Energy break-up backed - 11 July

France and Germany yesterday suffered a blow to their efforts to block a radical overhaul of Europe's energy markets when European -parliamentarians backed a forced split of some big power companies.

The vote adds to tensions over how to increase competition in the European Union's electricity and gas sectors. A draft law designed to prise open the markets is due for release in September.

A majority in the parliament agreed that integrated companies, such as Eon of Germany and state-controlled Electricité de France, should be forced to separate grid and supply businesses.

In the Strasbourg vote, parliamentarians called for companies that bought pipelines and grids to meet investment targets.

Deputies want hedge funds and private equity groups to be barred from snapping up infrastructure unless they guarantee investment, according to Eluned Morgan, a Labour member for Wales.

Ms Morgan, who sits on the chamber's energy committee, said: "A fully competitive EU energy market will bring in more companies and greater investment in infrastructure. This will enhance security of supply as well as bringing consumer price benefits across Europe."

"I hope the [European] Commission will now heed the will of the European parliament and not kowtow to the member states who want to protect companies that over-charge customers."

Energy is at the top of Europe's agenda. Eight countries have called for the September proposal to demand a break up of big energy companies.

They back the European Commission's view that the best way to ensure competition is to force companies that both sell energy and run transmission networks to divest grids and pipelines.

Brussels has outlined a less radical plan. This would hand over management of transmission businesses to independent operators subject tougher regulation.