EU GETTING RID OF MONOPOLIES

 

The package of drafts of European Commission’s directives on EU energy market reformation was submitted

to Brussels on September 19.

 

According to the documents, the cornerstone of EU-foreign state companies’ cooperation is an intergovernmental agreement of cooperation as well as the requirement to split a company by two subdivisions, producing and transporting.

The work over a new package containing the EU directive and 5 revisions was launched in June 2007 under the supervi petition Policy Neelie Kroes and EU Energy Commissioner Andris Piebalgs following European Council rejecting its previous version. Two of them suggest revising directives 2003/54/eu and 2003/55/eu that concern EU common antimonopoly rules in electricity and gas market, another two made to rules of work of trans-border networks and gas pipelines 1228/2003 and 1775/2005, and the last one is a proposal to create the Agency of European Energy Regulation (ACER).

If previously EU directives covered chiefly European companies, now the Commission in its special article is binding foreigners to comply with the law, especially the unbundling principle, according to which transportation and generation of energy resources and electricity shall be performed by independent companies.

The unbundling principle has already been set forth in Articles 9 and 13, Directive 2003/55/eu in effect since July 2007.

All these transformations imply the creation of a super-national power agency, ACER, to bring together both the authority to work out the uniform tariff, regulatory and competition policy for national regulators of the EU member-countries and control all energy streams of Europe through it.

Furthermore, the revisions 2003/54/eu and 2003/55/eu prohibit simultaneous management of electricity generation and transmission as well as gas production and pipeline transfer by a single company.

The drafts of directives also set forth the restrictions for acquisition of control stocks in allotted network companies, energy grids and gas pipelines: ACER shall impose the same restrictions on third countries companies as on EU’s entities. Mr. Barroso said the companies splitting shall result in their size reduction: energy reforms will make them a target for third countries companies. “We are open but we should not be naive”, said the President of the European Commission. To obtain authorization for asset acquisition from ACER and the European Commission, a third country company shall be guided in its operation by principles applied in the EU. So, small and medium-size private-owned and governmental companies not suspected of monopolistic intentions will be allowed to European market.

Being approved in the Council of Europe by Energy Ministers of EU27 countries, the document will prevent large state monopolies from investing in European energy sector. Such a turn of events in today’s deficiency of energy resources regardless of how large European and foreign corporations do perform, can trigger a series of energy crisis’s through to undersupply of energy resources, artificial deficiencies, conserved reserves, new rules-motivated structural changes, pricing, and, even if temporarily, but chaotic market relations. In case these actions are taken, in the short-range outlook one can predict a jump of network energy resource prices; nevertheless, in case ACER will keep maintaining active competition among new market players it shall get relatively stabilized. Anyway, a super-national agency has long been a necessity due to a need in creation of a uniform pan-European pipeline network and negotiation of energy nationalism by leading European countries. Even if EU’s top four countries reject these proposals, it becomes increasingly obvious that the world is not tolerating empires like Rockefeller’s Standart Oil, once split by government into 40 small companies.