The European Union reached a deal on liberalizing energy markets after lawmakers accepted a compromise over breaking up giant utilities in return for action to protect consumers’ rights.
The deal between the European Parliament and EU member states late on Monday ended a year-long standoff during which France and Germany battled hard to protect energy giants such as EDF and RWE.
The EU executive in 2007 proposed separating suppliers of gas and electricity from the infrastructure that carries the energy, after companies including green energy firms said the big incumbents were hampering access to the networks.
However, Paris and Berlin led opposition to any forced breakup of national energy champions, and other states last year accepted their proposal to give giant energy companies easier options.
Under the compromise deal, those countries not enforcing a full split must appoint a powerful independent regulator to prevent any market abuse.
Parliament, which has joint powers of decision, accepted that compromise on Monday after demanding the regulator be given extra powers. It should receive formal approval in coming weeks.
European competition chiefs have already swooped on Germany’s RWE and E.ON for anti-competitive actions, pushing them to sell networks, and that made it easier for parliament to back down on the tough stance it held last year.
“We thought that battle was not far from being won anyway,” said Welsh socialist Eluned Morgan, who negotiated on behalf of parliament. The European Commission welcomed the agreement.
“Even the smaller companies, such as those working in the renewables sector, will have access to the energy market on equal conditions,” said spokesman Ferran Tarradellas Espuny.
Parliament won new rules to prevent the poorest families being made to pay high and discriminatory energy tariffs on pre-payment meters. It also demanded new rules to help consumers compare energy prices easily and switch between suppliers within three weeks -- helping millions of EU citizens who struggle to switch supplier.
European nations will also have to alleviate ‘fuel poverty’ -- the situation that occurs when gas and electricity bills eat up so much of a user’s income they cannot afford other basics.
EU member states will also have to ensure ‘smart meters’ are installed in 80% of homes by 2020, allowing households to choose the cheapest time to consume gas and electricity.
“The idea is to smooth out the use of energy... by getting people to use dishwashers and washing machines outside of peak hours,” said Morgan.
Although some countries will be allowed to keep their national energy champions intact, safeguards were introduced for liberalized countries that fear their networks may be taken over by overseas rivals with more financial fire power.
The so-called “Gazprom Clause” would prevent energy companies from outside the bloc -- such as Russia’s state-owned Gazprom -- from buying up distribution networks without approval by governments, which would be guided by the EU executive on the potential impact on regional energy security. (Reuters)