EU energy boss Piebalgs wants working internal market by 2009

Brussels (Platts)--23Sep2005

European Union energy commissioner Andris Piebalgs intends to have
everything in place to have a working internal EU gas and power market by
2009, the end of his tenure as a commissioner, he told a gas industry seminar
in Brussels Thursday. "I am personally convinced that the internal energy
market is on the right track," he said. "I'm determined to have all the
existing rules implemented by 2009."
     The deadline for last stage of opening up the EU gas and power markets
for domestic consumers is July 1, 2007, but some of the smaller member states
have later deadlines owing to the embryonic nature of their gas markets or
special circumstances in their power markets. And some have simply been slow
to adopt the second EU energy market opening law package into their national
law. The deadline for this was Jul 1, 2004 but a year later five member states
had still not done so, causing the EC to refer them to the European Court of
Justice.
     "Our belief is that if all the existing laws are implemented we should
not need a third package--the second package will be enough," said Piebalgs.
"New laws take time and we've seen how difficult it was with the second
package." The aim is to allow the free flow of gas across the EU so that
investors can benefit from an open, integrated market, he added. "This is
exactly what we hope to achieve with the existing laws."
     The next steps and any new measures will be influenced by the debate on
the EC energy department's progress report on the markets, due in December,
the outcome of the EC competition department's inquiry into the gas and power
sector (first results expected this autumn) and the situation after the second
energy package has been fully implemented, said Piebalgs. But if all this
leads the EC to believe a third package is needed, "we will not hesitate to
come forward with it."
     Industry observers had mixed reactions to Piebalgs' 2009 target. While
one major trader thought it 'unlikely', given that in his view little had
changed over the past few years, another from the infrastructure perspective
said that the markets generally worked quite well now, in the sense that it
was possible to flow gas from one side of Europe to the other. Countries such
as the UK complain that gas flows do not follow market forces--Centrica's Jake
Ulrich told delegates that the UK-Belgium gas Interconnector did not fully
flow gas to the UK even when UK prices spiked to GBP1/therm last winter, well
above mainland European levels.
     But mainland European companies cited interoperability and infrastructure
issues. "Should we be emptying our storage because the UK doesn't have
enough?" said a German delegate. And the UK's gas quality interoperability
makes it more expensive and difficult to supply than the rest of Europe,
because of the need to blend the gas, said another mainland European delegate.
"We spent the money years ago adapting our appliances to be able to use the
prevailing gas quality specification," he said. "The UK chose not to at the
time and now it has a problem."

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