EIUG Press Release: 12:30pm Wednesday 10th January 2006

The Energy Intensive Users Group strongly welcomed today's announcements by the European Commission, but warned of the need for rapid action to complete the single energy market.

EIUG's Director, Jeremy Nicholson, said: "The Commission has confirmed what the UK learned in the 1980s - you cannot establish competition in energy markets if transmission operators remain under the influence of vertically integrated utilities. Consumers will welcome the Commission's recognition that the EU needs a balanced energy policy, including the use of nuclear power, if we are to achieve our environmental goals in an economically sustainable way."

EIUG has lobbied hard for the completion of a single European energy market as the best means of delivering the secure, competitive energy supplies industry needs to stay in business. Patchy or non-existent competition in national energy markets has distorted energy prices, and hence competition in the production of energy intensive goods within the EU, as well as compromising security of supply and damaging the competitiveness of European industry in world markets.

EIUG has urged the Commission to look at the lack of availability of common contract terms for supplying energy to large industrial users in different national markets, even when supplied by the same utility. We have argued for action to reduce the market power of national champions, and for the full unbundling of transmission from the ownership of vertically integrated utilities, to facilitate new entrants and stimulate competition. We have also urged the government to consider what transitional arrangements would be required to ensure the security of UK energy supplies in the event that liberalisation European markets fails to progress as anticipated. EIUG appreciates the efforts made by Ofgem and DTI in assisting the Commission in its inquiries, for the benefit of UK consumers.

EIUG has also argued that promoting unrealistic targets for subsidy-dependent and insecure renewables, whilst failing to face up to the need to retain nuclear baseload within the generation mix, damages industrial competitiveness and undermines Europe's credibility as a leader on climate change issues.

For further details, please contact Jeremy Nicholson (Mob. 07785 280568) .

Notes for editors:

1. EIUG represents the UK's energy intensive industries - manufacturers of steel, chemicals, paper, cement, glass, ceramics, aluminium, industrial gases, etc. These industries have a commercial interest in the responsible and efficient use of energy - they compete in international markets, and hence depend on access to secure, competitive energy supplies to remain in business.

2. EIUG is the UK member of IFIEC Europe, the International Federation of Industrial Energy Consumers, which represents these industries at a European level (www.ifieceurope.org).

3. Large industrial users in the UK faced the most expensive gas prices in Europe, and amongst the most expensive electricity prices, through 2005 and 2006. Prices have since converged towards European levels, partly because of mild weather, but remain higher, more volatile and more vulnerable to supply and demand shocks than those in continental Europe. UK prices reflect the lack of fair access to gas supplies, transportation and storage infrastructure in unliberalised continental markets.

4. Uncompetitive gas prices forced a number of glass, paper, steel, brick and chemical plants to suspend production during winter 2005/06 - some sites have closed permanently - the ONS confirmed that 100,000 manufacturing jobs were lost last year, with energy costs cited as a major factor.

© Energy Intensive Users Group 10 January 2007