France and Germany clashed on Friday with other European Union governments over plans to open up the bloc’s energy market in an effort to increase customer choice and drive down prices.
The two countries are opposed to an “ownership unbundling“ proposal under which large energy companies would shed their power grids and pipelines to lessen their control over the energy supply chain, IHT said.
Meanwhile, at a meeting in Luxembourg of EU energy ministers, France and Germany also criticized a slightly less drastic alternative that would allow companies to keep energy infrastructure under tight supervision to make sure that they allow access to rivals.
Both plans could hurt successful energy companies and discourage investment, the two countries argued.
Last year, EU antitrust regulators said that Europeans were paying too much for their energy needs, while energy companies that control the market are not putting enough of their profits into making much-needed improvements to the region’s energy network.

Around half of the 27 member states in the European bloc have taken steps to liberalize energy markets and allow all power suppliers to use existing networks.

The EU energy bill is part of an ambitious effort to guarantee safe and affordable supplies of diverse forms of energy at a time when global demand, especially for oil and gas, is driving up prices to record high levels.
But Energy Minister Michael Glos said of Germany said that the EU plan went too far because it would effectively “expropriate“ private companies “through the back door.“
“The issue of ownership is extremely important in Germany,“ Glos told his EU colleagues at a meeting that was broadcast on the Web. “We do not want things determined by the European Union.“
But many European nations do support the drastic changes that EU regulators seek. Around half of the 27 member states in the European bloc have taken steps to liberalize energy markets and allow all power suppliers to use existing networks.
The somewhat less drastic alternative to the full “ownership unbundlng“ plan was crafted to get the French and Germans on board, officials said.
That plan would let energy companies keep their grids or pipelines if they were managed by an independent transmission operator under outside supervision and with credible long-term investment plans of their own.
The companies could be fined if they did not break ties with their parent companies and could not allow managers to float from one firm to the other.
The energy ministers also discussed creating an EU energy industry oversight agency and letting the EU review the work of independent transmission operators for five years.
The British energy minister, Malcolm Wicks, suggested a review period of three years to see if the independent transmission operators produce results “equivalent to full ownership unbundling.“ If not, then “full unbindling“ should be implemented across the EU, he said.
The Netherlands said that it would accept independent transmission operators, but only as a temporary alternative to stripping companies of their grids and pipelines.
France and Germany also object to the so called Gazprom clause in the bill, which would let EU companies only do business with non-EU firms--like the Russian state-owned gas giant Gazprom--if the latter’s home countries do not restrict access to EU energy companies.
Euope has consistently asked Russia to grant European firms wider access to the Russian market.
The EU gets a quarter of its gas from Gazprom, a level that is set to rise significantly in the years ahead. German, French and Italian gas companies have signed long-term delivery contracts with Gazprom.

Faced with a growing coal and power shortage, China’s provinces are devising their own policies to ensure cheap coal supply, as price controls on electricity increasingly cause distortions in China’s power and coal markets.
Central planners want to fight inflation and prevent blackouts, while recovering from a terrible earthquake ahead of the Olympic Games in Beijing in August, Reuters wrote.
But by discouraging production and limiting trade within China, unilateral policies by provinces could further complicate Beijing’s efforts to ensure a smooth economy this summer.
Shaanxi province, one of the country’s top coal producers, has urged local mines not to increase coal prices before Sept. 15 to comply with Beijing’s goals of cheaper coal supply.
“Now coal prices have risen, and the profit margin of power generating companies has been squeezed,“ Shaanxi vice governor Wu Dengchang said in a speech published on an official website.
“But everyone, especially state-owned enterprises, should understand that we ought to take the entire country’s interest into consideration.“
Although capping coal prices brings no economic benefit to coal-exporting provinces and could discourage mines from producing more to meet shortages, political pressure to maintain thermal coal supply is significant, analysts said. “It’s right before the Olympics, and the earthquake just happened. It’s a time political performance weighs over economic interest for local governments,“ said Chen Liang, an analyst at Ping An Securities.
Already, coal-importing provinces have taken steps to defend supply. Shandong, the fifth-largest producer but a net importer, asked its coal mines to supply an extra 2.56 million tons each month in July, August and September at a 10 yuan per ton discount to the June price, causing shares in local champion Yanzhou Coal Mining Co Ltd to drop 9 percent on June 4. Beijing is hesitant to intervene on coal prices nationwide.
“We still believe that the possibility of the central government putting an absolute control over coal price is very minimal,“ said an analyst at an investment bank.
“It would look like going back to the planned economy--the government would not want that,“ Lin Boqiang, director of China Center for Energy Economics Research at Xiamen University agreed.
Chinese spot coal prices have hit new records almost daily over the past several weeks, but the government has not allowed power generators to increase electricity tariffs since June 2006 for fears of fuelling inflation.
This has aggravated power shortages in parts of China as power generators cut purchases of high-priced coal. Coal miners, in turn, divert shipments away from clients who have lower-priced term contracts, or reduce operations in hopes of higher returns later.
To defend its supply, Shandong asked miners to ’ensure’ that their coal is used for power generation in the province.