A lack of power market unbundling is a persistent barrier to competition, a new report assessing the development of the EU Energy Markets in 2006 has concluded.
The European Regulators Group for Electricity and Gas (ERGEG), which comprises regulatory authorities from all 25 member states, is calling for new legislation on unbundling and for regulatory powers to be enhanced in its key report to EU energy commissioner Andris Piebalgs.
The ERGEG report criticises the vague implementation of the unbundling provisions of the existing Directives, stating what when they are transposed into national law they leave a lot of discretion to the integrated companies, and companies often act without fear of enforcement because of a lack of adequate powers of the regulators.
Regulators must also be independent from political intervention while stronger political commitment to regional energy initiatives is needed for EU market integration, the report adds.
ERGEG further concludes that regulated energy prices distort competition and should be abolished.
ERGEG chairman, Sir John Mogg, stated: “Some integrated energy firms may claim that ownership unbundling will not help competition. This is untrue. Insufficient unbundling is often the most persistent barrier to competition.”
Mogg adds: “The powers of national regulators must be compatible and complementary to develop the EU energy market. Regulators must be independent from political interests as well as from industry so as to protect the interests of energy customers.”
Piebalgs welcomed the report, saying: “ERGEG’s report highlights some of the most serious problems of the internal energy market.”