Electric Power Sparks High-Voltage Argument in Europe
A DISTINCT touch of absurd theater is affecting the staid and secretive world of Europe's electricity utilities. After a lifetime of basking in comfortable national or regional monopolies, the utilities are being told by their own national government and European Community officials in Brussels that, in the name of consumer interest, their destiny lies in ``competition.'' Governments have made plans to split up and privatize former state monopolies.
Meanwhile, EC officials in Brussels are inventing an internal energy market that optimists hope will result in electricity becoming just as tradable a commodity as tomatoes and textiles. The result is that everyone inside the electricity industry is howling in protest while everyone outside is perplexed.
In Britain, not a day passes without a strange amalgam of environmentalists, labor unions, and utility officials occupying vast tracts of the national press with predictions that the government's electricity privatization program is doomed to disaster. Topping the list of their complaints is the claim that Britain's aging nuclear plants are inefficient, expensive, and unsafe.
Government ministers have countered simply that nuclear energy is environmentally friendly and there should be more of it. And eager to promote a wholesome image of the electricity industry in time for the first privatization phase next year, the British government is sponsoring prime-time TV ads where cute little kids talk about the man who sells the ``electric currants [sic].''
The Spanish government introduced new electricity regulations a year ago but few people are happy. Private-sector utilities, which are obliged to purchase some of their supply from Endesa, the state-controlled generating company, complain that the state company is too expensive and the regulations biased against them.
Since the Spanish government privatized 25 percent of Endesa last year, the state and private utilities have been competing against each other for investors, a race which the state company with its better results has been winning hands down. ``Some people think the state sector shouldn't make money,'' says an Endesa official.
But a future European single market in energy could help the private-sector utilities, says Luis Magana, president of Fecsa, the debt-ridden Catalan utility. Rather than buying kilowatts from Endesa, they could get them cheaper from France's state-controlled supplier, 'Electricit'e de France, which is eager to export its surplus nuclear power. This way, he says, consumers would also benefit.
Endesa has retorted that there is nothing ``cheap'' about French nuclear power. Rather it benefits from a French government subsidy which EC rationalization would eventually remove. But West German industry has joined in the argument saying they too want to buy cheap French kilowatts rather than the more expensive German ones.
West German electricity is expensive because the utilities, fearing an erosion of their regional monopolies, are screaming they will ``never'' allow a foreign competitor to sell to their clients using their transmission grid.
So the ball is back in the EC court in Brussels where energy officials have been bogged down trying to put together a ``common carrier'' transmission system. This process is taking too long for Martin Herzog, economy minister in the West German state of Baden-W"urttemberg, the country's modern industrial heartland.
Mr. Herzog recently welcomed the beginning of France's six-month term in the EC presidency with the hope that ``the opening of the European electricity market will be handled forcefully.'' What Herzog did not say was that West German utilities are simply parts of large industrial conglomerates. So what is gained through cheaper power purchases from abroad will be lost through lower earnings.