Untangling unbundling: MEPs and energy experts debate gas and electricity packages
Is 'unbundling' - i.e. separating energy supply operations from transmission ones, as the Commission proposes - essential to the success of the third energy package? Will it boost investment, or have no impact on it? Is it too far reaching, or does it not go far enough? Consensus was hard to come by at an Industry Committee public hearing of energy experts on 31 January.
'Current rules on unbundling mean that a large number of network operators can effectively discriminate against new entrants', said energy Commissioner Andris Piebalgs. 'Ownership unbundling or a very strong ISO (Independent System Operator)', he argued, 'is the best way to ensure the [...] independence of decision-making of the transmission system operator (TSO)'.
A third way for the third package?
'Third way' proposals, that prefer 'structural separation' within a business to ownership unbundling, such as those recently unveiled by several Member States (including Germany and France), cannot be 'a credible alternative', said Mr Piebalgs, unless they guarantee the independence of TSOs.
Jorge Vasconcelos, of New Energy Solutions, called for better market monitoring: 'unbundling alone does not guarantee the necessary integration of the [energy market] infrastructure', he warned. 'We need really effective unbundling', said the Chairman of the German Bundesnetzagentur Matthias Kurth, adding that he would agree with a third way if it were 'more effective and enforceable without a lot of bureaucracy'. In his view, 'effective structural separation avoids many problems associated with ownership unbundling'.
Jorgo Chatzimarkakis (ALDE, DE) asked how far the third way went beyond the second energy package. EP rapporteur on the electricity network regulation Alejo Vidal-Quadras (EPP-ED, ES), felt that although it would be unfair to claim that the third way proposal went no further than the second package, it did deserve to be considered and evaluated. 'The third way is an example of how working under threat stimulates the imagination', he said.
Taking Finland's 'well-functioning energy market' as an example, Reino Paasilinna (PES, FI), for his part, wondered whether unbundling had 'to be taken so far that there is a complete break between generation and transmission'.
Gas: markets here, resources there
“Markets here, resources there', noted Paolo Scaroni, head of ENI, Italy’s biggest oil and gas company, pointing to Europe's small gas reserves in Europe and growing energy demand from third countries. This is a 'mismatch that will increase the voice of producer countries”, he noted, adding that “if we go down the line of full owner unbundling, there will be people who will be interested in purchasing our assets. We can put forward rules saying that third countries cannot take part in tenders but there is no way of ensuring this will not happen anyway (…). “Ownership unbundling is pointless 'given that there are instruments guaranteeing access to networks”, he said.
Further liberalization should produce more competition, said Rainer Seele, of WINGAS (an affiliate of Russian energy giant Gazprom) but it should also ensure supply. The European market for gas, he said, 'needs long-term partnerships with producers”. “If you don’t have enough gas', he later added, 'there is no sense in building pipelines”
Opposing full ownership unbundling and favouring the third way, Mr Seele asked: “Can we be sure that the infrastructure in which we want to invest billions will belong to us in the future?” The third package “is not based on market mechanisms”, he complained. Whereas framework policies are needed to 'incentivise investments, [...] excessive regulation can be counterproductive”. “We shouldn’t interfere in trade, nor should we interfere in ownership” (…). “Security of supply will be ensured by investment”, he concluded.
Right and timely to intervene
The state of the EU market in gas is such that “it is right and timely to intervene”, said Alessandro Ortis, Chairman of Italy’s Autorita per l’Energia, defending the provisions on ownership unbundling. “One of the goals of the package is overcoming asymmetries”, and this will be impossible “if we don’t go down the path of full ownership unbundling”, he said. Major European operators who do not have their own transmission networks are 'doing just fine', he argued. Moreover, “ownership unbundling should not be considered as expropriation, but as the sale of a grid at a fair price.”
Asked by Herbert Reul (EPP-ED, DE), about the effects of ownership unbundling on companies, prices and investment, Mr Ortis noted that there is “more investment in unbundled markets.” As soon as unbundling began in Italy, “investment exploded”, he said. Mr Seele countered that ownership unbundling 'has precious little effect on how prices are set.”
'I'm still not certain whether the benefits and virtues of unbundling have been sufficiently well explained”, noted EP rapporteur on the Gas directive Romano La Russa (UEN, IT). “People seem more concerned about the future of their companies than the future of the market as such”.
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