EU energy market opens to competition
Monday, 2 July 2007
PARIS, July 1 (AFP): The entire EU energy market was thrown open to competition Sunday, allowing consumers to choose their gas and electricity suppliers and spelling an end for monopolistic state-run utilities.
The liberalisation process has been resisted in some countries and welcomed in others, highlighting different attitudes to competition and the notion of protecting national interests in the energy sector.
The European Commission, which has championed the process, notes that reforms have not been fully implemented in some parts of the EU, meaning a handful of former state energy monopolies still enjoy a crushing grip on their domestic markets.
"It is undeniable that great progress has been made," EU Energy Commissioner Andris Piebalgs said in a recent speech. "However, it is equally undeniable that many of our basic objectives have not yet been achieved."
"Markets remain stubbornly national in scope, cross-border trade is difficult and limited, and far too many customers have little or no real competitive choice of supplier," he added.
In theory, companies have been able to choose a supplier for their gas and power since 2004. Sunday marks the first time the household market has been opened to competition throughout the EU.
Ten of the EU's 27 member states have led the liberalisation vanguard ahead of the deadlines, with Britain setting the trend by opening its markets to competition as far back as 1990.
But the long journey to full market liberalisation, which has taken 11 years to complete, has been marked by frequent battles between the European Commission and more reluctant member states.
The Commission, the EU's executive arm, still believes former state monopolies have too much market power and there is evidence that consumers in some countries are paying too much for their gas and electricity.
To counter this and increase the benefits of the liberalisation process, which is intended to lower energy prices for consumers, the Commission is likely to continue to press for more reforms.
These include splitting the ownership of power providers and the energy distribution grid, and increasing distribution links between countries, allowing competition across borders.
The Commission continues to argue, in the face of resistance from countries such as France and Germany, that power producers must not be allowed to own the distribution network because they are then able to hinder competitors.
The Commission is also keen to see more powerful energy regulators to fight anti-competitive behaviour, improved cooperation between network operators and increased investment.
Paradoxically, the liberalisation of the energy market, which is meant to promote competition, has led to a number of giant mergers in recent months, which reduces the number of companies.
In some cases, takeovers have been encouraged and even abetted by governments which are keen to build a national champion in the energy sector to compete in a new enlarged European market.
This was the rationale put forward by the French government for the merger of French groups Gaz de France and Suez, which is still to be completed because of legal problems.
The liberalisation process has been resisted in some countries and welcomed in others, highlighting different attitudes to competition and the notion of protecting national interests in the energy sector.
The European Commission, which has championed the process, notes that reforms have not been fully implemented in some parts of the EU, meaning a handful of former state energy monopolies still enjoy a crushing grip on their domestic markets.
"It is undeniable that great progress has been made," EU Energy Commissioner Andris Piebalgs said in a recent speech. "However, it is equally undeniable that many of our basic objectives have not yet been achieved."
"Markets remain stubbornly national in scope, cross-border trade is difficult and limited, and far too many customers have little or no real competitive choice of supplier," he added.
In theory, companies have been able to choose a supplier for their gas and power since 2004. Sunday marks the first time the household market has been opened to competition throughout the EU.
Ten of the EU's 27 member states have led the liberalisation vanguard ahead of the deadlines, with Britain setting the trend by opening its markets to competition as far back as 1990.
But the long journey to full market liberalisation, which has taken 11 years to complete, has been marked by frequent battles between the European Commission and more reluctant member states.
The Commission, the EU's executive arm, still believes former state monopolies have too much market power and there is evidence that consumers in some countries are paying too much for their gas and electricity.
To counter this and increase the benefits of the liberalisation process, which is intended to lower energy prices for consumers, the Commission is likely to continue to press for more reforms.
These include splitting the ownership of power providers and the energy distribution grid, and increasing distribution links between countries, allowing competition across borders.
The Commission continues to argue, in the face of resistance from countries such as France and Germany, that power producers must not be allowed to own the distribution network because they are then able to hinder competitors.
The Commission is also keen to see more powerful energy regulators to fight anti-competitive behaviour, improved cooperation between network operators and increased investment.
Paradoxically, the liberalisation of the energy market, which is meant to promote competition, has led to a number of giant mergers in recent months, which reduces the number of companies.
In some cases, takeovers have been encouraged and even abetted by governments which are keen to build a national champion in the energy sector to compete in a new enlarged European market.
This was the rationale put forward by the French government for the merger of French groups Gaz de France and Suez, which is still to be completed because of legal problems.