By OGJ editors
HOUSTON, Nov. 15 -- The European Commission has warned members of the European Union to accelerate deregulation of their electricity and gas markets or face "stronger action."
The EC adopted a report highlighting slow progress on compliance with deregulation directives and disclosed initial findings of a separate competition sector inquiry that it said confirmed the report findings.
"Member states need to quickly and fully implement the gas and electricity directives not only in letter but also in spirit," said Energy Commissioner Andris Piebalgs, promising continued pressure on members to increase electricity and gas competition. "If this does not happen, stronger action will be needed."
Competition Commissioner Neelie Kroes said the report shows "evidence of serious malfunctions" in EU energy competitiveness and warned, "I am determined to use competition law to protect European industry and consumers."
The report said cross-border competition in gas and electricity hasn't developed to the point that customers have real alternatives to nationally established energy suppliers. It cited the absence of price convergence across the EU and low cross-border trade.
It also said the gas market lacks liquidity of both gas supply and transport capacity.
Competition inquiry
The competition sector inquiry paralleling the report began in June and includes responses from the energy industry and customers.
Among its findings:
-- Gas and electricity markets in many EU member countries remain concentrated and allow existing operators to influence prices.
-- Many wholesale markets are not liquid because of long-term contracts, in the case of gas, or because companies are active in both production and retail marketing, in the case of electricity. Unbundling of network and supply activities is inadequate.
-- Barriers to cross-border supply of gas and electricity prevent development of integrated EU energy markets.
-- Markets are insufficiently transparent.
-- Industry and consumers have little trust in specific price formation mechanisms on energy wholesale markets.
