Political unity on the next step towards liberalisation of the electricity sector  

By Annette Schneider, 26. March 2009

After 18 months of negotiations, the final meeting took place Monday evening between the Parliament, the Council and the Commission on negotiations for the third liberalisation package for increased competition on the electricity market. The Danish Energy Association expects the precise outcome of the negotiations to be revealed later.

In September 2007, the EU Commission presented a package of five directives for speeding up liberalisation and competition on the European energy market (electricity and gas) – the so-called third liberalisation package.

The biggest political sticking point in negotiations between the EU Council, Parliament and Commission has been the requirements for “unbundling” – in other words independence between system responsibility for the grid on the one hand and production and trading interests on the other. On this there were sharply opposing viewpoints:

The European Parliament – supported by the Commission – demanded full “unbundling” of ownership – i.e. full formal and genuine independence between system responsibility for the grid and production and trading interests.

After massive pressure from Germany and France in particular, the countries in the Council have insisted on a more flexible approach to “unbundling”, so that the requirement is either 1) full unbundling of ownership, 2) independent system operators or 3) functional unbundling (i.e. separate companies, but with group links).

Parliament has lost this battle for more competition in the electricity sector and the Council – i.e. the member states – has won. Thus in the final text a flexible approach to “unbundling” has been chosen.

- The Danish Energy Association supports full unbundling of ownership between production and trading/transmission, so each country has a system responsibility which – as in Denmark – is completely independent of commercial interests. So naturally we feel it is unfortunate that the Council and EU member states are not prepared to go all out in the direction of a liberalised electricity sector, says Danish Energy Association Chief Consultant Charlotte Søndergren.

- It is fundamentally indefensible that development of the liberalised energy market should proceed in slow motion. Cross-border trading is languishing, in part because of the confusion of interests in grids, trading and production, she continues.

The Danish Energy Association supports increased cooperation between the transmission companies with system responsibility and the regulatory authorities in the individual countries and further supports the establishment of two EU bodies for this purpose – ACER and ENTSO-E.

The Danish Energy Association supports efforts to make the retail market and thus price formation more transparent. Customers must have rights and opportunities to make complaints in the market, with the result that the European rules come closer to the regulation we already have in Denmark. Only in this way can we encourage customer mobility and thus competition.

The Danish Energy Association also supports initiatives to promote greater transparency of prices on the wholesale markets.

The formal adoption of the political agreement awaits a vote in Parliament (on 31 March) and adoption by the Council later this spring.

Fact

Holdning

The headlines in the Commission’s package are:


• Higher requirements for separation of transmission system operators from commercial activities – in EU jargon “unbundling” (independence between system responsibility for the grid and production and trading interests).

• Increased powers for the regulatory authorities (The Danish Energy Regulatory Authority and Energinet.dk), and better coordination between regulators at the European level, including a new agency for cooperation between energy regulators (“ACER”) and the creation of a cooperative body for system operators (“ENTSO”).

• Greater transparency of price formation on the wholesale markets.

• A certain harmonisation of retail market frameworks.

Contact

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  • Chief Consultant
  • Annette Schneider
  • T: +45 35 300 943
  • M: +45 25 291 943