28th Nov 2023

France and Germany push ahead with own energy liberalisation plans

  • France and Germany say the commission's energy liberalisation proposals go too far (Photo: Wikipedia)

A Franco-German alternative to the European Commission plan to separate transmission of energy from its production within energy companies is taking concrete shape, but the European Commission has indicated it is unlikely to fly.

A working document, seen by EUobserver, suggests that energy firms' production and transmission wings should be independent from each other and connected by only a common set of shareholders.

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Under the scenario, "all transmission assets shall be owned by the transmission system operator" (TSO), which "shall have its own identity, different from the vertically integrated company with a separate branding and communication policy".

Additionally, "personnel leasing from any affiliated of the vertically integrated company to the TSO shall be strictly forbidden," the document says. That is to say that no staff may be shared between the parent company and the transmission firm.

In simple language, the Franco-German proposal would see the transmission system operator be a separate firm, distinct from the parent electric company, but at the same time the TSO would be owned by the same set of shareholders as the parent electricity firm.

This very point makes the joint initiative by Berlin and Paris - dubbed the third alternative - different to the liberalisation ambitions recently tabled by the European Commission, which the two leading EU states strongly oppose.

The asset break-up is seen in Brussels as essential to boosting competition and cutting prices in the energy sector. Control of both supply and transmission makes it harder for new entrants to enter the market, the commission says.

However, Berlin and Paris oppose the core of Brussels' proposal, known as full ownership unbundling. This means splitting up energy firms' production and transmission wings by forcing the parent company to sell its transmission networks.

They have also been reluctant to give their approval to an alternative scenario tabled by the EU's executive body, which would see the setting up of an independent system operator (ISO).

Under this proposal, big energy companies would retain ownership of the transmission lines, but hand managing control over networks to an entirely separate operator. This company would not share any shareholders with the parent company.

In this way, says Brussels, the parent company would have no influence over the decisions taken by the independent manager.

According to one German diplomat, the commission went "too far" with its proposal, as it would "infringe constitutional property rights", but not necessarily ensure more competition in the sector.

"The ownership structure should be different", he said about the Franco-German initiative.

The Slovenian EU presidency has urged Germany and France - home to energy giants EDF and E.ON, which both supply energy and control transmission networks - to present their proposal this week.

However, it is expected they will not make it public until it is properly examined and agreed by the rest of the critics of the unbundling idea - Austria, Bulgaria, Cyprus, Greece, Latvia, Luxembourg and Slovakia.

According to one commission official, speaking to EUobserver, the model - if presented in its current version - is unlikely to win over officials in the commission.

He said that having the same shareholders behind the production and transmission would not introduce competition and cut prices in the energy sector, as the decisions taken by each wing would tend to reflect the same group's interests.

EU energy commissioner Andris Piebalgs himself said last December that he was "ready to discuss with those who still have doubts" about unbundling, but any new alternative should bring "real structural change similar to that proposed by the European Commission."


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