Tuesday, 6 May 2008

That issue of ownership unbundling again....

The Parliament’s Energy Committee voted this afternoon to back the Commission’s plans for breaking up Europe’s large energy companies in the electricity sector through full ownership unbundling. While the Commission had made clear its preference for full ownership unbundling it had also proposed an alternative – this was for the appointment of an Independent System Operator (ISO) to which energy companies would hand over control of their transmission assets, investment and commercial decisions. This was rejected by MEPs for being too bureaucratic and too costly and in the process it killed off amendments for a “Scottish model” of the ISO to be adopted as a compromise solution.

Also rejected were proposals for a third alternative put forward by a number of EU member states including France and Germany which sought to allow member states to choose between ownership unbundling, ISOs and legal unbundling (whereby energy companies could retain their network assets so long as there was an effective separation of interests via rules on assets, equipment, staff, identity and compliance control (i.e. Effective and Efficient Unbundling).

The report drafted by the Welsh Labour MEP, Eluned Morgan, on the internal electricity market was adopted by 31 votes in favour and 17 against, though the amendment setting out the third alternative was narrowly rejected with 25 MEPs voting against and 22 in favour and 3 abstentions.

While the Parliament is set to vote on the Morgan report in Strasbourg next month, all eyes will be on the meeting of EU Energy Ministers in Luxembourg on 6 June when a political agreement on the energy liberalisation package will be sought.

Ultimately what we want to see is greater competition in Europe's energy markets and our consumers benefiting from greater choice and most importantly lower energy prices.

The difficulty for Scotland is that energy regulation is a reserved matter for Westminster. Certainly for Scotland it would be much easier if we were independent and able to defend our own energy interests in our own right at the Energy Council meeting next month. Yes, it is for Scotland to have a view and then convey that view to London and Brussels to try and win support for our arguments but when it comes to the negotiations in the Council we have to rely on persuading London to ensure Scottish interests are part and parcel of the discussions.

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