The inding has been without appeal. Un eiling, in mid-No ember, the preliminary results o the sur ey on the markets or gas and electricity, the Commissioner responsible or competition, Neelie Kroes, sent a harsh warning to stakeholders in the ield. "Energy is essential to the competiti eness o the European Union," said." Howe er, we ound serious shortcomings in this area. Also I am determined to use competition law to protect businesses and European consumers.
The indings by the report o the DG TREN (1) on the unctioning o the market or gas and electricity, which points out the lack o integration o national markets and the absence o price con ergence. The Commission indeed noted substantial di erences between Member States, the retail tari s may ary between 40 and 55 euros per MWh or large consumers, between 40 and 80 euros per MWh or consumers o a erage size (24 GWh per year), duty- ree between 60 and 150 euros per MWh or small pro essional consumers (50 MWh per year).
or the Commission, this phenomenon is primarily the delay o a large number o Member States in the transposition o the second directi e. "They must implement rapidly and ully the directi es on gas and electricity, not only on the orm but also on the merits, insists the Commissioner responsible or energy, Andris Piebalgs. The Commission will maintain the pressure on the Member States so that they apply the necessary measures to achie e a le el o growth and competiti eness in Europe. I such is not the case, more radical measures will be necessary.
What could be the magnitude o initiati es rom Brussels tomorrow or the moment, the Commission keeps well orward in the detail and judge that it is still too early to decide whether additional legislati e measures. But point dys unction (see box), stressed the recriminations and each other and e okes possible solutions. The lack o transparency in the wholesale markets or example is part o the substanti e problems. In the gas networks users thus toil to obtain in ormation on the capacity o the pipelines, congestion le els or e en opportunities to increase the pressure in the pipes. New entrants argue or a plat orm pro iding in ormation on the capacity o transit across the market.
Indispensable in ormation remain inaccessible
Same obser ation in electricity. According to the preliminary report o DG competition, 83 o the inter iewed producers, suppliers and traders say that important or critical in ormation are inaccessible. "This lack o transparency probably cost tens o billions o euros to European consumers", said a trader in Brussels in estigators. Concerned, the Commission considers will require appropriate rules in the matter and reporting obligations.
A point o iew ob iously shared by the regulators. In their contribution, they emphasize the risks o manipulation and ind it necessary to strengthen sur eillance while it is changing little by little to regional markets. "The case o a major production site can or example ha e a signi icant impact on the wholesale market." I this in ormation did not announced to all players at the same time, the owner o the plant will ha e an ad antage o er its competitors. ""This lack o in ormation also eliminated most inancial or independent traders, adds the European association o metallurgy, Eurometaux, in his contribution. The dominant traders are subsidiaries o the producers and are integrated into their business organizations. Normally, in a market o amenities, this situation does not exist. " acing an also unanimous inding, Brussels likely to inter ene. But what will be the le el o dissemination o in ormation imposed by the Commission In its report, DG TREN estimates that model applied in the matter could be that o the Nordpool, the Scandina ian trade scholarship. Be ore returning the ball to the DG competition, which must consider this issue in detail in his in estigation.
Another point put orward by the report and the sur ey on the energy market: barriers to the cross-border supply o gas and electricity. or the Commission, the irst su ers rom long-term contracts concluded prior to the deregulation while the latter su ers rom lack o interconnections between Member States. The whole despite the commitment made by the European Council in 2002 to reach an import capacity equi alent to 10 o domestic consumption.
Course, or some, the thing was no surprise. "A small transport manager can probably get 10 requested by building a single line, but Europe as a whole will probably ne er achie e this goal," notes in his contribution the European association o operators o transport Etso. or, this indicator only is rele ant in the case o small markets with a dominant operator, but not or large countries where suppliers are multiple and the range o productions is aried.
Monopolistic income annuities
In the meantime, the use o re enues resulting congestion raises questions in the Commission. And to quote examples: "between 2001 and 2005, three German transport operators ha e made more than 400 million euros o turno er with congestion. On this amount, 20 to 30 million euros were used to strengthen or build new interconnectors. "Scandalised, industry point out that these congestion pre ents them to import electricity at best price and ask the Commission to inter ene. "The problems o congestion re enues should be dedicated solely to strengthening interconnections or the construction o new, pounding the association o German électro-intensi s IK (2)" It is a ery important question because the owner o an interconnection has no incenti e to in est in new capacity, which yet would sol e the problems o congestion but would also lead it to renounce a monopoly income annuity.
or the moment, the Commission reser es its judgment. "Unless that another use o the income is more e ecti e congestion re enues should be reser ed or strengthening interconnections," notes the competition DG in its preliminary report.
The separation o the property done debate
Brussels is also concerned about the lack o liquidity in the markets o large, either because o long-term contracts, in the case o gas, either because o ertical integration between acti ity o production and retail market, in the case o electricity. The Commission also noted the lack o dissociation between network and pro ision but inds a net change o beha iour o operators when a separation o property has been implemented. Di icult howe er to say whether this will lead the Commission to ollow the countries which imposed this le el o dismantling. Se eral associations o industrialists ad ocate a separation o property across the alue chain. An idea which aroused the opposition o the incumbent operators. "The guarantee o the stability o a European legal ramework is essential or the operation o a competiti e electricity market," said ED in its contribution. "The unbundling o ownership is unnecessary since the current guidelines are e ecti ely implemented and regulators to ully play their role, adds GD ." It would appear e en disproportionate and counterproducti e to the objecti e pursued.
Pointing dys unctions, relaying each and other critics, the Commission now conducts a pain ul re iew on the process o deregulation that it imposed. Prudent, it intends ne ertheless a oided any direct challenge to his work. Cabinet Copenhagen Economics study assisted by the Commission, the price o electricity would be today rom 10 to 20 lower than they would ha e been without liberalization. In the case o gas, this igure would reach e en 35 " or the more ad anced countries." The assumptions that the balm to the heart o Brussels o icials...
(1) - DG TREN: Directorate General Transport energy.
(2) - KI: Industriellen Energie und Kra twirtscha t erband.
i e dys unctions identi ied by Brussels
-The gas and electricity markets remain too concentrated.
-The lack o transparency in the sector bene its the operators in place.
-Cross-border supplies are insu icient.
-The wholesale markets lack liquidity.
-Companies and consumers questioned the price ormation mechanisms.