Jan. 11, 2001Germany’s E.ON, Norway’s Statkraf, and Denmark’s Elsam have agreed to free up capacity on key power cables linking the high tension electricity grids of Scandinavian countries to Germany, European Competition Commissioner Mario Monti said Thursday.
Monti called the decision a welcome step toward creating a European single market for electricity.
“Without an open and nondiscriminatory access to interconnectors there can be no real competition as the established power firms could monopolize the scarce capacity available for themselves,” Monti said in a statement. Without intra-European Union (EU) trade in electricity the benefits to the customers in terms of lower prices would be delayed, he noted.
The companies took action after the EU commission found earlier agreements among the companies reserved all capacity on interconnectors or cables linking high tension grids for themselves to the detriment of fair competition.
Access to transborder interconnectors is a prerequisite for a functioning European electricity market, the competition commission said. The opening up of national electricity markets for competitors from other member states will lead to a new pattern of electricity trade across national borders, resulting in lower prices for consumers.
But interconnectors’ capacity is limited and some have become congested. This is particularly true for the lines linking Germany and Denmark and Denmark and Norway.
The commission said this is partly the result of a long-term agreement reserving 60% of the total capacity of the only cable connecting western Denmark and Norway (“Skagerrak cable”) for Statkraft and Elsam. The agreement was expected to be in place for 20 years.
The remaining 40% of the capacity on the Skagerrak cable was subject to a 25-year agreement between Statkraft and E.ON. The agreement also included reservation of transit capacity through the western Danish network and of some 34% of the capacity of the Danish/German interconnector towards Germany.
Together, these agreements locked up100% of the available transmission capacity between Norway and Denmark, and around 34% of capacity at the Danish/German border. The two purchasing parties, E.ON and Elsam, enjoy very strong positions in their respective markets, the commission found, and imports through interconnectors are thus a crucial source of competition.
The commission said it found indications the lack of open capacity on both the Skagerrak cable and the Danish/German interconnectors have lead to distortions in the trade between Norway, western Denmark, and Germany.
These findings raised serious doubts about the compatibility of the agreements with the EU’s electricity competition law, the commission said. Subsequently, the Statkraft/Elsam agreement for 60% of capacity on the Skagerrak cable was amended to free up the capacity in its entirety beginning this month.
E.ON also agreed to abandon its reservation of capacity on the Skagerrak cable and on the Danish/German interconnector. The commission said it will continue to monitor all congested interconnectors, including those at the German/Dutch, the Belgian/Dutch, the French/Spanish, and Italian/French borders.