Kroes backs competition to deliver energy security

BERLIN—The European Commissioner for Competition Policy, Neelie Kroes, has attacked energy industry claims that enhanced future energy security and greater competition simply cannot be achieved at the same time.

Last Thursday, Andris Piebalgs of the Competition Directorate announced that it had concluded that competition is not functioning properly in electricity and gas markets.

He said that there are three major structural reasons for the lack of competition: national energy markets are too highly concentrated and lack liquidity; there is an absence of cross-border competition; and, there is insufficient unbundling of network and supply activities.

Ms. Kroes told delegates at a high-level workshop on energy organized by the German presidency the following day that the arguments proffered by energy industry lobbyists against the unbundling simply do not stand up.

"I'd like to start with a very clear message. I simply do not accept that there is a 'balance to be struck' between competition and energy security. That is just too easy an argument to make," she said.

"Instead, the facts are that these two elements are—and must continue to be—mutually reinforcing. That is the only way to ensure affordable and sustainable energy supplies for generations to come. If there is one message I would like you to really take to heart, it is this one," continued Ms. Kroes.

The Commissioner who is leading a whole raft of competition investigations currently—including one into the business insurance sector—said that structural change in the form of ownership unbundling will be good for European business, because this will:

• Deliver more investment
• Protect the E.U. against any potential dominance from external suppliers
• Improve security of supply

"There are win-win scenarios out there if we are brave enough to grasp them. A competitive internal market for electricity and gas will not only deliver efficiency, it will also improve security of supply and make prices more competitive by opening up the possibility to more companies to invest. It is clear to me that competition is key for delivering a better-functioning internal market, security of supply, and, in the long-term, lower prices," concluded Ms. Kroes.