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RWE CEO says will hold on to power networks

EU

RWE AG CEO Juergen Grossmann said RWE intended to keep its high-voltage power network, unlike German rival E.ON AG which plans to sell its grid to settle a row with Brussels.

“We want to employ our networks strategically for our entrepreneurial success,” he told journalists late on Wednesday in remarks embargoed until Thursday E.ON surprised energy and equities markets late in February with the announcement it would try and sell its high-voltage power grids and certain generation assets in order to settle two cartel cases with the EU Commission. Previously fiercely opposed to shedding its distribution networks, E.ON broke ranks with sector peers, authorities and politicians who had resisted earlier EU calls to break up big energy firms to stimulate competition.

Grossmann said that the supervisory board of RWE, Germany’s second biggest power company, had discussed the matter thoroughly and decided against a sale. He was reinforcing a stance RWE has taken since the EU Commission started proposing that all European utilities should sell their grids. He also said he detected no signals from Brussels that RWE faced anti-trust penalties for either its gas or power business, and there was no need to change RWE’s behaviour in the marketplace just now. Germany’s big four utilities, which also includes Vattenfall Europe and EnBW, have been criticised by politicians and the public for supposedly carving up the market amongst them and using their integrated businesses to keep prices high for consumers.

The EU believes splitting up production and transmission could be a remedy against that, as the big firms’ former business units would be forced to compete with smaller market newcomers. On Tuesday, a European Parliament committee backed the Commission’s “unbundling” plan but the EU executive stays locked in a fight with France, Germany and others who seek to protect their energy companies and have proposed alternative plans. Grossmann said he thought investors could show an interest in German power networks but that RWE was not interested in selling. It was not in any talks and no-one had submitted an offer, he said, but added that the situation might change in the future, should earnings from the network business turn out unsatisfactorily.

Grossmann also played down market talk that the Germany utility could face a hostile takeover from a rival after rumours circulated on Wednesday that French energy group EdF could be weighing a bid. “I do not believe that anyone is seriously interested in RWE at the moment,” he said. (Reuters)

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