RWE close to EU antitrust deal-sources

EU

German energy company RWE is in advanced negotiations with the European Commission to settle an antitrust case over its gas supply network, two sources familiar with the situation said.

“An agreement could be reached soon,” one of the sources said on Tuesday. “RWE is checking concessions to settle the case.” The other source confirmed the information. Neither the European Commission nor RWE, Europe’s fourth largest utility, would comment.

The world’s biggest utility, E.ON, agreed in February to sell its power grid and some generation plants to settle similar EU antitrust charges, breaking a united German front that included RWE, Vattenfall Europe and EnBW.

The European Union regulator is pursuing suspicions that RWE firm used its control of gas pipelines illegally to shut out competition. The talks come 10 days before EU energy ministers are due to decide how to “unbundle” vertically integrated utilities to open the market to new entrants and push down gas and power prices. Brussels and Germany are at odds over whether to force energy companies to divest their transmission networks.

German Chancellor Angela Merkel has stuck to her guns despite EU Competition Commissioner Neelie Kroes’s deal with E.ON. “I don’t think the EU Commission should interfere with structures which have established themselves over the years,” Merkel told a conference in Berlin on Monday. It was more important for the EU to work for additional electricity and gas pipelines across borders, she said.


BARROSO, MERKEL TO MEET

European Commission President Jose Manuel Barroso and Merkel are due to meet in Bonn on Wednesday on the sidelines of a UN environment conference for what could be crucial talks ahead of the June 6 energy ministers’ meeting. The Commission has pursued a twin-track strategy of pressing EU governments to adopt proposals for so-called “ownership unbundling” while using its antitrust powers to force a separation of power supply from transmission activities. In the latest such move, Brussels opened formal antitrust proceedings against Gaz de France last week over suspicions that the state-owned firm deliberately underinvested in its gas network to shut out imports.

Under the E.ON agreement, the purchaser would be an operator with no interests in electricity generation. But that may have done little to advance negotiations on the liberalization of the EU’s internal energy market. “The E.ON deal made the Germans more intransigent. They felt they had been sold down the river by their own company. I don’t think it helped the negotiations,” said an EU diplomat involved in the talks. If the Commission made RWE divest its gas transmission facilities, that could further undermine Merkel’s position. But the diplomat said it might come too late to sway the talks.

An RWE deal would end antitrust proceedings the Commission opened in May, 2007. Brussels said it was investigating whether RWE abused a dominant position for transport and wholesale supply of gas in the state of North Rhine-Westphalia. The Commission said at the time it believed that RWE walled competitors out of the market by preventing them from getting capacity in the gas transport infrastructure in Germany.

Germany and France are leaders of a group that opposes separating ownership of transmission and production facilities, supported by Austria, Bulgaria, Greece, Luxembourg, Latvia and Slovakia. A German deputy economy minister told Reuters last week that the Czech Republic had signaled its support and other nations were mulling doing the same. (Reuters)

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