WRITTEN QUESTION E-0910/01

by Luis Berenguer Fuster (PSE) to the Commission

(28 March 2001)

Subject: Entry barriers on the Spanish power generation market identified by the national competition authority

The report issued in Spain by the national Anti-Trust Commission (TDC) in the case concerning the merger of Endesa and Iberdrola probes in detail into the entry barriers existing in the Spanish electricity industry, namely: the risk stemming from regulation, isolation, the existence of strategic assets, excessive concentration, vertical integration, and costs of transition to competition (CTCs). As a result of all these factors, the Spanish electricity market is largely unassailable.

In the section on CTCs, the TDC points out that they could reduce the number of new firms entering the market and gives two reasons. Firstly, because of CTCs, the pool prices bear no relation to reality, and the real costs are consequently not passed on to the market. Secondly, the inflexibility resulting from the price ceiling increases the risk to firms entering the market as far as recouping their investment is concerned, because the ceiling (Ptas 6 per kWh) is applied indiscriminately.

Does the Commission share the TDC's view of the Spanish electricity industry?

Answer given by Mrs de Palacio on behalf of the Commission

(5 June 2001)

The Commission notes that the economic analysis on the Spanish electricity market as referred to by the Honourable Member was carried out by the Spanish anti-trust authority (Tribunal de Defensa de la Competencia) in the context of the merger between the two largest electricity companies in Spain, notably Endesa and Iberdrola.

The Commission's own analysis of the electricity market in Europe as a whole is set out in a Commission Communication to the Parliament and the Council on completing the internal energy market(1). In this Communication, the Commission outlines the encouraging progress that has been made with the development of the electricity and gas markets in Europe.

However, the ultimate objective of a fully integrated market has not yet been achieved. This is why the Commission has now proposed rules aiming at the creation of a real integrated single market, as opposed to a situation characterised by fifteen more or less liberalised but largely national markets.

The Commission believes that the adoption of these proposals by The European Parliament and the Council will address the main remaining obstacles to the creation of a truly operation internal market and will accelerate the pace of market opening. In particular, they will have a positive impact in addressing the fundamental problems that persist in most Member States, such as those identified by the Spanish anti-trust authorities with regards to the Spanish market and referred to by the Honourable Member.

The Commission is aware of the allegations made by the Spanish anti-trust authority with regards to the Spanish legal regime on the compensation of stranded costs (CTCs). The Commission is currently examining the compatibility of this regime with Community State aids rules. In this analysis, the Commission will take into account all the key elements, such as the recent legislative amendments introduced by the Spanish authorities as well as any other Community rules or case law that may be relevant for the purpose of this file.

(1) COM(2001) 125 final.