New EU energy commissioner expects more market opening measures

London (Platts)--16Sep2004

The European Union is likely to need more liberalization measures to achieve a
single gas and power market, the EU's energy commissioner-designate Laszlo
Kovacs said Thursday. In a written answer to questions from members of the
European Parliament, Kovacs said he doubted that the second gas and power
directives and the regulation on cross-border trade in power, even when fully
applied, would be enough to make the markets efficient or remove dominant
positions. 

The latest laws also gave member states "wide discretion" in areas such as
unbundling and the independence and power of regulators, leading Kovacs to
conclude that differences in the degree of EU market opening will persist. 

He plans for his European Commission staff to report on the effectiveness of
the latest measures by end-2005. "I already believe that further measures are
likely to be necessary...the single energy market remains segmented by
national borders as internal trade is hindered by limitations in
infrastructure, dominant positions and various regulatory barriers."

Improving third party access to power and gas networks to reduce or avoid
dominant positions, increasing interconnector capacity and widening the
internal market to neighboring countries are all possible future measures,
Kovacs said. These might be achieved through more far-reaching unbundling,
increasing the powers of national regulators, a law requiring minimum targets
for interconnection capacity and accelerated planning procedures for priority
infrastructure projects. 

The existing infrastructure should also be used more efficiently, said Kovacs.
He plans to be "vigorous" in helping his competition commissioner colleague
apply unbundling and other measures to protect the interests of customers. 

Kovacs added that the EC would need to address any distortions created by
using nuclear decommissioning funds for other purposes. And that the EC would
continue to monitor state aid in the power sector and investment in the
nuclear sector, and act to remove or prevent market distortions. If approved
by the EP, Kovacs will start on Nov 1, 2004.

Copyright © 2004 - Platts

Please visit:  www.platts.com

Their coverage of energy matters is extensive!!.