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Last Updated: Monday, 3 April 2006, 11:20 GMT 12:20 UK
EU to get tough on energy reform
Engineers work on a pylon in Italy
Energy markets are not functioning properly, Brussels admits
The European Commission is to take legal action against member states for failing to take steps to open up their energy markets to competition.

Brussels has confirmed that it will begin "infringement proceedings" against some EU members on Tuesday to penalise them for moving too slowly.

EU members have until July 2007 to fully liberalise their markets as part of a proposed common energy strategy.

The UK says uncompetitive EU markets have helped to push up gas prices.

'Failure to act'

The UK's Liberal Democrats recently estimated that British consumers were paying 10bn ($17.3bn; 14.3bn euros) more than they should be for gas and electricity because of failings in the European energy market.

UK business organisations have also blamed inefficient practices on the continent for companies' rising energy bills.

Much more needs to be done if the potential benefits of a wider and open market are to be passed on to Europe's citizens
European Commission spokesman

According to the Financial Times, Brussels will launch up to 50 legal cases against EU governments on Tuesday.

EU member states will be told that several of them have failed to fully or properly introduce reforms of their energy markets agreed in 2004.

A Commission spokesman said some states had failed to implement EU directives on energy reform but declined to identify the culprits prior to Tuesday's announcement.

"Although some progress has been made in creating a single European energy market, much more needs to be done if the potential benefits of a wider and open market are to be passed on to Europe's citizens," Ferran Tarradellas i Espuny said.

Price controls

Unfair price controls are blocking competition in some markets, Brussels is expected to say, favouring established state-owned firms at the expense of new entrants.

Efforts to introduce more choice in some countries have proved unsuccessful, while many consumers find it difficult to change suppliers.

Other shortcomings likely to be highlighted are a failure by some countries to separate contracts for the supply and generation of electricity and inefficient overall regulation.

The Commission warned member states in February that it was prepared to take strong action to make domestic energy markets more responsive to the EU's growing energy needs.

Energy security

Safeguarding future energy supplies has been one of the EU's main priorities since the start of the year when an energy dispute between Russia and Ukraine highlighted the EU's reliance on Russian gas imports.

At the same time, Brussels is having to contend with member states' own concerns about their energy security.

These worries have helped contribute to a growing trend of economic nationalism across the EU.

In recent months, France and Spain have both attempted to ensure that leading power companies remain in domestic ownership.

Critics believe that state intervention in EU energy markets and the dominance of many state-owned companies is distorting open competition and forcing up prices.





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