Energy ministers, meeting in Luxembourg on 6 June, reached a general agreement on the European Commission’s September 2007 package of legislation for energy liberalisation. The Slovenian EU Presidency had brought the divergent groups closer together on applying the ‘third way’ option of independent transmission operators (ITO) to both gas and electricity. The question of whether the review clause should only apply to the third ITO option had been a major bone of contention, notably for the Germans. Ministers dealt primarily with the legislative proposals for the liberalisation of electricity and gas markets. An open debate examined the Commission’s proposals on conditions for access to the network for cross-border exchanges in electricity, access conditions for natural gas transmission networks as well as the proposed Agency for the Cooperation of Energy Regulators (ACER).

The majority favouring greater liberalisation were under time pressure to compromise. According to one diplomat, it was mostly the Dutch and German positions that needed to converge. In the face of continued German-led insistence that ITO apply to both gas and electricity, and that the review clause apply to all three market models, the Dutch came out with a last-minute proposal on reciprocity. This would ban vertically integrated companies from non-unbundled countries such as Germany and France from buying production facilities in unbundled member states - if the latter so desired.

Also contentious was the review clause obliging the Commission, no later than three years after entry into force of the directive, to submit a “detailed” report on implementation of unbundling requirements. Member states finally agreed that this would solely apply to independent transmission operators, and not the other two models of ownership unbundling and independent system operators (ISO). Ministers also contested the purpose of such a report. Member states opposed to ownership unbundling feared it would provide a sunset clause for the third ITO option. Member states further disputed the exact nature of the review clause. The UK successfully inserted the word ‘competition’ in the initial draft by the Slovenes and the Commission. The review criteria are network access, effective regulation, investment, interconnection infrastructure and security of supply. Ownership unbundling will be the benchmark.

The Council conclusions and the general agreement are available at www.europolitics.info > Search > 230534

Ownership unbundling will be the benchmark