Select Committee on European Union Forty-Ninth Report


Letter from the Chairman to Brian Wilson MP, Minister of State for Energy and Construction, Department of Trade and Industry

  Thank you for your EM dated 2 July which Sub-Committee B considered at its meeting on 22 July.

  You will recall from the number of letters we have exchanged since 10 July 2001 that we have all along remained sceptical about the willingness of certain other Member States to open fully their markets in electricity and gas. We are, therefore, somewhat cautious about accepting this new proposal at face value and we should be grateful to learn whether or not the requirement for detailed consumer protection measures to be incorporated in the text of the Directive hides a wider agenda. Like you, we believe this to be unnecessary.

  If you are convinced that it is a matter for subsidiarity it is not possible to press this charge and thus to question the necessity for this proposal?

  We should welcome your views and what you think this proposal is really designed to achieve. In the meantime the scrutiny reserve on this document is maintained.

23 July 2002

Letter from Brian Wilson MP to the Chairman

  Thank you for your letter of 23 July, outlining your concerns about the detailed consumer protection measures contained in the proposal for a Directive referred to above.

  As you are aware, we believe this level of detail to be unnecessary and would prefer such matters to be left to subsidiarity. However, provisions on public service obligations are important for some Member States and the European Parliament and my judgement is that we will need to include them in the final package. They provide the comfort that some Member States need that vulnerable consumers will continue to be protected when competition is introduced into energy markets. We take this for granted, but others need to see it specifically spelt out.

  We, the Commission and other pro-liberalisation Member States are anxious to ensure that these provisions cannot be used to frustrate market opening. We have therefore been pressing for safeguards to prevent consumer protection measures undermining competition. The latest drafts of the electricity and gas texts contain a recital stating that "to the extent that measures adopted by Member States to fulfil universal service and public service obligations constitute State aids under Article 87(1) of the EX Treaty, there is an obligation according to Article 87(1) of the EC Treaty to notify them to the Commission". The electricity text also states that the provision on universal service "shall be implemented in a transparent and non-discriminatory way and shall not impede full market opening". Moreover, all the public service obligations are subject to Article 86 of the EC Treaty which prevents their application affecting the development of trade to such an extent as would be contrary to the interests of the Community.

  I believe that the additional wording referred to above provides sufficient assurance that public service provisions cannot be used to prevent market opening.

10 August 2002

Letter from the Chairman to Brian Wilson MP, Minister of State for Energy and Construction, Department of Trade and Industry

  Thank you for your letter dated 10 August which Sub-Committee B considered at its meeting on 21 October.

  We accept the point you make that the inclusion of detailed consumer protection measures is probably necessary in order to secure support for liberalised energy markets. We accept, too, your judgement that the additional wording quoted in your letter provides sufficient assurance that public service provisions cannot be used to prevent market opening.

  Under the circumstances, we are content to lift the Scrutiny reserve on this document.

22 October 2002


 
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