcomed the RWE announcement as "a structural change in the German gas sector" that, if implemented, will "facilitate competition in the sector to the benefit of domestic and industrial gas customers," according to a 31 May statement.

Meanwhile EU energy ministers are preparing to meet in Luxembourg on 6 June to discuss the third package, but it remains unclear if the meeting will produce a political agreement that could pave the way for speedy resolution of the file.

Nonetheless, the Commission was encouraged last week by two separate developments in the EU energy sector that point to a greater opening of the market in line with Brussels' liberalisation agenda.

French mega retailer Carrefour on 29 May launched an 'Energie EcoPlanet' programme, whereby customers will be able to purchase contracts for electricity that stems from certified renewable energy sources, primarily wind and bioenergy.

And on 30 May, France's Powernext and Germany's EEX, two power exchanges, announced they will integrate "their entire spot trading activities" under the umbrella of a new company before the end of 2009. source

My comment: Ok, I love the idea of the last paragraph. So we see French and German power exchange systems merger. That's pretty cool and it gives me a clue on what I already suspected. That the whole "unbundling" move is part of an effort to integrate European exchange grids in on system. Which is cool and I totally support it. And I love the idea of Carrefour. It's awesome and I think it will have effect. Hopefully.

EU enters crunch talks on energy liberalisation

6 June 2008

Energy ministers from the 27 member states are meeting today (6 June) in an attempt to reach a compromise over plans to force more competition onto EU energy markets - otherwise they risk delaying any decision until 2010.

The ministers will try to agree a "general approach" to further open up EU energy markets, including a contested proposal to break up energy utilities' production and transmission businesses, known as 'ownership unbundling'.

Germany and France have fiercely opposed the Commission's plans and formed a blocking minority with six other member states in the Council, threatening to derail the whole package if they are not offered an alternative.

But the ministers will be running against the clock when they meet in Luxembourg. The French, who take over the rotating EU Presidency from 1 July until the end of the year, clearly said they would refuse to deal with the issue, arguing that they already have an extremely busy agenda (EurActiv 2/06/08).

According to EU diplomats, in practice, this means the whole package could be delayed indefinitely, since next year will be almost entirely dominated by the European elections, leaving Parliament in a de facto recess as of March 2009.

On the other hand, if energy ministers can agree a general approach at their Friday meeting, then the deal could be fine-tuned and transformed into a more detailed "political agreement" in October, the official said.

Central to the discussion on Friday is a compromise proposalword tabled by the Commission and Slovenia, the current holder of the rotating EU Presidency, which aims to sooth Franco-German opposition to 'ownership unbundling' (for more details, see EurActiv 16/05/08).

However, there are a number of remaining issues which could still sink the deal.

First among them is to determine whether the 'Third Way' compromise proposal will be applicable to gas only or whether it should also be applied to electricity.

The Commission, supported by the UK, argues that the electricity market is already mature enough and that the 'Third Way' should therefore only apply to gas. Once the gas issues are solved, the argument goes, finding a compromise on electricity will be "much easier".

However, the French see things very differently.

Another big issue is the review clause that the European Commission will have to produce five years after the directive comes into force.

Under the current draft, the review would address "the extent to which the unbundling requirements [of the directive] have been successful in ensuring full and effective independence of transmission system operators".

For the UK, the review should be made as stringent as possible and focus mainly on whether the 'Third Way' option has delivered.

However, those claims are roundly rejected by France. "We are in favour of a strong regulatory system but the criteria should apply to all options in the same manner," the French official stressed.

In short, the directive's ultimate objective should not be ownership unbundling, the French official insisted. "If the 'Third Way' works, why change it?," he asks, adding that in this case, there would be "no reason to change the system even in ten or fifteen years".

Suggestions that unbundling could be introduced after a transition period were also rejected as "a non-starter", the official said, using Shakespeare's language.

Finally, a reciprocity clause on investment, also dubbed the 'Gazprom clause', is causing concern among some EU countries.

Under the clause, foreign companies would need to comply with the same unbundling requirements at home before making acquisitions in the EU. The deal would need to be signed in a bilateral agreement between the European Commission, on behalf of the whole EU, and the partner country.

Supporting the clause are former Soviet satellite states such as Poland, which are pushing for a strong approach at EU level to protect their strategic energy transmission assets from acquisitions by Russian companies (EurActiv 20/09/07).

At the other end are countries like the UK, which worry about "a burdensome procedure" that would involve all 27 EU member states mandating the Commission to sign a bilateral investment deal that would have to be returned to the Council for approval.

British diplomats also worry that the clause would give the Commission new "creeping powers". "The UK thinks it can deal with this without the EU," one said. source

My comment: Ha ha. All I can say. So to sum up: UK wants unbundling, France-no. UK doesn't want reciprocal clause with Gazprom, the other want. And now, let's think which Russian very rich people live in UK? Related? I don't know. But it's very suspicious. For me, the softening toward the position of France is wrong, even if my country is among one of the 6 supporters of France and Germany. For me, energy unbundling is good and it should happen. I'm not sure if the gaz and the electricity should be treated the same, but it makes sense for me. Pipes, wires, what's the difference. I think we're seeing a major fight in the EU that will determine its future-which will rule our Union-the business or the EU. I sincerely hope it won't be the first!

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