Europe opens gas, electricity markets July 1

Uchenna Izundu
International Editor

LONDON, July 3 -- Household customers across Europe became free to choose their gas and electricity suppliers on July 1, indicating the beginnings of a single, open energy market. The question, however, is whether customers will switch, as many utility firms on continental Europe continue to enjoy monopolies.

Legal unbundling of local electricity and gas distribution companies was also compulsory on July 1 to ensure independence from their parent companies and provide fair access to all suppliers in the distribution network. At transmission level legal unbundling was enforced in 2003.

Member states with open gas and electricity markets on July 1 were France, Bulgaria, Hungary, Poland, Romania, Slovakia, Slovenia, Lithuania, Luxembourg, Northern Ireland, Austria, Belgium, Czech Republic, Denmark, Germany, Spain, Netherlands, Italy, Ireland, Sweden, and the UK.

However, some member states have succeeded in obtaining derogations on introducing competition in their electricity markets such as Cyprus, Malta, and Estonia. Cyprus and Estonia have until 2013 to ensure there is a competitive electricity market.

Countries that have extensions to open their gas markets are Finland, Latvia, Greece, and Portugal, the last three of which have until 2010 to do so. "Cyprus and Malta do not have gas markets," a spokeswoman from the European Commission told OGJ.

The European Commission has championed an internal market, arguing it would provide competitive prices for consumers, energy efficiency, and investment in infrastructure. Developing a liberalized market has been difficult, with the latest report in January from the European Competition Commissioner, Neelie Kroes, showing that tougher rules to prevent discrimination are needed. Several legislative measures for greater unbundling are expected to be published in September.

According to UK researcher Datamonitor PLC, a single liberalized market "remains a distant possibility rather than an imminent reality" because of differing attitudes at a political level, market conditions, and varying degrees of competition.

On July 5 the European Commission will launch a charter of rights for energy consumers. The Commission hopes to have a fully functioning gas and electricity market with open competition and effective regulation in January 2009.

Contact Uchenna Izundu at [email protected].