EU Energy “Ownership Unbundling” plans throws workers in dark
PRESS COMMUNICATION, 19 September 2007
(Brussels, 19 September) The proposed changes to the directives on the Internal Market for Electricity and Gas, unveiled by the European Commission today, force restructuring in the electricity and gas industry. Astonishingly, the Commission has not seen fit to articulate any specific provisions to protect EU energy workers against these radical changes.
Although there is little evidence that it will bring reduced prices for Europe’s citizens and business, the European Commission promotes full ownership unbundling of transmission systems from generation and retail. The European Federation of Public Service Unions (EPSU) has repeatedly expressed its concerns about these proposals. The proposals do not guarantee investments, nor do they protect households against exploitive pricing and collusion between corporations and the small group of traders. The proposals of the Commission affect working conditions, collective bargaining, information and consultation rights, mobility and training. Workers will have to transfer to different companies and new owners. These will often be private equity firms. Their purpose is not to guarantee employment and security of supply but to extract more money out of workers and companies for shareholders, while claiming this is for the benefit of society.
“This is restructuring forced upon workers, not by the vague forces of global finance capital but by an ideological driven Commission President and Commissioners. They stubbornly continue to ignore all the lessons learned about restructuring and put competition before Social Europe, throwing workers and their families into months of insecurity”, said EPSU Deputy General Secretary Jan Willem Goudriaan. He added: “As far as integrating social Europe in energy policy is concerned, the Commission is an emperor without clothes -naked competition is all there is to be seen”.
Workers and their families will face uncertainty and insecurity which the Commission proposals do nothing to address. If the Commission wants to pursue this course of action, EPSU demands that the proposals contain a clause that protects employment, collective agreements, pay and conditions of the workers concerned.
Background information
This is the first major legislative proposal of the Commission after the European Council in June which agreed that the European Union is not about the zealous pursuit of competition. That Council confirmed that Commission proposals should be; “linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health”. The Commission should not make a mockery of what is to be the new Treaty.
Other issues EPSU is concerned about:
The proposals will not strengthen price regulation for domestic users or households. This concerns workers, their families and the communities in which they live. Many see prices of electricity (and gas) rise and there is no evidence that the proposed changes will have an impact. On the contrary experience in the EU, but also the US for example indicates that price increases are a structural phenomenon when introducing competition in this sector due to a complex of factors such as the physical nature of electricity, geographic (hydropower, coal or dependency, small country) and historical situations (centralised, more local systems, nuclear) and also the economic (asymmetry of information for example) and social (you can not increase the price of electricity and gas 150-200% and say that is a good solution as it pushes people into poverty and makes small and medium sized enterprises go bankrupt. Price regulation for domestic households should be allowed and at least for those Member States that wish to do so as their citizens demand this protection.
A third issue of concern: the powers of the regulators are to be strengthened and a stronger European body will be created. This does not go hand in hand with a strengthening of the democratic nature of this body. It is not clear who controls this body - national parliaments or the European Parliament? Nor what role social partners, organisations which protect poor people (anti poverty organisations), consumer clubs for example will have.
The proposed solutions do not lead to a stable investment climate needed for long-term planning. Already the report on the internal market electricity and gas of 10th January 2007 announced next steps: ownership unbundling of distribution networks. And the energy sector inquiry raises the issue of vertical foreclosure and suggests separation of generation and retail. No guarantees are provided that in three years time the Commission will not come forward with a new set of proposals.
The impact assessment which has been done appears to us to be incomplete as social issues where insufficiently addressed. Also the European Parliament has requested such full impact assessments.
As the Commissioner will be aware, the proposals are highly controversial in Member States, and parts of the electricity industry. Newspapers report that even Commission-staff predict long legal battles. It is highly unsatisfactory that the Commission knows only one answer to problems and that is more competition. It is as a doctor giving more of the same medicine to a patient each time. But too much of the same medicine can also kill the patient. Once again: the problems the internal market for electricity and gas is causing are inherent to electricity as a product and service. The present proposals are based on the view that electricity is a commodity. It is not. And the Commission treats electricity and gas in broadly similar manner while many countries have not even implemented legal unbundling. This is not realistic and endangers a secure infra-structure on which Europe is depending.
The proposals should not move forward. Satisfactory solutions are to be found that protect the workers concerned and that protect citizens and especially the poor and vulnerable against volatile, non-cost based and exploitive prices.
Given the evidence that the markets are dysfunctional and do not deliver the benefits for society and only for a small group, and given that in this sector competition can not work to deliver such benefits for society due to the factors mentioned earlier, EPSU believes it is important to re-think the whole approach. Not doing so will lead to a disastrous situation and weaken the support for the European Union project as such. In no other area, Commission induced reforms have such an impact for all in the EU as in the electricity and gas sector. Every body pays his or her electricity bill and all businesses use electricity. Electricity is a truly universal service and not a commodity.
See here for further details http://www.epsu.org/r/34
EPSU supported by John Maynard Keynes! http://www.epsu.org/a/3189
For more information, please contact Jan Willem Goudriaan or EPSU Press Officer Brian Synnott, + 32 2 2501080 or by email epsu@epsu.org
EPSU press ending
“EPSU is the European Federation of Public Service Unions. It is the largest federation of the ETUC and comprises 8 million public service workers from over 200 Public Service Unions in 37 countries. We organise workers in health and social services, local and national administration, energy, water and waste. We are the recognised European social partner organisation in each of these sectors. EPSU is committed to building a European Union that promotes democratically accountable public services of the highest quality, within and beyond its borders."
For more information on EPSU and our work please go to: www.epsu.org
Click here to read also:
Proposals for liberalising the European energy market fail to meet the real challenges
(from ETUC - CES MEDIA Etuc - Ces)
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