Under the heading "Brussels plans break-up of energy groups" the FT has just reported that:
the European Commission is preparing to break up big, integrated groups such as Eon, RWE and EdF in an attempt to stimulate cross-border competition.
Neelie Kroes, the European Union competition commissioner, will say that splitting up companies that supply energy while owning infrastructure such as power grids and interconnectors is an “absolute priority”.
The Commission is due to propose a review of EU energy legislation early next year. Ms Kroes’ stance will face tough opposition from Germany and other member states, and may also meet resistance from other commissioners. However, she insists that her views are receiving growing support from regulators and market participants.
She also hits out at long-term supply contracts that she says act as a brake on healthy competition: “Where almost all gas coming to the market is locked in for the long-term, the cumulative effect is likely to be that new entrants cannot buy enough gas to build up a business, or access enough customers to create a sustainable customer base.”
With France and Germany defending their national champions and helping them to avoid both domestic competition and hostile takeovers, their relationship with their energy companies is looking increasingly like Russia and Gasprom. It's not surprising that Russia and Germany see eye to eye about long term gas contracts.
