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EC in bilateral consultations with states on energy price regulation

EU

The European Commission is conducting bilateral consultations with all member states centrally regulating retail energy prices, an unnamed European Commission source told Hungarian journalists, MTI’s Brussels correspondent said. 

The source said that energy commission Günther Oettinger wrote a letter last year to all member states centrally regulating the price of electricity or natural gas, telling them that the Commission proposes a gradual phasing out of energy price regulation because Brussels does not believe centrally regulated prices “carry the right message” for the implementation of appropriate investments.

In the long term, this cost will have to be paid by somebody, if not consumers, then taxpayers, the Commission says, arguing in favor of a free market price, adding that competition among service providers will eventually stabilize prices at an appropriate level so consumers would also be better off in the longer term.

Instead of central price regulation, Brussels would favor free market prices combined with targeted support of vulnerable consumers, the Commission said already in a November 2012 statement on operating a unified energy market.

Oettinger asked information of the specifics of the affected countries in order to enhance the liberalization of the internal energy market, the source said. EC experts will start bilateral consultations with the affected countries based on the data received and evaluated so that the regulated price could be phased out without harming the interest of vulnerable consumers.

The Commission wants to formulate a timetable for gradually phasing out government energy pricing as part of the member states’ structural reforms, and will launch, if necessary, infringement procedures against those who use price regulation which does not conform with EU law.

Antal Rogán, the head of Fidesz’ parliamentary group said on Monday that Brussels plans to launch another attack against EU member states regulating household utility prices, citing reports saying that EU officials plan to launch infringement procedures against countries regulating utility prices.

Rogán added that not only Hungary’s parliament and government, but Hungarian voters should also stand up to support the utility price cuts.

Bruxinfo said at the weekend, citing Klaus-Dieter Borchardt, director of the internal energy market, that the European Commission is ready to start infringement procedures against member states with whom it has been unable to reach agreement in ongoing bilateral consultations on phasing out price regulation in the utilities sector.

Nevertheless, Bruxinfo concluded that the Commission will leave ample time for persuading member states and will not launch infringement procedures in the short term.

The Hungarian government reduced utilities prices in two rounds by a combined 20% last year, and announced last weekend a third round of cuts this year.

There are 17 affected countries, including Hungary, where the retail price of gas or electricity is centrally regulated, although some of these have already undertaken to gradually phase out price regulation, the EC source said.

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