EU Struggles Over Plan to Split Energy Companies | Europe| News and current affairs from around the continent | DW | 06.06.2008
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EU Struggles Over Plan to Split Energy Companies

European energy ministers on Friday were finding it hard to reach an agreement over proposals to bring more competition to the EU's gas and power markets by taking apart the continent's big energy companies.

The Sun behind a electric power tower

Will EU ministers come together and reach a deal?

EU Energy Commissioner Andris Piebalgs said that a failure to reach agreement would have serious consequences for everyone.

"I ask you not to miss this opportunity," Piebalgs said, according to news reports.

The main controversy among countries remains whether gas and electricity concerns should be forced to spin off their retail distribution networks into separate companies, hence creating more competition.

The European Commission, which proposed the plan last September, hopes that the move will end conflicts of interests that keep prices high and hold back investment.

Giving the big guys a break

A gas pipeline

The big guys don't want to give up their pipelines

Several EU countries, including France and Germany, have introduced alternative ways to change the status quo after energy companies complained about the plan. A compromise proposal by the Slovenian EU presidency would now spare some of the continent's biggest energy companies from being broken up.

According to the Slovenian plan, energy companies would still own distribution infrastructure as long as the operators of gas pipelines and power transmission lines are highly independent of the parent company.

Backers of full separation, such as Denmark and the Netherlands, want any alternative to be only a temporary arrangement that would be eventually phased out.

Running out of time

If an agreement on the main principles of the reform are not reached soon, little progress is likely for some time.

France, which is deeply opposed to the idea of breaking up big national champions in the energy sector, takes over the European Union's rotating presidency in July for the rest of the year.

Some energy giants have already taken Stepps to sell their distribution networks in order to avoid EU anti-trust problems.

German energy group EON said earlier this year it was planning to sell its high-voltage electricity network in the face of concerns from EU regulators.

Last week, fellow German energy group RWE proposed last week to sell off its 4,100 kilometers (2,500 miles) of gas transmission network in order to avoid a drawn-out anti-trust battle with the commission.

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