30th Mar 2023

MEPs approve softer version of energy law

  • Electricity transmission networks (Photo: European Commission)

The European Parliament has approved a watered-down version of an energy package aimed at further liberalising the bloc's electricity and gas markets, while strengthening consumer rights.

Initially targeting full separation of transmission and production activities in energy giants like E.ON or GDF - also known as "unbundling" - the compromise approved on Wednesday (22 April) by the European Parliament gives big energy players the option of keeping the two types of activities, but under stronger supervision.

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The EU goal is to facilitate network access for smaller energy companies without their own grids, as well as to ease up cross-border investments and trade in EU's €300 billion electricity and gas market, which is still fragmented by national barriers.

"The package will give the EU a clear regulatory framework needed to ensure a properly functioning internal market and to promote much needed investment, especially by cross-border and regional cooperation," EU energy commissioner Andris Piebalgs told MEPs in a plenary debate ahead of the vote.

He admitted however, that the compromise was only a "tool" to achieve the "ambitious goal" launched in 2006, to create a truly competitive and single European energy market with greater transparency and lower prices for EU consumers.

Under the deal pushed especially by Germany and France, home of Europe's biggest electricity and gas giants, companies will be required to choose one of three options of unbundling – full separation of transmission and production, handing over the management of the grid to an independent operator or keeping the transmission business but under strict supervision by a mixed body which includes third party shareholders. The latter version was promoted by Berlin and Paris.

A "compliance programme" would set out measures to prevent "discriminatory conduct" from energy giants on the local markets and a "compliance officer" would monitor the implementation of this programme.

EU countries will have up to 30 months after the rules are published to enact one of the three options. Publication will probably be within the next five or six months.

To Luxembourg Green MEP Claude Turmes, the compromise would only bolster "oligopolies" in tightening their grip on the market and absorbing smaller companies, much to the detriment of EU consumers.

Most MEPs, however, defended the package stressing that the compromise was accepted only after having obtained increased scrutiny of energy companies and regulatory authorities and by grating consumers, especially the poorer ones, more rights and options.

"We are moving toward a separation of the transmission networks one way or the other," Spanish MEP Alejo Vidal-Quadras said.

During the two years that the package was negotiated and watered down, the EU commission also probed several energy giants, including EDF, E.ON, Gaz de France, RWE and Eni for possible EU competition rules breaches.

Last year, Germany's E.ON agreed to sell its electricity-transmission grid and fellow German supplier RWE chose to sell its gas-transmission network to settle commission investigations.

New agency born

Among the measures adopted there is also one providing for the creation of a new EU agency – the Agency for Co-operation of Energy Regulators (ACER) aimed at ensuring the independence and joint work of national energy market regulators.

Usually a matter of national pride for member states to host an EU agency, ACER is already being courted by one of the bloc's newest members, Romania, as well as Slovenia.

But it is likely to be initially located in Brussels and - when "several other new agencies are set up" - EU heads of state and governments will decide which countries get to host what, an EU source told this website.

In 2005, Italy and Finland fought a diplomatic battle over the seat of the European food safety authority which was in the end located in Parma, Italy, with premier Silvio Berlusconi arguing that "Parma ham" bears no comparison with "smoked reindeer."

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