EU: bungle and bundle

Business in Brussels is rarely glamorous -- especially when it involves regulating the byzantine EU energy sector.

And the European Commission's mandarins may be revealed as toothless when they present their final plans for the liberalisation of gas and electricity markets this week. It is part of an effort to inject competition into sectors traditionally dominated by big national monopolies.

Consumers currently have the legal right to choose their supplier, but that is purely symbolic in countries where certain utilities exercise great market power. These mega-corporations have an opaque, 'bundled' structure -- in which transmission, generation and wholesale operations are combined within single companies. To its critics, this system leads to underinvestment, limiting competition and risking the security of energy supply. Thus the European parliament voted in favour of breaking up 'bundled' utilities this summer.

Some member states are prepared to give Brussels the cold shoulder on energy. Two of the most powerful -- France and Germany -- are home to the largest monopolies and are unwilling to force tectonic shifts in their energy industries. The Commission may meekly suggest full unbundling as part of a 'menu' of options next week. Paris and Berlin will choose the watery option settle of 'operational' unbundling, putting transmission networks under independent control. This option may combine some of the worst features of unbundling and the status quo. Given the reluctance to move from all sides, and continued heavy lobbying by the utilities and their national backers, some member states may choose to do nothing at all.