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EU to open domestic energy markets

26 November 2002 – EU energy ministers meeting in Brussels Monday reached a deal to allow homeowners in the European Union to choose their gas and electricity suppliers starting in July 2007.

The date for liberalization of the domestic energy market, which is two years later than originally proposed by the EU Commission, has been widely welcomed.

“It’s a great day for the European Union, for our companies and our consumers,” said Bendt Bendsen, Danish minister for economic and business affairs. “It will lead to cuts in energy prices and benefit growth.'”

The liberalization of the domestic energy supply market will come three years after the business market is opened to competition.

The EU has been negotiating for ten years to reach a deal on opening markets. The French government – which has fought for years to preserve the interests of state-owned Electricité de France – had argued that more time was needed to assess the effects of the business-sector liberalization on price and quality of service before moving on to the household sector.

France’s position softened following the election of the new right-of-centre government, in office since June, which said it cautiously, favoured more competition in the sector. France is still likely to face significant opposition of at home to any weakening of the position of Electricité de France from a public wary of job losses.

However, France has been under pressure to accept compromise. EU Commission President Romano Prodi has warned failure to open energy markets could cost the European economy €15bn ($14.9bn) a year.

At the meeting Germany defeated a plan to force utilities to separate generation and sales from transmission system operations, The Commission agreed instead to revisit the issue in 2006 to see whether this kind of legal unbundling is necessary to make the market work properly.