Germany and France, together with other six other Member States, oppose the breaking up of their electricity and gas national ‘pride’ companies like French’ EDF and GdF and Germany's RWE and E.ON. The splitting up of the generation of power and the transmission (grid) businesses is known as the ‘ownership unbundling’ approach.

It took these energy utilities many years to consolidate as the national giants they are today, and after what seemed to be an exercise of Franco-German soft power politics in the Council, the Council seems to have been persuaded to change its initial position and to come up with a new ‘third way’, a ‘non-full ownership unbundling’ solution.

However, Energy Commissioner Piebalgs’ spokesperson Ferran Tarradellas told GreenPrices that “the third way as it is now proposed will not meet EU energy liberalisation objectives,” reason for the Commission to go far beyond this proposal.

The issue, according to Energy Commissioner Andris Piebalgs, is extremely important for the promotion of renewable energy sources. “The current energy market conditions make it very difficult for renewable energy undertakings to have access to the grid in fair conditions,” Piebalgs said.

The German-French ‘third way’

In order to retain full ownership of their two core businesses, France and Germany have proposed the creation of an ‘independent’ Transmission System Operator (TSO) ‘with effective decision-making rights’ in the management of the grid business.

This TSO is expected to be under ‘close scrutiny’ by a Supervisory Board “in charge of taking decisions which may have a significant impact on the value of the assets.” Such decisions include the financial plan, the level of debt the TSO should be able to assume, and control over the dividends distribution.

According to the Council’s proposal document to the Parliament, it is not yet clear how this TSO is supposed to work efficiently and independently, while the main power companies remain vertically integrated.

The Supervisory Board will be composed of members elected by the power companies, some employees chosen as representatives of the TSO itself, and other members elected by “third party stakeholders.” The proportion of each group however, is not known yet.

“But these measures are not stronger enough to assure a real independent Transmission System Operator,” Tarradellas said.

The Commission and other Member States position

Tarradellas: “Our proposal then would be to give Member States the option to choose between a full break-up of the power generation business and transmission and the option of retaining ownership of the transmission part, but with strong safeguards to be sure it will be managed in an independent way.”

For other Member States however, the issue appears to be much clearer.

In conversation with GreenPrices, Jan van Diepen, spokeperson for energy issues from the Dutch Ministry of Economic Affairs, said the Netherlands "strongly supports ‘full ownership unbundling’, and that it shares its position with the UK, Spain and the majority of Member States.”

A new element to the discussion was introduced yesterday, when the European Parliament’s Industry Committee voted against the break up of gas utilities in what represents a victory for the Franco-German position. This means gas and electricity will now be addressed separately - initially they were supposed to be included in the same Directive.

The debate will continue at the Energy Council on 6th June, and later a Parliament plenary vote is expected on the proposed gas directive.