MEPs seek break-up of dominant energy groups

MEPs seek break-up of dominant energy groups

The European parliament will this week urge the EU to boost consumer rights and drive down electricity and gas prices by forcing the break-up of large continental energy groups and introducing far more competition into the market, the Guardian has learned.

The 732 MEPs will vote overwhelmingly on Thursday in favour of legislation to enact "ownership unbundling" - the sell-off of power and gas transmission networks by incumbent operators who use their current ownership control to squeeze out new rivals. European energy regulators issued a similar call last week.

The EU will also be pressed by the MEPs to adopt a citizens' charter setting out enhanced rights for consumers, including greater information about charging and easier ability to switch suppliers. European consumers tend to face much higher bills than UK customers because of the dominance of large incumbents.

Europe's energy markets are due to open to full competition on July 1 but a new survey of the five main markets, published today, shows that the utilities sector is the most profitable in the EU.

Research published by consumer consultants Group 1 Software found that Italian utilities are making €137 (£92.50) profit per customer, Spanish firms €125, French €117.30 and Germans €110.10. UK utilities, operating in the most competitive market, make €86.50 profit a customer.

All four main political groups in the European parliament - Christian.....continued below

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Democrats, social democrats, Liberals and Greens - support "ownership unbundling," says Eluned Morgan, Labour MEP and rapporteur of the industry, research and energy committee. Resistance from German MEPs in particular has been overcome.

The MEPs' vote on the European commission's energy green paper comes in advance of next month's planned assault by the commission on large incumbents' abuse of their dominance in selected EU markets. The commission believes the break-up of such groups is the only way to bring proper competition.

Ms Morgan said: "The current system has failed to deliver the open markets that had been promised. It has allowed German and French companies to clean up in the UK whilst UK companies struggle to get access to pipelines and electricity networks across some parts of the continent."

She added: "When you arrive in the UK on Eurostar there is a large poster welcoming you and saying 'EDF delivering energy to millions of Londoners. 'I dream of the day when I can get off the train in Paris and see a sign announcing 'Centrica delivering energy to millions of Parisians.' I don't think it's likely to happen by July's deadline so tough action is necessary to pierce these markets open."

The European energy regulators (ERGEG) on Friday demanded greater independence for their colleagues in markets such as France and unbridled powers to set network tariffs. Sir John Mogg, head of ERGEG and chairman of British regulator Ofgem, said these powers and ownership unbundling would bring increased cross-border flows, encourage new entrants and help drive down prices.

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