Brussels, Belgium — ESI-AFRICA.COM — 25 January 2011 – The approved European Union strategy of liberalising energy markets to increase competition and drive down prices for consumers has triggered increasing friction between various of its members.
Reuters reports that in the latest development, friction is on the way up between Lithuania and Russian gas giant Gazprom as the government in Vilnius tries to implement the EU strategy of liberalising the energy markets.
The EU’s 27 member governments agreed in March 2009 to liberalise gas and electricity markets in the "third energy package", in order to increase competition and drive down prices for consumers.
The deal forces giant utilities to isolate their gas and electricity distribution networks into independent entities, which would allow all companies equal access to the infrastructure.
There are three options that EU member states have for improving competition in their domestic gas and electricity markets, also known as "unbundling":
First, Full Ownership Unbundling “’ this was the initial proposal from the EU’s executive commission, in terms of which integrated energy companies would be forced to sell their gas and electricity grids, thus establishing separate network operators which handle all transmission issues. A supply or generation company could not hold a majority share in a network operator.
The second option allows integrated energy companies to retain ownership of their transmission network assets, but they must hand over operation of their network to a designated, separate manager.
Thirdly, energy companies may remain integrated, but they must abide by certain rules to ensure the two sections of the company operate independently and are financially independent.