Stand firm over the break-up of European energy giants, EC told

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The Independent Online

Centrica and National Grid are urging the European Commission not to bow to pressure from EDF of France and RWE and E.ON of Germany by diluting proposals to break up the European energy giants this week.

Andris Pielbags, the EU Energy Commissioner, will recommend that monopolies like these be forced to sell their electricity and gas transmission networks to crack down on anti-competitive behaviour. Brussels has blamed lack of transparency and competition in the energy markets on companies owning both a billing business and the pipes or grid for distribution.

But following pressure, mainly from the French and German governments and the energy giants themselves, he will also offer an alternative that British companies warn will not go far enough. Under this option, groups that own a supply business will be able to keep hold of their transmission networks as long as an independent third party operates the networks. In theory, the operator would decide how much the owner should invest, with the energy groups being closely regulated to make sure they comply.

But UK groups – backed by most of the Low Countries and Scandinavia – worry that giants like EDF and RWE would still be able to abuse their dominance.

A spokesman for Centrica, owner of British Gas, said: "Effective unbundling is a key plank of creating a properly competitive market which will stimulate new entrants, more investment and thus better security of supply, benefiting consumers. We hope the Commission will stick to its guns and ensure its unbundling proposals are successfully implemented and regulated by bodies with increased powers and greater independence."

Nick Winser, head of transmission at National Grid, said: "We want the EC to hold its nerve and go for complete unbundling. We need Europe's transmission networks to be in independent hands to allow the market to work better. It would be good for investment, customers and security of supply. The new proposal is a step in the right direction but it's a very small step indeed and would not deliver anything like the benefits of full unbundling. "

Member states will vote on the plans in the European Parliament. If the EC cannot secure a majority for either proposal, they will probably be dropped.

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