André Jurres

25 jun 2007

Last week I spoke at the Power conference 2007 and I was partly surprised by some of the developments.  Somebody from the Spanish Ministry informed me that recently a number of steps were taken to introduce more competition in the Spanish market.
One of the things he said got my attention, he said that the government had decided to introduce SMP as a guideline in the energy market.  Significant Market Party/Power is a term that comes from the European Commission and for me not new as in the telecom industry this guideline was also used.  
He said that every player with more than 10% market share will be regarded as important/dominant and will have to apply to different regulation.  And this in first phase to production but not limited to.  As signal this is important as in some countries governments try to define how many competitors you need to have a free market.  Looking at production a minimum of five players is necessary to have a start of competition, preferable some more players should become active in niches so that overall you get maximum competition.  The market will determine how many players are possible.  Looking at other liberalizations it has proven to be difficult for governments to assist market openings.  More important is the recent Spanish example on how you should create level playing regulation so that everybody can compete under the same conditions.  
Also in Belgium the debate has finally started on how competition can be created on for example production of electricity.  The first suggestions are positive but still very ad hoc, popular slogans like we have to create at least three competitors were the former dominant player can stay at 70% are of course not a solution to a real competitive market.  Having 70% of any value chain but especially electricity production is like having the power to own the total market(pricing).
Another subject that got my attention was the debate on what the ideal energy mix should be, here I saw a more open mind towards nuclear and coal compared to a year ago.   Most specialists said the same thing, green power production is great as long as there are subsidies but it can go hand in hand with nuclear and coal, at least for the next twenty to thirty years.
Having created my own energy company in Belgium six years ago I wonder if the Belgium political climate will allow that other countries move forward and we stay behind.  When Doctor Ungurer spoke of the Commission I asked him what he was going to do better when compared with his experience in telecom.  With my statement to him that five years ago I could start a new energy supplier in a closed market but today in a open market it has become impossible he simple ignored this and said that the Commission is working hard to introduce more competition.   On my question if with competition he meant that only former incumbents will compete in neighbouring countries or that there will also be room for new players he also choose not to answer this question.  It seems that the Commission is still looking for a lot of answers.  The good thing is that individual member states like Spain have decided themselves to move ahead.   This does not mean that Spain has become an easy market to enter as it is still mostly an island in energy country.
Finally everybody agreed that England is still looked upon as an example on how to move ahead in a liberalization process.