EC minister proposes 'full opening' of European gas, electricity markets

PARIS�European Commission Vice-Pres. of Energy and Transport Loyola de Palacio Monday gave preconditions for the "full opening" of the gas and electricity markets on the continent within 4 years.

She said for European Union citizens to reap the benefits of deregulation of these energy sectors there would need to be "clear and open access to the networks, a set of trading rules, an improvement of infrastructure capacity, and the respect of social and environmental objectives."

De Palacio, speaking at the World Economic Forum in Davos, Switzerland, said the EU was on the "right track" in its restructuring of the gas and electricity markets, but that "more needs to be done" toward achieving "truly integrated markets that will profit European consumers."

She plans to make a number of proposals to the EC "in the weeks ahead" aimed at "deepening" the pace of liberalization so that markets will be "fully opened to all consumers by 2005, with all non-domestic consumers being open to competition in 2003 for electricity and 2004 for gas."

Before these deadlines, said de Palacio, the EC would also push for published and regulated access tariffs to "become the norm," in recognition of the fact that access to the networks is "crucial" to developing competitive markets. In line with this plan, she said, the EC would make certain that the future transmission network operators would be "fully independent" from any involvement in generation and sales to ensure access was offered on "nondiscriminatory terms."

She said, "For this reason I will propose stricter rules on the unbundling of the system operator."

De Palacio said the EC would also formalize a set of trading rules, "mainly tariffs for cross border transactions and the allocation and management of interconnector capacity," with a view to such rules largely determining the success of the restructuring process. She noted that "a lot of progress" on these issues had already been made on a voluntary basis, through the cooperative efforts of the EC, industry, consumers, and national regulators.

"It seems important that a further step is made and that we lay down binding rules for cross border trading issues as well," she said. "I will therefore propose the adoption of legislation that will contain rules on cross border transmission tariffs and on allocation of interconnector capacity, so that these issues are decided upon at European level."

To prevent fragmentation of these markets, and to make sure "all companies must have free access and be able to develop markets across the EU as easily as they can within their own member state," de Palacio said the new EC plans would stress infrastructure capacity. She said the commission was "currently reviewing the situation regarding infrastructure capacity, and (would) shortly put forward a European plan seeking to eliminate existing bottlenecks."

De Palacio underscored that the changes entrained by an internal market would have to address social and environment objectives while answering the economic goals.

On the back of the planned directives, she noted, member states would also be able to enforce environmentally sound public service obligations, and "dictate priority dispatch for electricity from renewables."

De Palacio called for a comprehensive debate on energy supply in Europe. Among the "main issues," she said, many of which were raised by the EC Green Book published in November, would be assuring "true integration" of European markets to improve security of supply; diversification of fuel supplies; further development of relations with energy producing nations; promotion of renewables; intensification of efforts to boost energy efficiency; and the use of taxes to enhance the current "security of supply situation."