RIGA - Estonian Prime Minister Andrus Ansip said that he categorically rules out the possibility of the European Union dictating to Estonia that it has to sell a part of its national power utility Eesti Energia in an EU-mandated restructuring of the energy market.
EU Energy Commissioner Andris Piebalgs has proposed, in a directive, for the separate ownership of companies producing and distributing electricity and natural gas within the EU market.
The European Commission, through this proposal, wants to create new incentives for companies to invest in new infrastructure, inter-connection capacity and new energy generation capacity, thereby avoiding blackouts and unnecessary price surges, says a Commission report.
According to Economy Minister Juhan Parts, Estonia is positively disposed toward the EU's plan to separate energy generation and distribution in the future.
He said that Estonia would be ready to separate the grid operator OU Pohivork from Eesti Energia, but that this should be looked upon as one possible outcome, rather than as the final decision. "It wouldn't be sensible to tear Eesti Energia into pieces without good reason," he said.
Parts said that "Such a step [of unbundling] is necessary for an open market to develop." In calming fears of higher prices, he added that "The price of electricity will not start rising under its direct impact." Comparing experiences in other deregulated markets, he commented that "The price of energy will be regulated by the market and the influence of the market can today be seen in the telecommunications sector, where prices have dropped by several times."
Both Ansip and Parts voiced concern about third countries which might, upon the full liberalization of the EU energy market, start selling electricity at below-cost prices in Estonia. Parts said that with regard to energy supplied by third countries, Estonia is in a peculiar position in that Russia could sell it all the electricity it needs.
The requirement for the separation of producers and distributors also hits natural gas supplier Eesti Gaas. The ministry has suggested that an exception be made here because the company is in private hands. "We haven't yet had time for an exhaustive legal analysis," Parts said. "If we find a way to make the owner of Eesti Gaas give up their pipes, we'll naturally support this."
The Constitution says property may not be expropriated, Parts noted. In his opinion, this is the main legal argument against the division of Eesti Gaas. The minister added, however, that the gas company could be split by a procedure resembling an expropriation of property, if it was in the public interest.
Latvia is grappling with the same demands, and is also of the opinion in that it does not support the Commission's proposal for the electricity and natural gas sectors, Economy Ministry representatives told the parliament's European affairs committee.
"The Latvian energy market is small and specific, therefore such a proposal is not appropriate," said the ministry's representative Nils Freivalds. The energy sectors would become more fragmented in Latvia, experts believe.
Freivalds said that the European Commission might face problems with implementation of its new energy proposal. He warned that there is a bloc of ten new EU member states who object to the proposal. France and Germany, with companies Gaz De France and E.ON commanding the market, have voiced the most protests against the directive, while the directive is supported by the UK, Ireland, Sweden, Denmark, the Netherlands, Belgium and Spain.
