eNERGYEC offers unbundling opt-out.(Features)

by Janet Wood

European Union member states opposed to unbundling their vertically integrated electricity and gas utilities could instead ensure access to networks is controlled by an independent system operator, according to new proposals due to be presented by the European Commission on Wednesday, after Utility Week went to press.

The Commission signalled its intention in January to seek full unbundling of energy companies, with the support of some member states, including the UK. But it hit concerted opposition led by France and Germany.

The Commission's favoured solution will be an independent transmission system operator, which owns and operates transmission networks. But countries could apply to set up an independent system operator (ISO) instead, responsible for operating and dispatch across networks owned by, but physically and legally separated from, their parent.

Sebastian McMichael, a partner at legal firm Shepherd and Wedderburn, said: "The Commission... would have come under pressure to give up ownership unbundling and it has not gone with it. For the EC, the ISO model is a halfway house. It does not deal adequately with the problem and it means costly regulation."

He added: "The ISO option would be a derogation and these are generally interpreted strictly." McMichael said it was not clear who would grant the derogation, "the state, the Commission, ...