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EU reaches compromise to breaking up energy giants

EU reaches compromise to breaking up energy giants

EU governments struck an everybody-wins compromise Friday which they said will liberalize Europe's energy markets without forcing large gas and electricity companies in Germany and France to sell off their distribution arms.
At an EU environment ministers meeting, France and Germany resisted a push for a complete sell-off of energy companies' power grids and gas pipelines to ease their grip of the supply chain.
The two nations disliked only slightly less an alternative to "ownership unbundling" whereby energy giants put their infrastructure under tight supervision.
In a compromise, the energy ministers adopted both models for now, agreeing that an independent review in 2010 must show which liberalizes the EU's gas and electricity markets best.
Dutch Environment Minister Maria van der Hoeven said if full ownership unbundling _ which she prefers _ wins French and German energy titans must then be broken up. "In that case we will move to full ownership unbundling," she told reporters.
The compromise rescued a broad EU energy package designed to secure and affordable supplies of energy at a time when global demand, especially for oil and gas, is driving up prices to record high levels, said Slovenian Energy Minister Andrej Vizjak, the meeting's chairman.
Officials said they hope the bill will be adopted before the end of the year b y the European Parliament.
Crucially, it contains a 'Gazprom' clause _ which France and Germany had wanted out _ that will let EU companies only do business with non-EU firms _ such as the Russian state-owned gas giant _ if the latter's home countries do not restrict access to EU energy companies.
Europe has consistently asked Russia to allow European firms wider access to the Russian market.
The EU gets a quarter of its gas from Gazprom, a level that is set to rise significantly in the years ahead. German, French and Italian gas companies have signed long-term delivery contracts with Gazprom.
EU antitrust regulators last year said Europeans pay too much to greedy energy companies that control the market and are not putting enough of their profits in making much-needed improvements to the region's energy networks.
They concluded that stripping power grids and gas pipelines was the best way to secure market liberalization.
At Friday's meeting, German Energy Minister Michael Glos argued that full ownership unbundling as well as the alternative of putting energy distribution networks under independent supervision and management amounted to the "expropriation" of private companies.
"The issue of ownership is extremely important in Germany," he told his EU colleagues at the meeting that was partly shown on the Web. "We do not want things determined by the European Union."
Around half of the EU's 27 member states have already taken major steps to liberalize energy markets by allowing energy suppliers to use existing networks. At least eight have legislated ownership unbundling.
To get German and France on board, the European Commission and Slovenia drafted an alternative that lets energy companies keep their grids and pipelines provided they are managed by an "independent transmission operator" under outside supervision and with credible long-term investment plans of their own.
These companies could be fined if they did not break ties with their parent company and could not allow managers to float from one firm to the other.
By embracing full and partial unbundling for now, the EU nations "had to compromise. No one won 100 percent," said British Energy Minister Malcolm Wicks. He hailed the compromise saying "European companies and citizens expect us to move ahead" in energy liberalization to bring the cost of energy down.


Updated : 2021-04-18 14:59 GMT+08:00