EIUG calls for a sense of urgency in implementing the proposed reforms

In welcoming today's announcement by the European Commission, the Energy Intensive Users Group called for a sense of urgency in implementing the proposed reforms.

EIUG argues that a failure to integrate national energy markets has compromised security of supply within Europe and damaged the competitiveness of European industry in world markets. Barriers to competition not only distort the trade in energy, but also of energy-intensive products manufactured within the European Union. The key problem has been vertically integrated energy companies that have failed to provide open commercial access to the networks and gas storage they control, preventing new entrants from establishing themselves in the market.

EIUG's Director, Jeremy Nicholson, commented: "The Commission has correctly identified the areas where new legislation is needed, and their proposals should be implemented without further delay. Failure to establish competition in European energy markets threatens security of supply, industrial competitiveness and the ability to deliver the cost-effective carbon reductions to which we are collectively committed."

Competition in EU markets directly affects the security and pricing of UK energy supplies since the UK has become increasingly dependent on imported continental gas (and to a lesser extent on imported electricity) to meet demand. Industrial consumers are acutely aware of this dependency, having suffered during winter 2005-06 when UK energy prices soared to unprecedented levels, yet gas failed to flow in from continental markets in response.

The situation in the power markets is further complicated by the flawed EU emissions trading scheme which, in its current form, perversely rewards carbon-intensive generators with windfall profits and acts a barrier to new entrants.

The Commission's proposals for unbundling network operation from production and supply, greater co-operation between transmission operators, better regulation and increased market transparency should significantly improve the prospects for consumers. EIUG is sceptical, however, whether these benefits can be realised without full ownership unbundling of the monopoly network businesses.

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

Notes for editors:

© Energy Intensive Users Group 19 September 2007