EU happy ‘in principle’ with UK plan to ease unbundling rules

The UK is free ‘in principle’ to change the way it applies the EU’s unbundling laws, the European Commission told ICIS on Tuesday.

This follows UK energy secretary Ed Davey’s proposals to relax the laws, which prohibit energy companies owning both supply and the means of distribution assets in the power and gas sectors.

“The European Commission has been informed and remains in contact with the UK authorities,” the spokeswoman said.

“We have not seen the draft legislation yet, but in principle, EU member states are free to adapt their legislation in the field of unbundling as long as it continues to respect the third package,” she said.

Davey wrote to British regulator Ofgem last Thursday outlining the proposals, which would see the regulator look at investments on a case-by-case basis to decide if they are anti-competitive ( see ESGM 17 July 2014 ).

“These unbundling rules were designed for good competition reasons; but over-rigid interpretation is stopping infrastructure investment that could not possibly result in any discriminatory behaviour,” he told a conference in London last week.

“We will consult on our precise approach to a more flexible unbundling regime, but we think there is scope to give Ofgem more discretion in its assessment and final decision on transmission system operator certification,” said a spokeswoman for Department of Energy and Climate Change.

Any changes to the unbundling laws, a key part of the EU’s third energy package, which has driven market liberalisation across Europe, remain firmly within the commission’s purview. This is because the commission has to certify the unbundling rules are complied with in each case.

A draft of the new regulations will be published in autumn 2014, with implementation anticipated for early 2015. Albert Evans