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EU sees E.On's proposed grid sell-off as major boost for its energy deregulation plan

EU sees E.On's proposed grid sell-off as major boost for its energy deregulation plan

The European Commission's bid to break up energy giants got a boost Thursday with the announcement by E.On.AG, the German energy titan, it plans to sell off its distribution network to defuse antitrust problems.
The European Commission said E.On has offered to settle several antitrust cases by selling off its transmission network to an operator not involved in generating or supplying power.
Such complete ownership "unbundling" is a key part of a sweeping energy package proposed by the European Commission aimed at combatting climate change.
The announcement took German officials by surprise. After attending an EU energy ministers meeting, German Deputy Economics Minister Peter Hintze said the E.On announcement "was not the best backdrop" to a gathering at which he argued against full ownership unbundling.
EU Energy Commissioner Andris Piebalgs called the E.On announcement "an encouragement that our proposal (for full unbundling) is the right one. And that it does not create any problems for companies."
The European Commission believes former state-run monopolies have a disproportionate say in energy by controlling both the production and distribution of gas and electricity. That dual power keeps prices high and discourages investments in new pipelines and power grids to keep energy rivals at bay, it believes.
EU regulators will check if E.On's commitments to fully cast off its distribution arm.
If the E.On plan gets the green light, its promises would be made legally binding and the EU would drop the antitrust cases against the company, officials said.
The company also announced it will divest 4,800 megawatts of generation capacity to rivals, EU officials said.
"These proposals, if adopted, would structurally change the electricity sector in Germany and could spur competition in the sector to the benefit of domestic and industrial customers," the European Commission said in a statement.
EU regulators are investigating possible cartels between German gas and electricity companies, raiding E.On Ruhrgas AG and electricity supplier RWE AG in May 2006. They also claim the German power market is run by an oligopoly of E.On, RWE, Vattenfall AB and EnBW AG.
They fined E.On's Energie division euro38 million (US$56 million) last month for tampering with a plastic seal regulators fixed to secure an office during that raid. The EU said the broken seal meant the company had the chance to remove incriminating documents.
EU energy ministers debated the European Commission's proposal for energy companies to choose between operating energy infrastructure and generating or selling power, saying this would be the most effective way of generating customer choice.
France, Germany and six other nations pushed a far less drastic plan. German officials said later that alternative plan will unlikely succeed now that German industry appeared to agree with the European Commission's call for breaking up energy giants.
As an alternative, the European Commission has proposed independent oversight of gas and electricity distribution networks.
Its deregulation plan is part of a broad energy package that aims to slash greenhouse gas emissions by 20 percent and boost renewable energy to 20 percent of the EU's total energy use by 2020.
On Thursday, France, Denmark and the Netherlands urged their EU partners to make sure it is enacted by year's end.
"Europe's credibility is at stake" in combatting climate change, said Dutch Energy Minister Maria van der Hoeven. French Energy Minister Jean-Louis Borloo spoke of a global "energy war .... We must win this battle."


Updated : 2021-05-12 06:23 GMT+08:00