Debate over how far to go in opening European Union gas and electricity markets raged on Tuesday ahead of a proposal to break up big utility companies and limit foreign firms' control of pipelines and power grids.
The European Commission on Wednesday will propose forcing giants such as Germany's E.ON and Electricite de France to separate power generation businesses from their distribution networks in an effort to boost competition. But last-minute wrangling continued among high-level officials less than a day before the proposals are published.
EU sources said Transport Commissioner Jacques Barrot of France wanted utility groups to have more say over their transmission if they were run by an independent operator. "(The companies) must be able to maintain the assets and also influence over them, which basically means no change of the status quo," said one source, describing Barrot's position.
Energy Commissioner Andris Piebalgs, competition chief Neelie Kroes and President Jose Manuel Barroso rejected Barrot's line, the source said. National governments are sharply divided over the new legislation and its goals of increasing security of energy supply, avoiding blackouts and spurring competition.
The Commission will lay out two options for EU states. Its preference is to force companies to sell their transmission assets in a process called "ownership unbundling".
It argues this would create more incentives to invest in upgrading infrastructure, facilitate renewable energy sources into the grid, and allow newer companies to break into a market largely dominated by big, well-established players.
Option two would allow utilities to maintain ownership of their networks but only if an "independent system operator" runs them while a regulator monitors its actions.
The proposal as it stands would give companies no influence over investment decisions on the grids, but would allow them to keep drawing profits from the distribution assets. Barrot wanted companies to maintain some influence under that option, EU sources said, and sought assurances that the rules would not prevent governments from owning both types of businesses. France controls EDF and will keep a stake in Gaz de France after its merger with Suez.
Sources said Barrot also wanted gas and electricity markets to be treated differently in the legislation but accepted that such a change would likely come later during talks with EU governments and the European Parliament.
Wednesday's proposal will also seek to placate fears that Russia's Gazprom would buy gas pipelines that EU companies sell. The directive will contain language that prevents foreign firms from owning EU transmission systems. Exceptions could be made with EU approval if foreign nations have free trade agreements with the bloc, one source said.
Economic and Monetary Affairs Commissioner Joaquin Almunia and Internal Market Commissioner Charlie McCreevy expressed concern about those elements to ensure they did not block the free movement of capital in the bloc, the source said. The proposals are likely to create fierce debate among EU governments, which are keen to "speak with one voice" when addressing foreign energy suppliers but hesitant to give up control of energy policy to Brussels.
Other elements of the new rules include strengthening the role of national electricity and gas market regulators and the formation of an Agency for the Cooperation of Energy Regulators.
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