My noble Friend the Parliamentary Under-Secretary of State for Energy, Lord Truscott has made the following written statement.

“I represented the UK at the Energy Council in Luxembourg on 6 June.

The main purpose of the Council was a discussion on the internal energy market; this focused primarily on the question of unbundling. The Commission, recalling the mandate given by the Spring European Council, made the case for full ownership unbundling as the most cost effective and simplest way to enable a fully functioning internal market to be established. Proposals were expected to be adopted by the end of September. The Commission also outlined intentions to deal with cross-border regulatory issues, facilitation of investment and technical cooperation between operators.

Though some member states' positions were clearer than others, upwards of 16 spoke in favour of full ownership unbundling. Several of those opposed did so with little or no qualification. The smaller member states emphasised the importance of taking into account the special circumstances faced by small or isolated markets, or those with a single energy supplier which meant ownership unbundling would not be an appropriate way forward.

Views were equally divided on whether gas and electricity markets should be treated in the same way. A small minority of member states were in favour of unbundling distribution as well as transmission.

Otherwise there was general support for the Commission approach on the regulatory framework, investment and technical cooperation by transmission system operators. One member state noted that independence of national regulators would not be a crucial issue if a European regulatory system were established.

With very few Ministers in attendance, the presidency seized on differences of view to conclude there was no majority in support of ownership unbundling and the Commission should therefore seek an alternative solution. The Commission argued that although there was no consensus for full ownership unbundling, nor was there one for a different approach.

Earlier, the Council had begun with a report on the signing of a Memorandum of Understanding on regional market integration by the Pentalateral Energy Forum. The Commissioner had also signed the document. During the policy debate, one of the member states in this forum emphasised that pushing forward on regional cooperation was not incompatible with liberalisation measures at EU level.

The Council ended with a Commission round-up on international dossiers summarising the state of play on EU relations (with the US, Russia, OPEC, the Energy Community Treaty and Africa)”.