EU plans more energy competition

The EU is scrutinising energy firms' business models

European energy giants will be targeted by new legislation aimed at boosting competition in the market for supplying gas and electricity.

The package, already backed by EU ministers, was adopted by the European Parliament on Wednesday.

But it softens an original proposal to make big energy utilities "unbundle" their control over both power generation and distribution.

Producers will still be able to control grids and pipelines under supervision.

The "ownership unbundling" drive was a European Commission initiative launched in 2007, aimed at liberalising the EU's energy market.

Market domination

The commission was concerned about "national champions" such as EDF of France and E.ON of Germany, whose domination of the market limited opportunities for smaller firms to offer competitive deals to consumers.

France and Germany led opposition to the original plan, pressing for alternatives to breaking up the energy giants that dominate the market.

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Full ownership unbundling is still an option for governments. But under a compromise backed by MEPs, governments will be able to opt for two alternative models, which let energy producers retain control of gas and electricity networks.

EU member states can make energy firms hand over the management of their transmission network to a separate independent system operator (ISO).

Firms can also preserve integrated supply and transmission under the independent transmission operator (ITO) model. This involves various rules to ensure that the two sections of the company operate independently in practice.

The ITO includes a supervisory body with third-party shareholders, as well as a compliance programme to prevent discriminatory actions in the market.

EU Energy Commissioner Andris Piebalgs said the compromise deal would provide "a clear regulatory framework needed to ensure a properly functioning internal market".

But Green MEP Claude Turmes said the legislation was "not strong enough to contain the... domination of the sector by energy oligopolies".

The BEUC European consumers' association also voiced disappointment.

"Even if the new energy package consequently offers more rights to consumers, these rights cannot be ensured without real competition and in particular without full ownership unbundling," said BEUC head Monique Goyens.

The package included measures aimed at improving consumers' rights.

Consumers will be able to change their energy supplier within three weeks, free of charge.

There will be independent complaint mechanisms to settle disputes with suppliers.

Consumers will also have the right to compensation for bad service, such as inaccurate or delayed billing.