EU energy liberalisation boon for monopolies - study
Date: 30-May-02
Country: EU
Author: Robin Pomeroy
With more possibilities for mergers both within countries and across borders as the European Union moves towards a single liberalised power market, most countries have seen market dominance increase, the Oko-Institut said in a report.
"The analysis leads to a clear picture of market concentration in the liberalised power generation markets in Europe" the report concluded.
Green politicians in the European Parliament, concerned to ensure renewable energy firms can access liberalised markets, will use the report to push for tougher antitrust action and legal safeguards in the forthcoming EU liberalisation directive.
Claude Turmes, a Green Luxembourg Euro MP who is guiding the liberalisation package through the EU assembly, was due to meet EU competition authorities yesterday to present his concerns about the strong position of firms like Electricite de France, and Germany's RWE and E.ON.
"We are facing a situation where even before putting in place the rules the game is already over, unless we act swiftly at a European level," Turmes told a news briefing, voicing fears that a handful of big firms were moving to block competition.
UK GOOD EXAMPLE
The Oko-Institut report found the main EU markets apart from Britain and Scandinavia were dominated by key players such as EDF in France, Electrabel in Belgium and Endesa and Iberdrola in the Iberian peninsula.
The number of big power generators in Germany is set to decrease with Sweden's Vattenfall acquisition spree, taking the market to a more concentrated level than regulators normally consider acceptable, the report said.
EDF already controls more than one-third of power generation across France, Germany, Switzerland, Austria and the Benelex countries, according to the institute's calculations.
The report's author, Felix Matthes, said the legislation being discussed by EU governments and parliament should include strong measures to break the market hold of former state-owned monopolies such as EDF.
"The UK is a very good example. It shows it can be done right," Matthes said. The number of generators in the United Kingdom has increased from six, before privatisation in 1991, to 33 last year, the report said.
The forthcoming EU rules should ensure fair access to the grid, give incentives to smaller decentralised generators, and stop firms from tapping funds set aside for decommissioning nuclear power plants to buy up competitors, he said.
There should also be increased monitoring of power market concentration at EU level, Matthes said.
MINISTERS TO DISCUSS UNBUNDLING
Turmes said the EU should consider reviewing more electricity mergers, most of which are now examined by national competition authorities.
If more than two-thirds of the companies' turnover is made within one country, the national authority has jurisdiction.
Turmes said national regulators tended to be less tough than the Commission as they were under pressure to allow firms to become "national champions" that can compete internationally.
The European Parliament has said it favours splitting grid and generation activities into separate companies to ensure fair grid access for all competitors.
EU energy ministers will debate draft legislation in Luxembourg next week, which includes a less radical division of the activities.
According to Turmes, France and Germany will push for even less stringent rules, demanding only separation of accounts of the two activities.