M OTION FOR A R ESOLUTION BY T HE C OMMITTEE ON I NDUSTRY , T ECHNOLOGY AND R ESEARCH Whilst allegations emerge of price-fixing on the British gas market and the German RWE npower being under scrutiny for tax avoidance, an estimated 50 to 125 million Europeans are now in a state of “fuel poverty”. How can the EU improve openness and encourage competition on an oligopolistic energy markets? Submitted by:
Keda Bamber (St. George's School, Malaga), Blanca Carcasona (San Patricio), Aitor Fernández Garay (San José Jesuitak), Natalia Ferrando Lázaro (I.E.S. Sierra de Guara), Oihane Iturbe (Arizmendi-Almen), Juan Munuera Rufas (Santa Rosa Huesca), Miguel Navid (Col·legi Montserrat), Ellen Pellosniemi (FI), Can Sarıkol (TR), Caterina Andrea Valenzuela Fizedeanu (Caxton College), Cristina Crespo (Chairperson, ES), Hauke Sommer (Vice-President, DE)
The European Youth Parliament, A. Recognising increasing consumer distrust in energy providers triggered by both fluctuations in energy prices and uncertainty regarding the real profit margins for energy companies, B. Deeply concerned by the increase of energy prices in the EU leading to regional fuel poverty due to: i)
lack of competition,
the current economic situation,
increasing scarcity of fossil fuels,
C. Noting with deep concern that there is insufficient control over large energy companies resulting in cases of tax avoidance such as that of RWE, who admitted to having avoided corporate tax over a period of six years, D. Fully aware that European energy markets is controlled by a small number of large corporations such as EDF or RWE creating high entry barriers for new and independent competitors, E. Alarmed that the aforementioned oligopolistic structure of the Members States’ energy markets creates a risk of price-fixing as exemplified by the on-going investigation by the European Commission (EC) into an alleged collusion between the Royal Dutch Shell PLC, BP PLC and Statoil ASA, F. Approving the measures that have been initiated by the EC to strengthen European energy markets, such as the Third Energy Package,. G. Keeping in mind that the Third Energy Package is not yet fully implemented in all Member States, H. Noting the lack of consistent laws, regulations, standards and practices concerning energy markets across the Member States;
Endorses the development of an online consumer protection platform by the Directorate-General Energy, modelled upon the British ‘uSwitch’ web platform, that assists consumers in choosing their energy supplier;
Recommends Member States and EC to redirect fines imposed on energy companies for the infringement of EU competition law into programmes that fight the fuel poverty caused by their malpractices, as suggested by the British Labour Party;
Proposes the creation of a new European regulatory organisation based on the structure of the British ‘Ofgem’, with the aim of issuing reports on the practices of European energy companies;
Suggests that banks and national governments facilitate the financing of small competitors on European energy markets by offering low interest loans or by lowering taxes, thus reducing entry barriers;
Urges the European Competition Network to strengthen its current legislative requirements regarding mergers in energy markets through further specification and simplification;
Expresses its hope that the measures introduced in the Third Energy Package will be implemented in all Member States within the next decade;
Approves the steps taken towards the creation of the Internal Energy Market 2014, namely the pilot project for joint electricity trading;
Calls for the cooperation of both the Directorate-General Energy and the governments of Member States in supporting the implementation of Smart Grid technologies.
FACT SHEET (ITRE) Smart Grids: The concept of SmartGrids was developed in 2006 by the European Technology Platform for Smart Grids, and concerns an electricity network that can intelligently integrate the actions of all users connected to it - generators, consumers and those that do both - in order to efficiently deliver sustainable, economic and secure electricity supplies. A smart grid employs innovative products and services together with intelligent monitoring, control, communication, and self-healing technologies in order to: 1.
Better facilitate the connection and operation of generators of all sizes and technologies
Allow consumers to play a part in optimising the operation of the system
Provide consumers with more information and better options choosing their energy supplier
Significantly reduce the environmental impact of the whole electricity supply system
Maintain and improve the existing high levels of system reliability, quality, and security of supply
Maintain and improve the existing services efficiently
Foster the development of an integrated European market.
Taken from: European Technology Platform.
Third Energy Package: Since March 2011, the Gas and Electricity Directives of the EU’s Third Energy Package for an internal EU gas and electricity market are transposed into national law by Members States. The core elements in this set of legislative measures are the three applicable Regulations: •
Ownership unbundling, which would split generation of electricity from transmission in order to avoid vertical integration,
Independent system operator, which would let the transmission networks remain under the ownership of energy generating groups, but transferring control of their daily business to a trustee – the independent system operator.
Independent transmission operator, which would allow energy companies to retain ownership of their transmission networks, yet the transmission subsidiaries would belong to independent companies operating under stringent regulatory control.
The EU has summarised these goals in their Energy 2020 strategy. Critical evaluation of the measures proposed in this strategy is central to understanding the EU efforts in addressing the topic of an integrated energy market.
Ofgem: As a regulator Ofgem works closely with [electricity] suppliers to improve their performance in several areas including how they: •
Handle consumer complaints,
Fulfil their social obligations,
Provide support for vulnerable consumers,
They carry out a wide range of research [on the British Energy Market] and publish reports and data to explain our findings. Taken from: Ofgem’s oficial website.
European Competition Network: The European Competition Network (ECN) has been established as a forum for discussion and cooperation of European competition authorities in cases where Articles 101 and and 102 of the Treaty of the Functioning of the European Union are applied. It should ensure an efficient division of work and an effective and consistent application of EC competition rules. The EU Commission and competition authorities from EU member states cooperate with each other through the ECN by: •
Informing each other of new cases and envisaged enforcement decisions;
Coordinating investigations, where necessary;
Helping each other with investigations;
Exchanging evidence and other information; and
Discussing various issues of common interest.
The objective of the European Competition Network is to build an effective legal framework to enforce EC competition law against companies who engage in cross-border business practices which restrict competition and are therefore anti-consumer. Taken from: EC’s official website.
uSwitch: uSwitch is a certified energy utility comparison website that operates in the UK. It is both impartial and independent.
Pilot project for joint electricity trading: As of this year a pilot project for joint electricity trading has been initiated, involving 14 EU Member States. The project, designed by the EU Commission, regulators, grid operators and power exchanges, is a milestone on the way towards an integrated European Energy Market. It works by the principle of market coupling, which combines all offers and bids in a region and creates an integrated electricity market in the areas concerned.