EC clears DONG's merger of power providers

March 27, 2006
The European Commission has approved the merger by state-owned Dansk Olie & Naturagas AS (DONG) of Denmark of four regional electric providers.

By OGJ editors
HOUSTON, Mar. 27 -- The European Commission has approved the merger by state-owned Dansk Olie & Naturagas AS (DONG) of Denmark of four regional electric providers.

The companies involved are Energi E2, Elsam, Nesa, Frederiksberg Forsyning, and Copenhagen Energy. The EC initially questioned the transaction, based upon concerns about both electric and gas competition.

For nearly a year, commissioners analyzed liquidity at gas trading hubs as well as storage issues. In response, DONG offered commitments promoting gas competition, and the commission accepted the following proposals:

-- A program under which DONG will auction 400 million sq m/year of gas for 6 years, equivalent to 10% of Denmark's total yearly consumption to ensure a liquid gas market in Denmark, regardless of whether Elsam and Energi E2 are removed from the market as potential wholesalers.

-- The sale of DONG's gas storage facility in Lille Torup in Jutland, which accounts for over half of the company's storage capacity. DONG will retain the gas storage facility in Stenlille. This will ensure two independent storage suppliers in Denmark.

DONG addressed the electricity market concerns on June 1, 2005, when it agreed to sell power station and wind power activities to Sweden's Vattenfall AB. That transaction involved about 2,400 Mw of electric generation. The commission approved the sale on Dec. 23, 2005.