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Europe’s Power Industry Warns EU On Energy Policy

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The Wall Street Journal

The European Union is jeopardizing the competitiveness of its economy and risks disruptions to its supply of energy as a multitude of national regulations is undermining the sector’s ability to invest, top executives of some of Europe’s largest utilities said this week.

While energy supply is expected to remain robust in coming years, due to stagnating or falling energy demand across much of recession-stricken Europe lawmakers need to take action now to ensure that security of supply doesn’t deteriorate, industry officials said at the 2013 convention of Europe’s federation of power generators, Eurelectric.

“What our industry needs first and foremost is a coherent energy policy that stops the unilateral intervention by national governments,” said Fulvio Conti, chief executive of Italian utility Enel SpA and outgoing president of Eurelectric.

“The markets are sidelined by national governments and regulators. There are too many national targets and there is too little European cooperation,” said Mr. Conti.

Mr. Conti said the multitude of support schemes for renewable energies in the EU is counter-productive and distorts the broader power market, eroding utilities’ profits and undermining their ability to invest in new power plants or grids.

Additionally, the renewables support schemes are raising energy costs for households and business, Mr. Conti said.

Many of Europe’s utilities are suffering badly under high levels of debt that spiraled during the mergers and acquisitions wave in the years ahead of the global financial crisis. That situation has been exacerbated by Europe’s poor economic performance, which hit energy demand and prices. As a result, power producers are barely making money with their power plants and are shutting down loss-making plants.

“The situation has long been threatening the existance of some assets,” said Johannes Teyssen, CEO of German utility giant E.ON and incoming president of Eurelectric.

E.ON last month said it is considering shutting down more gas-fired power plants in Europe. At present, those plants are suffering most under the combination of the increase renewable energies and the recession-related decline in power demand and prices.

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